Thomas A. Danjczek President Steel Manufacturers Association May 10, 2010 Milwaukee, WI

1. LONG PRODUCTS SUPPLY CHAIN SYMPOSIUM ACTIONS FOR ECONOMIC RECOVERY From the Steelmaker’s Perspective Thomas A. Danjczek President Steel Manufacturers Association May 10, 2010 Milwaukee, WI

2. Outline Long Products Supply Chain Symposium • SMA • Set the Stage • U.S. Steel Production • SMA Long Product Data • Global Steel Outlook • Trade Issues • China • Scrap • Raw Materials • Environmental / Safety Washington, DC Issues • Is Enough Being Done? • What does the U.S. need to do? • Conclusion

3. SMA Long Products Supply Chain Symposium • The Steel Manufacturers Association (SMA) • 34 North American companies: 29 U.S., 3 Canadian, and 2 Mexican • Operate 125 steel recycling plants in North America • Electric Arc Furnace (EAF) steelmakers using recycled steel • EAF steel producers accounted for nearly 2/3 of U.S. production in 2009 • SMA represents approximately 90 million of U.S. 120 million ton capacity (75%) • 128 Associate members - Suppliers of goods and services to the steel industry

4. US Steel Production (All in Million Net Tons)(Numbers are Approximate) Set the Stage Long Products Supply Chain Symposium PAST –From 1986 through 2008, U.S. steel production has been around 100 m tons – up & down 10% 2009 1st Half 25m (45% utilization) 2nd Half 36m (62% utilization) Now 1.5m/week vs. 2.1m/week Year 63m (Minimills at 63% of production) 2010 (from November 2009) World Steel 78m (up 19% over 2009), optimistic Peter Marcus 68m (Back to 75m in 2012) US Poll 69m (up 10% over 2009) 2010 – Today (Through March 30) Capacity Utilization (67.7%); or approximately 80 million tons annual rate 42.9% in 2009

5. Long Products Supply Chain Symposium The Worldsteel Short Range Outlook Source: Worldsteel Economic Studies Committee, April 2010

6. Global Steel Capacity Continues to Increase World Crude Steel Capacity 2000-2012 World Crude Steel Capacity CAGR 2,055 2,100 20 1,997 1,917 1,816 1,850 1,654 1,583 1,600 1,453 15 1,356 1,350 1,245 1,170 1,095 1,062 1,062 1,100 Current Average Growth Rate (CAGR) 10 Steel Capacity (million metric tonnes) 850 600 5 350 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e) 2011(e) 0 Long Products Supply Chain Symposium 2012(e) Source: Worldsteel

7. Long Products Supply Chain Symposium SMA Long Product Summary Data – (4/16/10)

8. Long Products Supply Chain Symposium SIMA Import License Data Detail for March as published April 13, 2010:

9. Long Products Supply Chain Symposium Total Mill Shipments – 1st Quarter 2010 (Total Mill Shipments = Net Domestic Mill Shipments plus Exports; Table in Short Tons)

10. Long Products Supply Chain Symposium Red = Long Product Producer Globalization and Consolidation Developments Have Dramatically Changed the NAFTA Steel Landscape Acquiring Company Acquiring Company Acquiring Company Acquired Company Acquired Company Acquired Company Arcelor Mittal Nucor Duferco/NLMK Arcelor Connecticut Steel Winner Steel Dofasco Trico Evraz Mittal Birmingham Ispat Inland Corus Tuscaloosa Oregon Steel Bethlehem ISG Worthington-Decatur Claymont Steel Marion Ipsco Canada LTV Nelson Steel US Steel Plate Weirton Severstal Harris Steel Auburn Steel Arcelor Mittal-Sp. Pt. Acme-Riverdale North Star Arizona Rouge WCI Georgetown American Iron Reduction Sicartsa Bayou LMP Steel & Wire Wheeling Pitt The David J. Joseph Co. (Scrap) CSN US Steel Gerdau Ameristeel Heartland Lone Star Sheffield Essar National Chaparral Algoma LTV Tin Co-Steel Minnesota Steel ISG IH#2 Pkl. North Star Stelco Sidetul Tultitlan Quanex Macsteel BlueScope Corsa IMSA Steelscape SSAB OAO TMK ICH/Grupo Simec Ipsco Plate (U.S.) Ipsco Tubular (U.S.) Republic Tenaris Steel Dynamics Ternium GalvPro-Jeffersonville Maverick Tube (U.S.) Hylsa The Techs Prudential Canada IMSA Roanoke Steel Hydril Company Steel of West Virginia Omnisource (Scrap) 1/1/09

11. Long Products Supply Chain Symposium China’s Trade Surplus with the U.S. • YearChina’s Trade Surplus • 2001 $22 billion • (year China joined WTO) • 2006 $177 billion • 2007 $262 billion(up 47.7%) • $290 billon • $196 billion The U.S. has lost 3.3 million manufacturing jobs since 2000… imbalances cannot go on forever.

12. Long Products Supply Chain Symposium U.S. Scrap Consumption and Exports 2009 – Exports 22.3mt Imports (e) 3.0mt U.S. Consumption 48.0mt

13. Long Products Supply Chain Symposium RMDASTM Ferrous Scrap Price Index Effective 4/20/10

14. Raw Material Export Restrictions are Continuing to Disadvantage U.S. Steel Producers • Many countries continue to impose a variety of restrictions on exports of vital raw materials • Export prohibitions • Export duties • Export quotas • Other measures • Trade-distorting restrictions on exports of raw materials • Give domestic producers in the exporting country an unfair advantage • Increase worldwide costs of production • Do not accord with the justifications given • Place a heavy burden on steel industries in developing countries that do not have substantial iron ore reserves or steel supplies scrap

15. US Steel Industry, Then. . . . . . . . .and Now Smoke pouring into the air from a Pittsburgh steel mill, 1890. Image by Corbis - Bettmann Electric Arc Furnace facility Image by SMA.

16. U.S. Steel Industry – Energy / TON Long Products Supply Chain Symposium Source: Dr. John Stubbles

17. EAF Steelmaking is Energy Efficient Long Products Supply Chain Symposium

18. Long Products Supply Chain Symposium

19. SMA Climate Change Policy – Federal Legislation Needs to Address the Following: Long Products Supply Chain Symposium • Reward Recycling • Recognize Steel Industry Improvement Limitations • Include Global Participation and Monitoring with No Exemptions Available for Any Nation • Prevent Double Counting of Carbon Costs • Promote GHG Emissions Reductions From Efficiency and Technology Improvements and Not Demand Destruction of North American Steel Production • Preempt Competing State Carbon Regulation Policies with a Single Federal GHG Policy, to Ensure a Level Playing Field within the U.S. • Avoid Unintended Consequences

20. Long Products Supply Chain Symposium Is Enough Being Done? Raw Materials No Barriers continue Lack of policy continues Energy No Currency manipulation, Subsidies, Not playing by the rules No China Distortions continue, Who’s the protectionist Trade No No long term structural policy changes are being proposed in Washington for taxes, trade imbalance, and energy.

21. What does the US need to do? Long Products Supply Chain Symposium • Assume a Pro-Manufacturing Agenda • Business Tax Reform • Border Adjustable Taxes • Currency Adjustments • Energy Independence • Reasonable regulatory measures (Environment/Labor) • Climate for investments (Jobs, Jobs, Jobs) and Infrastructure • Solve the structural problems that caused the recession- Real Foundation • Bad loans and securities on bank balance sheets • Reduce huge trade deficits • Policy incrementalism is not sufficient

22. Long Products Supply Chain Symposium Conclusion • The decline in U.S. Manufacturing has been so severe, policy incrementalism is not sufficient. • U.S. Steel Industry in Better Position Today to Manage the Down Cycle • (but what a down cycle!) • Improved Economics From Consolidations, i.e. “Reacted Quicker”; • Improved Control of Variable Costs • Scrap-Based Metallics (In 2009, U.S. will be nearly 2/3 EAF-based • Energy Costs • Transportation Costs • Labor Efficiency (U.S. at Below 2MH/Ton; Minimills Often Below 1MH/Ton) • Improved Inventory Control (Inbound Materials, Steel, and Customer Products). NOT THE OLD INVENTORY OVERHANG! • Concerns with Scrap, Climate Change, Energy, U.S. Debt, Taxes, Currency, but especially Climate for Investment • Still Challenging – But Reasons for Meaningful Long-Term Optimism!