Production Process The conventional production of steel from iron ore (which consistsprimarily of iron and oxygen) begins with the reduction of iron ore ina blast furnace (the "BF") using metallurgical coke as a reducingagent. The metal produced in the BF is then processed in a basic oxygenfurnace (the "BOF"), where oxygen is blown into molten iron in order toreduce its carbon content. In 2009, the BF-BOF process was used in theproduction of approximately 71% of the steel produced globally,according to the World Steel Association (the "WSA") (formerly theInternational Iron and Steel Institute). The metallurgical coke used inthe BF-BOF process is produced out of low ashcontent coking coal. Due to inadequate supplies of coking coal in some parts of the world, asecond steel-producing process, the electric arc furnace ("EAF")method, was developed. In the EAF process, steel scrap or directlyreduced iron ("DRI") is charged in an EAF and is melted using graphiteelectrodes charged with electricity produced using natural gas. An alternative way of producing steel is by using a medium or highfrequency electrical induction furnace. In the induction furnace, metalis melted through electro-magnetic induction in an electricallyconductive metal coil. Mild steel, stainless steel and low and highalloy steel can be made by using induction furnaces. Alloying elementsare added to the melted metal as needed. The major raw materials used in steel production depend on theproduction technology. The BF-BOF process mainly requires iron ore andcoke that, in turn, requires coking coal, the DRI-EAF process requiresscrap or sponge iron and non-coking coal and the induction furnacerequires scrap and DRI. The availability of the relevant raw materialsat commercial prices is essential to sustain profits for steelproducers. Products Steel produced by these processes is either cast into long productssuch as bars, rods, rails and structural shapes or into flat productssuch as hot rolled ("HR") coils and sheets. Long products are so called because they come out of the mill as longbars of steel. However, they are produced in a wide range of shapes andsizes and can have cross-sections shaped like an H or I (called joists,beams and columns), a U (channels) or a T (sections). Long products areprincipally used in the construction industry and also used in theproduction of capital goods and railways. Flat products, mainly in the form of HR coils and sheets, are used instructural materials, welded pipes and tubes and in the automobile andwhite goods (home appliances) industries. The major end-use sectors forpipes and tubes are water supply and distribution, other industrialapplications, housing applications and transport of petroleum products.Welded steel pipes are manufactured from HR coils by electricalresistance welding and are used in many piping applications. Submergedarcwelded pipes are manufactured from HR coils and are mainly used inthe supply and distribution of

2. crude steel production increased by 3.and decreased by 14. to industrial production and infrastructure development.9% in the EU of 27countries ("EU27") (28.127 mt.4% decrease in Russia.19.7% per year.water and gases.Global production capacity. Overall global crude steel production in 2009 was 1.1% decrease inItaly). 35. decreased by 29.4% in Other Europe (5.3%decrease in the United States). Excluding China.26. According to the WSA. Individual ratesfor these years ranged from a 9. resulting in a different set ofphysical and metallurgical properties. . In 2009.224 mt. diversification of customer base and focus on value-addedproducts. global crude steel production in 2009 wasapproximately 1. HR coils can also be further processed in cold rolling mills to producecold rolled products by passing the HR coils or strips through rollersat room temperature to reduce their thickness.0% growth in 2006 to a 7.224 mt. According to the WSA. Over the period from 2005 to 2009. overall steel productionin 2009 decreased by approximately 21% compared to 2008 level.2% decrease in Taiwan.9%decrease in production over the previous year. 8.3% decrease in Japan).1% per year from2000 to 2005. shock resistance and tensile strength.6% in Asia (13. The Global Steel Industry The global steel industry is cyclical and the growth or decline of thesteel industry is linked to the economic cycle of a country and inparticular.6% in CIS Countries (12. Seamless steel pipesand tubes manufactured from HR coils are used in the oil and gassectors.Steel producers may attempt to reduce the impact of cyclicality throughvarious measures like diversification of manufacturing operations tovarious geographies (preferably emerging markets with low-costoperations).6% decrease in Turkey).7% increase in India.5%increase in China. giving greatertoughness.global steel production grew on average by negative 0. trade policies of countries and theregional demand-supply scenario also strongly influence the industry. in which the steel is rolled at a high temperature.4% per year from 1995 to 2000 and 6. decreased by 33. decreased by 8.9% decrease in Ukraine).7% decrease in Germany. In addition to hotrolling. "Rolling" is the mainmethod used to shape steel into different products.9% reductionin 2009. steel mayalso be rolled at ambient temperatures. 20. according tothe WSA. while global apparent steel consumption was1.8% in North America (36. Rolling the steelby passing it between a set of rolls revolving at the same speed but inopposite directions makes the otherwise coarse grain structure of caststeel re-crystallize into a much finer grain structure. Global Steel Production Growth in steel production has been volatile.5% per year from1990 to 1995. a 7. global steelproduction increased by approximately 1.

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