01 July 2010 Asia Pacific/Australia Equity Research Steel

Australian Iron & Steel Review
Research Analysts Nathan Littlewood 613 9280 1766 nathan.littlewood@credit-suisse.com Michael Slifirski 613 9280 1845 michael.slifirski@credit-suisse.com

COMPANY UPDATE

#8 - BHP/RIO rail access a token win
On Wednesday this week, BHP and RIO bowed to a decision made by the Australian Competition Tribunal and called for smaller miners to step forward and negotiate access to the Goldsworthy and Robe River railway lines (highlighted in red below). While it might be a sentiment winner amongst the smaller miners today, we view this decision as a token win for the sector. These lines are of low commercial value to most. The Robe line runs out to the far West of the Pilbara and the Goldsworthy line runs to the East. The most substantial geological endowments in the Pilbara are located in the centre – no where near either the Robe or Goldsworthy lines. The only reason that access has been awarded to these lines is because they are being under utilised by RIO / BHP. This is the same reason that the juniors have not gained access to the Newman and Tom Price lines (because they are being ‘fully utilised’).
Figure 1: Robe River and Goldsworthy lines shown in RED

Source: Company data, Credit Suisse estimates

The real catalyst for this sector could have been / would have been last Monday's announcement about royalties from BHP and RIO. As we discussed in Friday’s FMG note, it had been anticipated that State Government negotiations re: the Iron Ore JV would have been the 'forum' in which the WA State Government would push for an amendment to the BHP/RIO State Agreements so as to make the railway lines more accessible for the juniors.

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S. Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

simply so that BHP does not have to hand ownership of the railway line over to the state government. with its 2.a deposit which effectively sits below Pardoo. but at least so far he has not managed to have the State Agreements modified. Looking forwards The only winner we can see within our coverage is possibly Atlas Iron. short life project such as this is probably not a strong business case (it is only 75km by truck anyway). however where there is upside is for the Ridley magnetite project . and why the real prize (access to the Mt Newman and Tom Price lines) remains out of reach of FMG and others. 0BAustralian Iron & Steel Review 2 . Unfortunately building rail loading infrastructure for a small tonnage. This is the key that has kept BHP and RIO off the hook. Access to the Goldsworthy and Robe lines mean next to nothing for FMG . Goldsworthy has been on care and maintenance for some time now. The reason it is underutilised is because there isn't a significant geological endowment along it.01 July 2010 Goldsworthy / Robe access a token win WA Premier Colin Barnett got his royalty increase. This is seeming a lower and lower probability outcome by the day.and in reality the fact that FMG has once again been denied access to BHP's Mt Newman line if anything is a net negative.4mtpa Pardoo project being located almost on the Goldsworthy line. The BHP/RIO State Agreements state that the majors must negotiate with others regarding haulage of their ore so long as to do so does not unduly impact BHP/RIO's own operations.

324 Scrap SGM 17.829 1.4 9.15 6.150 0% 0% 0% 0% 100% 0% 0% 41.1 2.6 32.4 29.6% 21.50 0.5% -4% 1.617 6.long products Scrap .2 -0.5% 16% 0.7 3.4 9.9% 25% 1.950 0% 0% 0% 0% 97% 0% 3% 2.55 2.3% 16.172 5.3 9.6% 25.2 6.Lump Total FY11 Revenue by product Steel .107 A$/sh x cps cps cps x x x x x x x x x A$/sh A$/sh A$/sh % % % % % % % x A$m A$m A$m A$m kt kt kt kt kt kt kt % % % % % % % MGX 1.2 18.25 45% O Littlewood 2.67x 1.979 5.6 -0.4% 2.73x 11.2 -58.24 5.0 -34.5 2.0 7.10 3.6 4.1 5.3 0.480 120 3.0% 0.5% 6.31x -5.00 49% 46% O O Littlewood Littlewood 3.Non Ferrous Iron Ore .5 4.5 85.8x 1.0% 0.39 0.98 4.0% 0.88x 16.0 42.Ferrous Scrap .1% 22.0 65.250 0% 4% 10% 6% 8% 6% 66% 15.89 0.61x 58.488 -137 3.4 -0.33 0.0% 42% 7.08 0.5% 4.8% 1.968 1.8 5.0% 0. Credit Suisse estimates 0BAustralian Iron & Steel Review 3 .0 28.6 3.1 4.453 1.8% 0.26 0.45 0.3 3.09 0.9 3.7 39.356 4.400 10.027 5.3 5.1 15.7 10.4 38.306 1.7% 15.0 14.11 4.6% 7.673 -220 923 1.995 0% 0% 75% 15% 0% 0% 10% Source: Company data.Non Ferrous Iron Ore .9 5.1% 0.650 1.08 0.403 99% 0% 0% 0% 0% 0% 0% 15.flat products Steel .8 81.long products Scrap .883 3.01 July 2010 GICS Steel comps Figure 2: Iron Ore & Steel comps (based on CS forecasts) Steel Producers Key valuation metrics Share price Target price Return to TP Rating Lead Analyst NPV Price / NPV Earnings multiples EPS FY10 EPS FY11 EPS FY12 PE FY10 PE FY11 PE FY12 Price/cash earnings FY10 Price/cash earnings FY11 Price/cash earnings FY12 EV/EBITDA (fixed) FY10 EV/EBITDA (fixed) FY11 EV/EBITDA (fixed) FY12 Cashflow multiples FCF per share FY10 FCF per share FY11 FCF per share FY12 FCF yield FY10 FCF yield FY11 FCF yield FY12 Dividend yield FY10 Dividend yield FY11 Dividend yield FY12 Balance sheet Gearing (ND/ND+E) (FY10) Price / book value (FY10) Market cap Net debt (FY10) (negative = net cash) Equity EV FY11 Sales by product Steel .7% 3.0x 3.9% 0.0 0.6% 23.3 1.5 4.7 46.90 -1.24 0.0% 0.2 6.351 Raw Materials Iron Ore AGO FMG 2.4 5.0% 0.4% 5.5 -37.1 3.0% -31% 1.7% 7.0 6.6% 37.Lump Other Units A$/sh A$/sh % BSL 2.6x 3.8 6.500 0% 0% 0% 0% 40% 60% 0% OST 2.4 118.0 4.5 5.42 -2.13 3.15 0.00 29% O Slifirski 27.Fines Iron Ore .1 8.55x 5.1% 3.600 2.85 0.Fines Iron Ore .8% 6.4 0.7 13.001 7.12 0.0% -149% 2.400 595 3.39 10.3 14.21 3.769 14.354 3.Ferrous Scrap .950 0 41.3 19.4% 5.6% 7.11 22.0 -0.2x 12.12 3.2 7.8 40.flat products Steel .7 3.6 9.403 2.7 7.35 -11.27 1.150 0 3.4 7.5 0.0 20.6 3.6x 999 -232 387 768 20.0% 14.801 1.5 223.00 34% O Slifirski 3.3 0.7 11.1 3.16 0.73 78% O Slifirski 3.000 8.0% 7.4 9.3 3.80 -3.24 0.0x 3.1 5.

3 35 784 31 11.2 1.AX TFE.503 356 164 45 108 6.1 1.9 33.M.3% 328 3.9 2.1 0.9 0.68 OUTPERFORM 1.8% 447 1.6 12.3 25 57.617 56.AX GRR.0 36 43.1% 791 23.94 0.1 OUTPERFORM UNDERPERFORM OUTPERFORM 38.5% 230 111 19.6 105.AX CFE.311 1.6 2108.996 33.3 1.5 5.0% 937 1.528 42.0 2.954 2.5% 5 40 53.6 12.9 5.88 3.1% 9.L AQA.107 708 178 143 1.7 4.425 179 55 300 43 126.8 2.9 0.6% 214 16.358 141 593 107 310 135 60 558 91 203 614 3.7 0.7 4.8 0.0 5.7% 74 1.414 744 22.0% 26 371 57.4 89 52.19 1.3 12.7 1.4 0.6 3.48 0.AX RVR.1 2.39 OUTPERFORM 84.259 35.5 4.4 4.8 2.466 38.03 0.8% 1 387 31.229 29.861 5.39 7.6 0.45 1.6 0.73 1.7 0.0 84.35 6.AX RHI.61 0.AX VALE WPG.1% 407 13.1 22.7 140 52.47 1.52 0.9 -1.7 -73.5 4.8 0.4 83.2 PE 12m 7.91 OUTPERFORM OUTPERFORM 6.0 9. Credit Suisse estimates 01 July 2010 4 .3 2.7 0.4 11.5 25.5 2.7 38.7% 112 148 59.0 3.4 43.7 0.7 221.4 43.449 2.2% 501 0.64 0.0 6.AX MIN.8 6.4 25.1 7.965 17 5.353 52 116 4 104.5 2.2 0.AX ARH.332 156 44 69 607 860 171 130 2.0 105 61.2 1.4 0.5 5.6% 651 10 55.0% 1.6 3.78 0.5 31.9% 1.4 0.3 5.7 5.3 5.35 48.2 11.1 3.5% 16 24 55.0 205 54.4% 193 6.4 22.5 39.L BHP.099 2.52 0.079 435 3.7 4.0 48.AX BCI.16 21.55 0.AX CXM.4 0.AX GBG.9 8.9% 675 4.147 795 41.185 1.8 0.98 6.00 OUTPERFORM 3 7.8% 65 38.4 2.66 1.AX AGO.5% 74 1.3 48.0% 139 10.2 3.3 0.9 1.230 33.2 0.7 4.7 387 57.2 3.7 -2.8% 224 8.0 2.4 0.5 3.AX MDX.1 10.8 1.L FMG.6 0.8 4.3 17.8 23.0% 199 57.9% 452 5.8% 715 341 9.AX OST.3 3.11 0.4 7.4 7.5% 15 277 56.7 7.67 Rating SP US$ 0.1 44.487 2.AX RIO.AX IRD.0% 59.46 0.1 0.AX FRS.7 4.4 Hematite Magnetite Magnetite EV / Resv (t) Fe (Mt) Ore (mt) % Contained Ore (mt) % Contained Fe Equiv Fe only 423 17.2 25.8% 847 25. I & I EV / Resc (t) Fe Equiv Fe only 0.5 2.8 2.71 5.4 2.88 1.NS NFE.4 43.6% 8 22.748 35.AX CUL.9 Mkt Cap US$m 10 47.0 5.8 0.1 24m 6.4 2.567 28 16 41 137 2.3% 62 1 54.2% 65 234 40.5 51.2 21.8% 22 14 57.0% 612 9.5 10.5 4.2 0.4 6.4 1.5 268 1.AX PLV.AX BZM.8 0.7 33.0 Source: Bloomberg (for Consensus forecasts) Company data.4 23.AX GIR.9 20.04 0.4 43.AX CLF CAS.452 30.695 1.05 56.965 292 1.2 4.2 54 49.1 4.710 264.AX AAL.38 0.3 23.1 0.5 1.AX SDL.3 28.4 3.0 5.7 3.3 1.187 55 Reserves (contained Fe) Hematite Fe (Mt) 264 21 10 1.7 0.3 21.28 0.52 Trading SOI m 2.8 7.9 0.4 4.168 830 85 116 338 165.0 6.1% 87 157 774 42.1 2.3% 61.6 0.7 10.93 2.7% 3.783 175 3.3 56.6 7.6% 58.AX CAZ.8 2.42 1.0 0.5 1.7% 299 7 58.8 3.5 1.45 0.AX FXPO.3 28.6 7.0 7.8 1.42 0.34 2.1 17.4 1.7 35 112 58.4% 21 220 28.49 0.9 2.400 29.68 3.7 -13.9 3.08 OUTPERFORM 932 -20.75 0.2 23.6 400 57.8 1.3% 46 754 39.0 0.5 1.2 8.8 0.7 10.AX IFE.4 17.319 322 474 442 84 527 3.0 -142.81 5.9 2.9% 1.6% 57 1.1 0.7 EV/EBITDA 12m 24m 4.2 6.AX MGX.5 41 449 31.7 1.AX BRM.8 5.3% 13 26 55.4 2.AX NMDC.605 31.AX IOH.0 0.9 3.7% 25 3656.AX GWR.3 0.6 739.2 4.3 4.564 113 4.7% 5.31 1.093 32.9 12.2 -88.445 332 3.2 5.024 39.2 1.6 -31.64 31.4% 122 42 58.57 0.AX SESA.493 Resources .6 7.11 OUTPERFORM 5 599 3.14 2.299 6.AX TP US$ 54.4 102 55.9 41.43 0.5 3.0BAustralian Iron & Steel Review Global Iron Ore comps Figure 3: Global Iron Ore comps (Consensus forecasts) Identification Company Admiralty Resources NL Anglo American Aquila Resources Ltd Atlas Iron Ltd Australasian Resources BC Iron Bellzone Mining BHP Billiton Brockman Resources Cape Lambert Cazaly Resources Limited Centrex Metals Limited Citic Pacific Mining Cliffs Natural Resources Crusader Resources Cullen DMC Mining FerrAus Ferrexpo Fortescue Metals Group Gindalbie Metals Ltd Giralia Golden West Resources Limited Grange Resources Iron Ore Holdings Limited Iron Road Limited Ironclad Mining Mindax Limited Mineral Resources Ltd MMX Moly Mines Mount Gibson Iron Ltd Murchison Metals Ltd NMDC Northern Iron OneSteel Pluton Resources Red Hill Iron Limited Red River RIO Tinto Sesa Goa Sphere Investments Limited Strike Resources Limited Sundance Resources Territory Iron Limited Vale Western Plains Resources Country Australia London Australia Australia Australia Australia Lonson Australia Australia Australia Australia Australia Hong Kong USA Australia Australia Australia Australia London Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Brazil Australia Australia Australia India Australia Australia Australia Australia Australia Australia India Australia Australia Australia Australia Brazil Australia Ticker ADY.6 452 173 56.5 7.7 0.2 -28.20 0.4% 68 230 6 59.152 135 74 53 146 161 473 157 1.380 10.0% 14 10.BO SPH.286 65.576 296 77 119 374 10 425 140 44.1 0.74 2.9% 38.4 4.0 0.50 1.6% 98 2.22 5.AX DMM.5 0.5 5.3 2.2% 62 569 35.6% 8 1.48 0.7 100 13 61.8% 157 497 354 54.808 70 1.0 0.8 12.AX MMXM3 MOL.7 13.0% 94 25.AX MMX.6% 4 0.AX SRK.00 35.5 4.3 5.968 59.187 56.5 4.809 620 280 88 480 162 36 41 51 1.7 42.

8 3.8 3.7 4.8 4.0 7.6 7. Company data. Credit Suisse estimates Figure 5: Consensus EV/EBITDA 12/24 mth forward 24 mth fwd EV/EBITDA .3 4.4 4.6 4.0 4.7 5.4 31.5 3.2 3.4 3.3 5. Credit Suisse estimates Source: Bloomberg.0 7.7 Source: Bloomberg.0 7.5 4.2 3.9 25.4 6.0 4. Credit Suisse estimates 83.8 51.5 4. Credit Suisse estimates Figure 7: Magnetite Resource grades Magnetite & Itabirite Resource Grades Entreprise Value / EBITDA Source: Bloomberg.0 Anglo American BHP Billiton Northern Iron Atlas Iron Ltd Cliffs Natural Resources BC Iron Mount Gibson Iron Ltd Grange Resources 2.4 7.3 4.6 3.1 7.2 5.5 1.5 Source: Bloomberg.8 20. Company data.5 12 mth fwd PER 12.0 Murchison Metals Ltd MMX Mineral Resources Ltd BHP Billiton RIO Tinto Vale Anglo American OneSteel Fortescue Metals Group Atlas Iron Ltd Cliffs Natural Resources Ferrexpo Mount Gibson Iron Ltd Northern Iron BC Iron Grange Resources 1.5 39.4 3.0 23.3 5.1 2.3 5.8 4.4 8. Company data.% Fe content PER (x) 10 12 14 16 18 0 2 4 6 8 Aquila Resources Ltd Western Plains Resources 4.5 2.5 3.4 1.3 8.7 7.6 4.7 6.4 2.2 Fortescue Metals Group 12 mth fwd EV/EBITDA 0BAustralian Iron & Steel Review 01 July 2010 5 Figure 6: Hematite Resource grades Figure 4: Consensus PER 12/24 mth forward 48% Price Earning Ratios 50% 52% 54% 56% 58% 60% 62% 56.2 6.0 2.3 6.0 5.9 Mount Gibson Iron Ltd Gindalbie Metals Ltd Sundance Resources BHP Billiton Sesa Goa Golden West Resources Limited RIO Tinto Mineral Resources Ltd Moly Mines Territory Iron Limited OneSteel Aquila Resources Ltd Centrex Metals Limited Red Hill Iron Limited Iron Ore Holdings Limited SinoSteel Midwest Corporation Ltd Strike Resources Limited BC Iron Anglo American FerrAus Fortescue Metals Group Kumba Atlas Iron Ltd Brockman Resources Cape Lambert DMC Mining Cullen Hancock Prospecting Mindax Limited Giralia Ferrexpo Cazaly Resources Limited Murchison Metals Ltd MMX Hematite Resource Grades 24 mth fwd PER % Fe content 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% EV/EBITDA (x) 10 0 1 2 3 4 5 6 7 8 9 LKAB Brockman Resources Grange Resources OneSteel MMX BHP Billiton Atlas Iron Ltd Sundance Resources Gindalbie Metals Ltd Western Plains Resources Citic Pacific Mining SinoSteel Midwest Corporation Ltd Anglo American Ferrous Fortescue Metals Group Sphere Investments Limited Mindax Limited Australasian Resources Northern Iron Murchison Metals Ltd Ferrexpo Bellzone Mining Ironclad Mining Iron Road Limited Admiralty Resources NL Murchison Metals Ltd Aquila Resources Ltd Western Plains Resources MMX Mineral Resources Ltd Vale Ferrexpo OneSteel RIO Tinto 1.2 2.9 5.2 4.6 12. Company data.4 3.9 11.5 12.1 2.5 48.2 6.8 4.9 84.

0 8.KS 005490.3 8.0 12.42 0.13 0.8 5.8 5.2 6.328 12.90 18.7% 8.1% 1.9% 3.00 2.9 4.5% 7.03 1.4 6.8 12.1% -6.150 20.575 16.8 12.114 6.4 7.01 1.2 8.4 4.4 5.08 1.6 FY12 7.0 4.6 7.6% 13.4 7.8 7.4% 11.0% 0.271 4.4% 7.93 1.6% 2.L HK1q.BO JIND.219 17.0 4.4% 9.1 10.0% 3.1 7.9% 1.0% -27.7% 2.0BAustralian Iron & Steel Review Global Steel comps Figure 8: Global Steel comps (all figures are CS forecasts.11 39.35 0.1 7.1 5.63 13.6 7.4% 15.1% -14.6 2.8% 5.) FY11 10.8% 4.4 3.8 4.2 8.3 5.0 7.00 21.7% 7.58 0.2% 0.L MTL.193 766 1.4% 2.05 33% 34% 33% 23% 25% 45% -2% 16% 66% 30% 56% 13% 36% 36% 31% 21% 24% 14% 13% 21% 37% 22% 27% 29% 40% 38% 24% -67% 29% 21% -12% 42% 69% -50% 72% 32% 54% 42% 44% 60% 41% 57% Gearing 16% 25% 27% 01 July 2010 20% 29% Source: Company data.02 1.2% 7.49 0.94 3.9 8.9 5.L CHMFq.0% 7.6 9.9% -5.92 1.83 1.84 2.N NLMKq.7% 52.9% 17.68 1.53 63.3% 7.3% 9.8% 10% 7% 8% 5% 8% P / Book FY11 0.3 10.9 7.BO 5486 5411 5406 5401 5405 5423 001230.4% 12.6% 4.12 27.0% 5.0% 9.060 787 12.5% 0.9 9.1 15.02 74.99 0.2 5.0% 0.6 8.7 3.34 1.6 8.0 5.5% 18.7 7.8 8.36 0.9% 7.7 5.7% 8.37 36.3% 11.5% 9.8% 5.077 4.6% 0.7 5.2 8.47 3.9 11.0% 0.953 41.0% 2.4 7.37 0.7% 3.3% 2.9% 2.4% 10.14 10.6 6.93 0.2 11.2 9.0 3.471 11.6% 12.4 14.0 8.6% 1.2% 12.18 FY12 0.55 1.0% 11.85 1.3% 20.8% 1.2 3.6% 5.9 6.03 15.1% 5.26 17.9 10.46 0.0 6.39 23.2 8.1 107.9% 0.1% -16.0 7.7 9.4% 4.1 5.2 14.3% 5.5 6.34 0.00 0.0% 0.7% 6.2 6.4 3.0% 0.35 18.56 0.4 10.0 8.53 22.80 25.61 0.9% 22.98 1.1 5.8% 13.6% 11.35 15.TW 2002.8 5.8 7.91 0.6 30.00 50.6 14.9% 0.60 3.6% 0.84 44.693 9.5 8.95 0.00 R 38.43 0.3% R 0.9 7.KS 004020.0% 2.80 1.5 10.07 38.2% 6.8 3.4 4.4 10.1 9.3% 7.8 6.3 10.L EREGL.4 6.1% 4% 5% 0% 10% 3% 8% FY12 11.0% 2.9 9.90 0.3 10.KS MAGNq.0% 4.35 4.6 6.7 9.63 0.2 4.6 3.6 6.0% 13% 11% 0% Div yield FY11 5.8 PER (consen.8 6.22 0.F VLLP.DE SSABa.0% 5.0% 5.01 0.91 1.7 9.7% 3.3 6.7% 1.6% 0.48 1.0% 45.5 8.17 1.9 9.BO TISC.3% 3.0 7.6% 21.48 35.3% 4.L TRMKq.7 2.3 6.3 9.1% 6.9 5.2% 9.8% 8.2 5.5% 4% 4% 4% 2% 3% FY12 7.1 9.AX OST.9% 6.0 8.36 1.0% 23.9% 7.7% 6.0% 3.5% 14.06 3. unless noted otherwise) Company Name Bluescope Steel OneSteel CSN Gerdau Usiminas Angang Baoshan Iron & Steel Maanshan Panzhihua New Steel and Vanadium Wuhan Acerinox ArcelorMittal Salzgitter SSAB Svenskt Stal Thyssen Krupp Vallourec Voest Alpine Stahl JSW Steel SAIL Tata Steel Jindal Saw Ltd Welspun Gujarat Stahl Rohren Hitachi Metals JFE Holdings Kobe Steel Nippon Steel Sumitomo Tokyo Steel Dong Kuk Hyundai Steel POSCO Magnitogorsk Steel TMK Evraz Mechel NLMK Severstal ERDEMIR Feng Hsin Iron & Steel China Steel Tung Ho Steel Enterprise AK Steel Nucor Tenaris Ternium U.HK 600019.VI JSTL.6% 2.7% 1.0% 6.8 11.2 6.4 19.3 4.1% R 9.9% 2.0% 5.10 1.5 5.36 1.242 3.97 1.5 14.0% 0.7 7.3 6.8% 10.9 8.4% 3.4 7.00 22.83 0.53 15.78 2.0% 1.14 32.773 1.45 27.64 1.5 16.2% 0.5% 14.7% 19.6% 0.5% 8.29 1.3% 27.85 10.7 5.0% 0.9 6.8 8.0% 15.2% 10. Steel Group BRIC Average (non-weighted) Asia-Pac Average (non-weighted) Europe Average (non-weighted) North America Average (non-weighted) Global Averages (non-weighted) Ticker BSL.SZ 600005.9 4.51 1.992 4.2 10.7% 3.4% 0.20 0.0% 8.4% 6.7 4.0% 0.5 7.9 5.1 5.7 7.2 FCF yield FY11 2.274 10.26 1.0 10.9 6.540 8.0% 25.29 1.1 5.4 10.0 11.1% 1.8% 12.00 33.60 0.194 1.1% 21.0% 5.56 4.7 6.1 9.66 25.8% 15.58 0.08 10.31 1.2 9.43 1.43 1.9 5.7 9.1% 12.85 27.939 4.64 158.8 10.23 391.54 1.1 12.05 1.7 3.0 8.3 14.6 9.75 42.00 2.3 11.3% R 21.1 20.77 1.2 5.9 19.1% 7.5 5.6 12.87 0.16 1.6% 10.60 18.0% 0.69 1.6 11.6 5.HK 000629.0 9.26 1.1 6.0% 0.393 3.1% 6.5% 4.93 0.185 1.87 1.0% 0.S.64 15.0% 0.0 8.6 9.21 174.4% 2.5% 4.5% 3% 3% 3% 1% 2% ROIC FY11 0.92 0.11 1.1% 16.7 7.74 0.93 0.7 FY12 3.8 FY12 7.663 3.42 2.3 10.5% 13% 9% 12% 7% 10% FY12 0.4 8.0% 5.801 15.5% 11.9 10.88 22.1 5.657 7.3 6.8% 1.81 1.5% 8.8 15.N SZGG.3 7.1% 0.1 6.1 10.81 12.1 4. Credit Suisse estimates 6 .01 1.0% 5.16 2.842 6.8% 22.8 5.0 76.1 4.0% 1.1% 4.9 5.0% 2.5% 8.2% 13.BO WGSR.2 3.7 9.3 13.80 0.19 1.1% 12.3% 9.16 3.0 6.889 1.0 4.8% 1.4% 0.9 7.AX CSNA3 GGBR4 USIM5 0347.00 32.23 1.11 3.1 7.1 7.7 6.0% 0.6% 2.2 5.981 3.1% 2.05 1.5% -10.8% 4.6% 0.0% 3.9 4.4 8.3 8.2 8.99 1.8 7.634 PER (CS fcst) FY11 11.4 6.60 60.1% 13.6% 10.72 0.360 21.6% 27.3% 11.TW 2006.78 1.0% R 0.0% 7.4 5.26 9.2% -4.0 4.9 4.5 6.4% 3.1 6.99 1.58 0.2 4.8% 4.00 24.7% 5.7% 1.92 0.ST TKAG.0% 1.0% 12.6 7.00 20.9 3.5 10.0% 11.74 16.94 29.9% 0.4 8.7% -8.3 3.7% 0.2% 4.9 6.29 1.23 554.4 13.6 9.52 14.50 1.14 1.5 9.1% 3.5 6.4% 7.6 6.945 5.82 2.9 10.6 CS mkt variance FY11 -9% -7% 29% -34% -26% -18% 28% -5% -6% 34% -18% 5% 16% 13% 35% 8% -2% -7% 1% 6% -12% 3% 29% -30% -17% -16% -19% -37% -8% 1279% 87% 42% -5% -3% 38% -4% 78% -22% 11% -47% -23% 77% 1% 121% -20% 44% FY12 -4% -16% -11% -57% 3% -27% -10% -11% 17% 17% 29% 29% 16% -23% -12% -12% -21% 1% 18% -35% -21% -21% 8% -50% -15% 650% -23% -17% -5% -45% -23% -30% 34% -13% 78% -32% 17% EV / EBITDA FY11 4.4 8.2 7.07 20.57 0.1 4.51 0.7 12.669 4.838 6.TW AKS NUE TS.104 9.70 1.2% 3.9% 3.8 7.00 75.0 3.7% 0.3 6.00 1.3% 6.9% 8.88 1.7 11.66 8.6% 0.41 1.4% 2.0 4.333 34.8 7.0 10.44 1.3 6.5% 4.5% 1.32 5.3% 3.0% 1.PA VOES.2 10.634 13.2% 4.324 18.9 5.9% 6.9% 28.0% 14.2% 11.N TX X Analyst Michael Slifirski Michael Slifirski Ivan Fadel Ivan Fadel Ivan Fadel Trina Chen Trina Chen Trina Chen Trina Chen Trina Chen Alessandro Abate Michael Shillaker Alessandro Abate Alessandro Abate Michael Shillaker Michael Shillaker Alessandro Abate Neelkanth Mishra Neelkanth Mishra Neelkanth Mishra Anubhav Aggarwal Anubhav Aggarwal Shinya Yamada Shinya Yamada Shinya Yamada Shinya Yamada Shinya Yamada Shinya Yamada Hocheol Kim Hocheol Kim Hocheol Kim Semyon Mironov Semyon Mironov RESTRICTED Semyon Mironov Semyon Mironov Semyon Mironov Semyon Mironov Sidney Yeh Sidney Yeh Sidney Yeh David Gagliano David Gagliano RESTRICTED Ivan Fadel David Gagliano Region Australia Australia Brazil Brazil Brazil China China China China China Europe Europe Europe Europe Europe Europe Europe India India India India India Japan Japan Japan Japan Japan Japan Korea Korea Korea Russia Russia Russia Russia Russia Russia Russia Taiwan Taiwan Taiwan USA USA USA USA USA Rating OUTPERFORM OUTPERFORM OUTPERFORM OUTPERFORM NEUTRAL OUTPERFORM OUTPERFORM UNDERPERFORM UNDERPERFORM NEUTRAL UNDERPERFORM OUTPERFORM NEUTRAL NEUTRAL OUTPERFORM NEUTRAL OUTPERFORM UNDERPERFORM UNDERPERFORM UNDERPERFORM UNDERPERFORM OUTPERFORM OUTPERFORM UNDERPERFORM UNDERPERFORM NEUTRAL NEUTRAL OUTPERFORM NEUTRAL UNDERPERFORM OUTPERFORM OUTPERFORM NEUTRAL NOT RATED OUTPERFORM NEUTRAL OUTPERFORM UNDERPERFORM NEUTRAL NEUTRAL OUTPERFORM NEUTRAL OUTPERFORM NOT RATED OUTPERFORM NEUTRAL SP (US$) TP (US$) 1.9% 8.7 8.6 6.5 8.1 7.4 5.6 19.1% 9.5 7.6 4.0 9.5% 0.0% 10.31 34.9 4.1 7.038 3.6% 1.6 6.4 4.0% 6.5 7.54 1.4% 7.1 12.0% 12.35 11.7 7.IS 2015.5% 3.8 5.7 6.9 9.1 9.7% 17.1% 10.1% 0.3 6.4 5.525 10.0% 3.6 12.MC MT.8 15.00 56.9% 15.07 1.81 1.8 9.3 7.BO SAIL.7 12.4% 15.037 3.3 5.5 7.39 1.00 Upside % 78% 34% 57% 52% 17% 39% 68% -18% -42% 62% 0% 59% 25% 14% 69% -9% 31% -33% -12% -17% -18% 53% 67% -8% -24% -8% 11% 52% 14% -15% 42% 82% 47% 104% 28% 110% -11% 50% 16% 90% 82% 30% 17% 43% 30% 20% 42% 43% 30% Mkt Cap (US$mn) 3.55 7.26 2.9% 3.1 7.9% 2.55 15.9 7.5 9.8% 4.768 15.3 7.3 5.6 8.SS 0323.1 7.9 8.6% 7.2% 12.19 0.4 11.4 5.05 0.5 5.9% 11.SS ACX.5 14.6 14.7% 2.1% 1.0 13.492 10.113 8.173 3.1 9.2 10.70 1.54 0.832 21.24 13.47 1.5 3.9% 4.0 10.7 10.0 6.00 R 40.6 5.6 4.

Steel Group Angang Jindal Saw Ltd POSCO ArcelorMittal Tung Ho Steel Enterprise Dong Kuk Mechel Maanshan NLMK Welspun Gujarat Stahl Rohren Wuhan CSN Baoshan Iron & Steel Magnitogorsk Steel Severstal AK Steel 0BAustralian Iron & Steel Review 01 July 2010 7 Figure 9: EV / EBITDA Source: Company data. Credit Suisse estimates 2010 EV/EBITDA 2011 EV/EBITDA EV / EBITDA (Credit Suisse forecasts) .S.EV / EBITDA (x) 10 x 12 x 14 x 16 x 18 x 20 x 2x 4x 6x 8x x Sumitomo Acerinox Hyundai Steel Tata Steel Vallourec TMK Hitachi Metals SSAB Svenskt Stal Nippon Steel Tokyo Steel China Steel Panzhihua New Steel and Vanadium Gerdau OneSteel JSW Steel Bluescope Steel Ternium Nucor Kobe Steel JFE Holdings Voest Alpine Stahl Feng Hsin Iron & Steel Thyssen Krupp Usiminas Salzgitter ERDEMIR SAIL U.

LKAB's president Lars-Eric Aaro and Kiruna's municipal commissioner Kenneth Stalnacke together fired the first round to inaugurate LKAB's first new iron ore mine in 50 years.8% from a month ago. Iron Ore Holdings Rio Tinto said in November it was evaluating Iron Ore’s Iron Valley deposit in Western Australia’s Pilbara region and may buy all or part of the project.000 tons at the end of May 2010. Swedish state-owned resources and mining company LKAB announced May 27 that Europe's biggest iron ore project.224. As a result.7 percent in the July-September quarter from a year earlier as relatively solid demand at home will help offset a likely slowdown in exports. to sell the 30% stake in Vale Oman Pelletizing Company LLC (VOPC).5% from a month ago. The facility is to start operation at the beginning of 2011.000 tons or 3. coking coal and gold mining. Trade and Industry said. the top two Russian producers said 29 Jun The Australian Australia 29 Jun TEX Iron ore Europe LKAB 29 Jun TEX Iron ore Oman Vale 29 Jun 29 Jun Metals Insider Metals Insider Steel Steel Europe 29 Jun Metals Insider Steel Japan Japan's crude steel output is expected to grow 10. an increase of 57. Asian stainless steel producers may gain market share in Europe as domestic producers are less able to react quickly to falling alloy surcharges and sluggish demand Severstal Severstal is planning to make further investments in Africa and will focus on iron ore. according to Chinese customs statistics made available in Tokyo.01 July 2010 Company & Industry News and Headlines Figure 10: Company & Industry News and Headlines Date Source Commodity 30 Jun Steel Business Iron ore Briefing 30 Jun TEX Coal Location Japan Company Mitsui & Co & Credit Suisse Headline Japanese trading house Mitsui & Co. general director Alexei Mordashov said at Metal Bulletin’s 8th Russian Steel Summit. down 59. Japan’s ferrous scrap exports totaled 446. the American Iron and Steel Institute in Washington reported Riversdale On 24th June.S. The railway is for export of metallurgical coal produced at Tavan Tolgoi deposit to the Asian Region through Russia. down 78. a company wholly-owned by the Government of the Sultanate of Oman.5% or 45.O.3% from a year ago. Metals Bulletin. Its new target is to reach 50Mtpy of capacity by 2012. up 221. Chinese steel mills are expected to abandon iron ore supply contracts within the next three months as index-linked contract prices are set to be substantially higher than spot market prices. Brazilian resources company Vale announced May 29 that it has entered into agreement with Oman Oil Company S. including world leader ArcelorMittal .year fall for three consecutive months. Resources Ltd. of Canada announced to have started construction of coal handing facility (CHF) at the existing Energy opencut coal mine Ovoot Tolgoi in South Gobi of Mongol. for US$ 125 million. Steel production in the US fell 2. the trade ministry said. and 66Mtpy by 2015 China’s Ministry of Commerce announced antidumping duties of between 6. the swap will be settled against the reference price for 62% Fe iron ore provided by The Steel Index (TSI) Canada 30 Jun TEX Steel Japan 30 Jun TEX Scrap ferrous Japan SouthGobi SouthGobi Energy Resources Ltd. WISCO buys out 40 percent interest in Zambeze Project from Riversdale and acquires 8 percent shares of Riversdale.100km railway from the Tavan Tolgoi coal deposit in South Gobi to the border with Russia. according to announced trade statistics from the Ministry of Finance Australia's new PM is working to meet a Friday deadline to announce initial changes to the proposed Resources Super Profits Tax. when they decreased by 35.0%. The Mongol parliament has recently approved the construction of a 1. falling short of 100% for the first time in two months. the Ministry of conomy. Riversdale Mining Ltd. According to Credit Suisse.7% from a month ago.1% and 26% on imports of certain steel fasteners from the European Union. but miners should not count on wholesale changes to plans pushed by her predecessor. analysts said. (OOC). when the nation’s inventory.024 million tons (Mt). according to the Japan Iron & Steel Federation. Australia’s new prime minister Julia Gillard offers a more consensual approach to mining tax reform. for operating a cartel Russian steelmakers expect U.000 st in the week ended June 26.000 tons in May 2010. According to the foreign trade statistics (preliminary) for May 2010 announced by the Japanese Ministry of Finance June 24. steel demand to support prices for the rest of the year despite recent weakness in China and a soft Eurozone economy. Mining Weekly. European Union antitrust regulators will this week fine steel companies. Company data 0BAustralian Iron & Steel Review 8 . China’s ferrous scrap imports totaled 360.C. iron ore imports into the country during the period were 11. Iron Ore Holdings has fallen to a six-month low in Sydney trading after saying it’s so far failed to reach a sales agreement with Rio Tinto Group.8% year over year. TEX Report. with first coal expected in 2013-2014.000 tons in May 2010. Japan's crude steel output is expected to total 26. 29 Jun MB Steel China 29 Jun MB Steel Asia & Europe 29 Jun MB Steel Russia 28 Jun TEX Coking Coal Mongolia 28 Jun TEX Scrap ferrous China 28 Jun Company announcements Iron ore Australia 28 Jun 28 Jun Bloomberg Platts Steel Steel China China 28 Jun Platts Steel USA 25 Jun Company Coking coal announcement Mozambique 25 Jun TEX Iron ore Japan 24 Jun MB Australia Source: AFR. Metals Insider. of Australia announced to have reached an agreement on joint promotion of Zambeze metallurgical coal project in Mozambique with Wuhan Iron and Steel Group Corp. indicating an increase for two consecutive months. when they decreased by 35.82 million tonnes during the quarter after a survey of manufacturers.shipment ratio of ordinary steel products stood at 97. The Government plans to invite international mining companies to tender for development rights and to take a 49% interest in the deposit by the end of this year. exporters and steelmakers. Baosteel Baosteel is scaling back its 2012 expansion targets by 38%. Gruvberget in Svappavaara. Japan’s ordinary steel stocks held by steelmakers and wholesalers totaled 6.6% from a year ago. The tariffs are effective from June 29 for five years.A. standing at a low level for the first time in one year and seven months since October 2008. is now open. has signed an iron ore swaps agreement with Credit Suisse. (WISCO) of China. indicating a yearon. The mining industry has made it clear it still wants evidence of changes to the resource super-profits tax by the end of the week or the moratorium on the "advertising war" will be lifted.

TEX Report.5 23.399 10.5% Fe (MB) Iron ore concentrate 66% Fe wet Coal Spot coke Hard Coking Coal PCI Ferrous Scrap East Asia import Domestic Heavy scrap Heavy Melt Scrap No. The Steel Index.6 US$/t of steel 0.5 -48% -21% -36% -34% 3.Europe CVRD blast furnace pellet .695 1.43 US$/t of steel 0. 1 Shredded No. 1 Shredded Heavy Melt Scrap No. 1 (TEX) Heavy Melt No.9 150 143 -1% 7% 95% 96% 75% 113% 94% -20% -10% 67% -3% 17% China (export) FOB Australia FOB Australia US$/t US$/t US$/t 470 220 170 470 220 170 0% 0% 0% 465 220 170 1% 0% 0% 495 125 85 -5% 76% 100% 80:20 mix East Asia China Turkey import CFR Turkey import CFR US export US East Coast export FOB US East Coast export FOB US East Coast export FOB US$/t US$/t US$/t US$/t US$/t US$/t US$/t US$/t 365 434 315 319 370 270 275 274 368 432 338 343 370 313 318 285 -1% 1% -7% -7% 0% -14% -14% -4% 410 432 361 365 410 353 358 285 -11% 1% -13% -13% -10% -23% -23% -4% 455 431 443 448 454 398 403 302 -20% 1% -29% -29% -19% -32% -32% -9% Capesize Handysize Capesize Capesize Western Australia to China Brazil to China Points Points US$/t US$/t 2. 2 bundles Freight Baltic Freight Index Baltic Freight Index SSY Spot Iron Ore Freight SSY Spot Iron Ore Freight Steel Hot Rolled Coil Cold Rolled Coil Slab Hot Rolled Coil Billet Rebar Hot Rolled Coil Rebar Steel making spread monitor Iron Ore Coke Scrap Total Raw material cost HRC (East Asia) HRC / Raw material spread Category Fines Lump Fines Lump Lump Pellet Fines Fines Fines Fines Fines Concentrate Location FOB Pilbara (Australia) FOB Pilbara (Australia) FOB Pilbara (Australia) FOB Pilbara (Australia) FOB Tubarão FOB Tubarão FOB Ponta da Madeira CFR China CFR China CFR China CFR China Ex-works Units US$/t US$/t USc/dmtu USc/dmtu USc/dmtu USc/dmtu USc/dmtu US$/t US$/t USc per 1% Fe US$/t US$/t 169 200 218 190 169 243 174 104 139 11.1 150 167 1% 1% 0% 0% 0% 0% 0% 0% -3% -11% -3% 0% 1 mth ago 31 May $/t % 177 205 218 194 169 243 174 102 145 14.7 169 170 -5% -2% 0% -2% 0% 0% 0% 2% -4% -21% -14% -1% 3 mths ago 31 Mar $/t % 170 187 112 97 97 114 90 129 155 6.1 24.477 13.01 July 2010 Commodity Prices . Metals Bulletin.6 146 168 1 week ago 24 Jun $/t % 168 199 218 190 169 243 174 104 143 13.8 22.713 1.7 33.15 US$/t of steel US$/t of steel US$/t US$/t Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 186 212 211 240 296 270 195 203 203 212 195 199 50 58 57 68 70 62 431 473 470 520 560 531 530 580 570 695 710 643 99 107 100 175 150 111 Source: Bloomberg.0 2.301 1. Steel Business Briefing.Europe CVRD Carajas fines (CJF) .217 1.Japan Indian spot fines 58% Fe (TSI) Indian spot fines 62% Fe (TSI) Implied TSI quality premium per 1% Fe Indian spot fines 63.3 -18% -17% -13% -9% Flat Flat Flat Flat Long Long Flat Long US (export) US (export) East Asia (import) East Asia (import) East Asia (import) East Asia (import) China (export) China (import) US$/s ton US$/s ton US$/t US$/t US$/t US$/t US$/t US$/t Nov 09 167 169 48 384 515 131 660 793 590 610 513 555 635 559 675 793 590 610 505 560 605 558 -2% 0% 0% 0% 1% -1% 5% 0% 720 830 680 643 573 618 605 567 -8% -5% -13% -5% -10% -10% 5% -1% 660 760 615 695 600 620 608 575 0% 4% -4% -12% -15% -10% 5% -3% spot 234 201 55 490 610 120 Amount required 1.Historical Figure 11: Global Commodity Prices (Historical) Spot 01 Jul $/t Iron Ore Australian 62% Fe spot Australian 63% Fe spot Mt Newman high grade Hamersley lump CVRD standard sinter feed .3 1% -3% -8% -5% 5. Credit Suisse estimates 0BAustralian Iron & Steel Review 9 .205 9.165 8.

Credit Suisse estimates Latest thoughts from our colleagues on the London iron ore trading desk: ■ ■ ■ ■ Spot physical trading $5/t lower at $138 cfr China 62% fe.01 July 2010 Commodity Prices – Futures Figure 12: Credit Suisse Iron Ore futures 180 160 140 US$/t US$/t Historical Fwd Curve 29/06/2010 120 100 80 60 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Figure 13: NYMEX HRC futures 750 700 650 600 550 500 450 400 350 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Historical Fwd Curve 29/06/2010 Source: Credit Suisse. Bloomberg. SGEX Source: NYMEX. Platts. falling $16 on the week Cal11 IO swaps giving away $6 to $118 Key concern for iron ore forwards over coming week is a sustained Chinese equities/property sell-off and reduced forecast growth for steel production Figure 15: LME Billet Futures 650 600 550 600 US$/t US$/t 500 450 400 350 300 450 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Historical Fwd Curve 26/05/2010 Fwd Curve 29/06/2010 250 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Historical Fwd Curve 29/06/2010 Fwd Curve 28/03/2010 Fwd Curve 24/09/2009 Figure 14: SHFE Rebar futures 700 650 550 500 Source: Shanghai Futures Exchange Source: London Metals Exchange Figure 16: Commodity News Sentiment Indicator (tracks Up / Flat / Down movements as listed over page) NEGATIVE news POSITIVE 100% 50% 0% -50% -100% 14 May 17 May 20 May 23 May 26 May 29 May 01 Jun 04 Jun 07 Jun 10 Jun 13 Jun 16 Jun 19 Jun 22 Jun 25 Jun 28 Jun Source: Business Speculator. although we are hearing reports of much bigger falls to come The front quarter has been hit hard on the back of poor forward freight bookings. Metals Bulletin. Steel Business Briefing 0BAustralian Iron & Steel Review 10 . TEX Report. Q3 last $124.

because price expectations from buyers were around $20/mt less. Platts einforcement bar price assessment for B500/BS4449 equivalent material moved up Tuesday by $10 to $515/mt FOB Turkey on an actual weight basis.00/LT for No2 bundles as well.Billet China Down 28 Jun MB Steel . according to SBB. Bookings for hot rolled coil imported into the Persian Gulf from China and Russia have been booked at $570-580 per tonne cfr main Gulf port. The Platts assessment for 63. The Platts assessment for hot-rolled coil in the US market declined another $12. Platts. Turkish mini-mills have successfully passed on higher ferrous scrap costs to billet export consumers despite lacklustre demand. Owing to the deadlock.50/st Wednesday to a midpoint of $645/st exworks Indiana. The Platts assessment for 62%-Fe fines slipped 50¢ to $135/dry mt CFR North China. based on firm bids. Spot iron ore prices for 63. Chicago. offers and transactions reported to Platts. Steel Business Briefing 0BAustralian Iron & Steel Review 11 .50 from last Friday. including tax. Mainstream transaction prices for heavy scrap in China have been stable at 2.Ferrous Turkey US$470-480/t Up 23 Jun Platts Steel USA US$645/st Down 23 Jun MB Scrap . up from the previous price of $480-500 fob last week.rebar USA US$585/t Down 29 Jun Platts Coking coal Asia US$202/t Flat 29 Jun MB Steel . as Indian and Chinese buyers blighted by fragile domestic steel markets reign in spot purchases. and Philadelphia. Market specialised newswires have recently indicated that Baosteel accepted a price of US$147/ton FOB for Q3 iron ore contracts from Australian miners.rebar Turkey US$515/mt Up 29 Jun Platts Steel . up by as much as $20 per tonne from the previous booked price of $460-470 fob last week. however. Platts held its regional rebar assessment steady at a midpoint of $515/mt FOB Turkey basis The Platts price assessment for US-made rebar dropped in mid. Transaction prices of HR coil exports to the Middle East are forecast to rebound if local customers opt to push negotiations before Ramadan on their imports of HR coils for August-September shipments in the wake of dwindling offers from China’s steelmakers. Baosteel denies having accepted Q3 iron ore contract prices. Metals Bulletin.5/t 29 Jun Platts Steel .A limited number of deals were concluded. 29 Jun Platts Iron ore China US$141.83/LT for No1 HMS as of June 21 when it remained unchanged at $274. while the Chinese import price fell $3 to $205/mt CFR Qingdao.Ferrous USA US$320/t Flat 22 Jun Metals Insider Steel South Korea Up 22 Jun TEX Steel . tracking lower steel prices.HRC Persian Gulf US$580-590/t Up 28 Jun MB Iron ore China US$147/t Down 28 Jun MB Steel . This corresponds to 23% q/q price increase. Ex-works billet prices in Hebei province fell more than 100 yuan ($14) per tonne to 3. up $10 from bookings at $570-580 cfr last week.5/63%-Fe fines slipped 50¢ to $141. for nearly a month. respectively. according to CIS mill and trader sources.000 yuan ($426-440) per tonne. MB was told.HRC China US$640-650/t Up 25 Jun MB Scrap . South Korea’s integrated steelmaker Posco professes to execute domestic price increases of various steel products by an average 6% from July 1. Turkish steel mills are moving in to buy ferrous scrap from overseas sources at higher prices and lifting their rebar export offers accordingly. while the Chinese import price slipped by $1 to $204/mt CFR Qingdao Very small bookings of hot rolled coil were made at $580-590 per tonne cfr Perisian Gulf. The composite price of US ferrous scrap remained unchanged at $319. The same material was on offer for $570-640 cfr two weeks ago.Ferrous China US$426-440/t Flat 22 Jun Platts Coking coal China US$203/t Down 22 Jun SBB Iron ore China US$147/t Up 22 Jun TEX Scrap . according to market sources. however. Small tonnages of Turkish billet has been sold at $470-480 per tonne fob main Turkish port for June production and delivery. CIS rebar currently stands at $500-510 per tonne fob Black Sea.June by $25 to $585/st ex-works Southeast mill and there has been no improvement since The continued stand-off between sellers and buyers of hard coking coal in the Asia Pacific region meant there was little movement in spot prices.9% from last Friday to close at 4. Offers for Turkish rebar inched up to $530-$540/mt FOB Turkey. Spot hard coking prices are falling slowly. market participants said.Rebar Turkey US$515/t Up Source: Business Speculator.HRC Middle East Up 22 Jun MB Steel .rebar CIS US$500-510/t Up 25 Jun MB Steel .50/dmt CFR North China.5% Fe Indian iron ore slipped to $146-148 per tonne cfr on Monday. according to Turkish market mill and trader sources. and the September hot rolled coil contract on the Shanghai Steel Exchange fell 0.01 July 2010 Commodity Price News and Headlines Figure 17: Commodity News and Headlines Date 29 Jun Source Platts Commodity Iron ore Location China Price US$135/t Change Headline Down Prices of seaborne iron ore bound for China continued to fall as lower offers emerged in a market almost devoid of any buying interest from steelmakers and traders. down around $1. respectively.900-3. Chinese exporters are raising hot rolled coil offers by around 7% for August shipments to offset the removal of a 9% rebate from July 15. recent deals are settled at US$330-335/MT C&F for a mix of 80% No1 HMS/20% No2 HMS and US$335-340/MT C&F for the shredded grade. Based on these developments. China’s domestic ferrous scrap prices could fall soon as the removal of some steel export rebates puts pressure on steel output and dampens scrap demand.HRC Persian Gulf US$570-580/t Down 22 Jun Platts Steel . CIS rebar export prices have increased by $30 for July production and delivery. price increases that will take effect in upply contracts from the July-September quarter. although there were no reported bookings at that level. Turkish traders told MB. and Australian producers have not dropped their offers. Spot availability still remains relatively tight. TEX Report. Local Chinese media stated that Baosteel vice-president denied any settlement so far With a weak market for imports of containerized ferrous scrap into Taiwan. Down Prices of seaborne iron ore bound for China continued to fall as lower offers emerged in a market almost devoid of any buying interest from steelmakers and traders. Platts lowered its Australian export price by $2 to $203/mt FOB Australia for 64% CSR. 25.5% VM material.Ferrous Taiwan Flat 22 Jun TEX Scrap . according to information made available in Tokyo. Platts maintained its reference price for Australian HCC exports at $202/mt FOB Hay Point.165 yuan per tonne on Monday. while offers range from $550-$630 cfr. The price increases are intended to meet rising costs of Posco’s raw materials imports and widening price differences between what the company sells at home and imported steel products. The composite price indicates the average of delivered prices for steelmakers operating in Pittsburgh..500 yuan per tonne at the weekend.

OUTPERFORM [V]. N=Neutral. TP A$22. A$2.0 Ma r-1 2-M 0 ay -1 0 25 -M ar 25 0 7 -M ay -0 25 7 -J ul07 25 -S ep 25 0 7 -N ov -0 7 25 -Ja n-0 8 25 -M ar25 0 8 -M ay -0 8 25 -Ju l -0 8 25 -S ep -0 8 25 -N ov -08 25 -Ja n25 09 -M ar 25 0 9 -M ay -0 9 25 -J ul2 5 09 -S ep -0 9 25 -N ov -0 9 25 -Ja n-1 0 Closing Price Target Price Initiation/Assumption Rating O=Outperform. Disclosure Appendix Important Global Disclosures I.15) BHP Billiton Limited (BHP.AX Date 31-Aug-09 1-Sep-09 12-Oct-09 29-Oct-09 4-Feb-10 Closing Price (A$) 4.AX. A$1. NC=Not Covered 0BAustralian Iron & Steel Review 12 .AX FMG.9 Ma r-0 9 2Ma y-0 9 2Ju l. certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was. TP A$2.AX. and 26 for other companies mentioned.AX. OUTPERFORM [V]. UNDERPERFORM [V].65. 21.AX. See the Companies Mentioned section for full company names.73) Fortescue Metals Group Ltd (FMG. U=Underperform. Target Price and Rating Change History Chart for AGO.21 6 O 13 11 9 7 6 5 3 A$ 1 31-Aug-09 1-Sep-09 4 U4 N O 2Ju l -0 7 2-S ep -07 2-N ov -07 2Ja n-0 2-M 8 ar08 2Ma y.41 3. OUTPERFORM.00) Mount Gibson Iron (MGX. R=Restricted. A$66.35. A$3. A$37. TP A$45. 3-Year Price.0 8 2Ju l-0 8 2Se p08 2-N ov -08 2Ja n-0 2.57. Nathan Littlewood. is or will be directly or indirectly related to the specific recommendations or views expressed in this report.66.AX.0 9 2Ja n1 2. A$21.0 9 2-S ep -09 2No v.62.00) Sims Metal Management (SGM. U=Underperform.01 July 2010 Companies Mentioned (Price as of 30 Jun 10) Atlas Iron (AGO. TP A$3. OUTPERFORM [V].9 3. OUTPERFORM [V].AX AGO. NEUTRAL.35. TP A$6.71 4. NEUTRAL. Target Price and Rating Change History Chart for FMG.AX.AX.45. TP A$100. A$2. R=Restricted. NC=Not Covered Closing Price Target Price Initiation/Assumption Rating O=Outperform.00) See Figures 20. NR=Not Rated.49.AX Date 23-May-07 21-Feb-08 27-Oct-08 30-Jan-09 6-Apr-09 8-May-09 19-May-09 15-Jun-09 24-Sep-09 19-Oct-09 10-Nov-09 3-Dec-09 22-Dec-09 6-Mar-10 Closing Price (¥) 580000 586000 257400 261000 272200 247000 268300 325000 319000 283800 253000 282200 308000 336500 Target Price Initiation/ (¥) Rating Assumption 620000 NC 450000 O X 290000 N 299000 232000 340000 O 370000 340000 N 300000 255000 320000 O N 360000 O 666500 620000 616500 566500 516500 466500 416500 366500 316500 266500 ¥ 216500 27-Oct-08 370000 340000 340000 320000 N 300000 290000 299000 O N O 255000 232000 360000 O N O 450000 NC 3-Year Price. TP A$4.00) BlueScope Steel (BSL.21 U X X N 4. TP A$3.50) Rio Tinto Limited (RIO. N=Neutral. NR=Not Rated.AX.25) OneSteel (OST.77 Target Price Initiation/ (A$) Rating Assumption 4. A$4.

97 1.0 9 2Ja n1 2. Analysts’ stock ratings are defined as follows: Outperform (O): The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% (or more. current holdings. Hold. the sector or the market that may have a material impact on the research views or opinions stated herein. **The broad market benchmark is based on the expected return of the local market index (e. U=Underperform. (Please refer to definitions above.25 N O 2 2 2U 1.AX Date 6-Jan-10 4-Feb-10 20-Apr-10 19-May-10 Closing Price (A$) 1. a portion of which are generated by Credit Suisse's investment banking activities. Underperform (U): The stock’s total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months. Target Price and Rating Change History Chart for MGX. subject to analysts’ perceived risk. Neutral (N): The stock’s total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months.S.5 A$ 6-Jan-10 0 The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues. and Canadian ratings are based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe**. U. Credit Suisse’s distribution of stock ratings (and banking clients) is: Global Ratings Distribution Outperform/Buy* 46% (63% banking clients) Neutral/Hold* 40% (59% banking clients) Underperform/Sell* 12% (53% banking clients) Restricted 2% *For purposes of the NYSE and NASD ratings distribution disclosure requirements.0 Ma r-1 2-M 0 ay -1 0 Closing Price Target Price Initiation/Assumption Rating O=Outperform. Credit Suisse’s policy is to update research reports as it deems appropriate. R=Restricted. 2Ju l -0 7 2-S ep -07 2-N ov -07 2Ja n-0 2-M 8 ar08 2Ma y. N=Neutral.825 1. the S&P 500 in the U. and Canadian ratings may fall outside the absolute total return ranges defined above. Japanese.37 Target Price Initiation/ (A$) Rating Assumption 1. based on developments with the subject company. during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.g. ratings are based on a stock’s total return relative to the analyst's coverage universe**. ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark. Credit Suisse policy and/or applicable law and regulations preclude certain types of communications. Neutrals the less attractive. however.5 2 O N O 1 0. 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Analysts’ coverage universe weightings are distinct from analysts’ stock ratings and are based on the expected performance of an analyst’s coverage universe* versus the relevant broad market benchmark**: Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. and Sell. **An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector. For Latin American. and other individual factors.0 9 2-S ep -09 2No v. respectively.AX MGX. Some U. *Relevant benchmark by region: As of 29th May 2009. Australia.01 July 2010 3-Year Price. For Australian and New Zealand stocks a 22% and a 12% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions.9 Ma r-0 9 2Ma y-0 9 2Ju l.. and Underperforms the least attractive investment opportunities. including an investment recommendation.S. Restricted (R): In certain circumstances. depending on perceived risk) over the next 12 months. and non-Japan Asia stocks.) over the next 12 months. and Underperform most closely correspond to Buy. with Outperforms representing the most attractive.5 U X 1. depending on market conditions and industry factors. The 22% and 12% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition.) An investor's decision to buy or sell a security should be based on investment objectives. respectively. NR=Not Rated. NC=Not Covered 0BAustralian Iron & Steel Review 13 . Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.

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