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Adalet Kazımlı, International Trade Director , ERDEMİR Group , TURKEY

FUTURE MADE OF STEEL. “Outlook of Turkish steel market and prospects of export to Europe". METAL EXPERT EUROPE STEEL TRADE CONFERENCE @ Stresa,Italy 2013. Adalet Kazımlı, International Trade Director , ERDEMİR Group , TURKEY. CONTENT. GENERAL OUTLOOK OF TURKISH STEEL MARKET.

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Adalet Kazımlı, International Trade Director , ERDEMİR Group , TURKEY

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  1. FUTURE MADE OF STEEL “Outlook of Turkish steel market and prospects of export to Europe" METAL EXPERT EUROPE STEEL TRADE CONFERENCE @ Stresa,Italy 2013 Adalet Kazımlı, International TradeDirector, ERDEMİR Group, TURKEY

  2. CONTENT • GENERAL OUTLOOK OF TURKISH STEEL MARKET • ERDEMİR GROUP • EXPORT TO EUROPE

  3. GENERAL OUTLOOK OF TURKISH STEEL MARKET • ERDEMİR GROUP • EXPORT TO EUROPE

  4. GDP Growth Rates (%) Turkish GDP is expected to grow at above 4% per annumover the medium term Source: Oxford Economics – TRG (Turkish Republic Government)

  5. Top Steel Producing Countries – Crude Steel (Mt) Turkey was ranked 8th positionamong Top Steel Producing Countries in 2012 Source: ISPA

  6. Crude steel production capacity in Turkey Turkish Capacity Snapshot • Turkish crude steel capacity increased 2,5 times in the last 10 years • Only 3 integrated steel makers among 31 producers • Turkey is the biggest scrap importer in the world (ca. 23 mtpy), local scrap supply is around 10 mtpy • Crude steel production reached 35,9 mtpy, indicationg a capacity utilization rate of 72% Turkish crude steel production is heavily dependent on imported scrap Source :DCUD

  7. Finished Steel ConsumptionandGDP of Turkey Source: ISPA (Turkish Iron & Steel Producers Association), Oxford Economics

  8. Turkish flat steel productioncapacity • Turkish flat steel production capacity increased 5 fold since 2006 • Flat steel production capacity is enough to meet local demand • Apparent flat steel use is estimated to be 13,6 mt, whereas flat steel production remains at 9,0 mt in 2012 • In 2012 Turkey imported about 6,5 mt flat rolled products Flat steel production capacity has developed quickly since 2006 and Turkey became a net exporter of flat products as well as long products Source :DCUD

  9. Finished Steel Production/Consumption (Mt) Turkey Source: ISPA

  10. Steel Exportof Turkey (Mt) Source: TSI

  11. Regional Distribution of Steel Export (Mt) – Turkey 2012 2011 Turkey exports mainly to MENA andEU countries *Other: Brazil, Peru, Ethiopia, Turkmenistan, Nigeria etc. Source: TSI

  12. ERDEMİR GROUP • GENERAL OUTLOOK OF TURKISH STEEL MARKET • EXPORT TO EUROPE

  13. Group Companies ERENCO ERDEMİR Romania ERSEM ERMADEN

  14. Group Companies Establishment of ERSEM and ERENCO Flat steel production in İSDEMİR Acquisition ofERDEMİR Maden Acquisition ofİSDEMİR and ERD.Romania Privatization Establishment 1965 2013 2001 2002 2004 2006 2008

  15. ERDEMİR – «World-Class Steel Producer» ERDEMİR Wasrankedtothe category of the world's top steel producersby WSD in 2012 Source: WSD

  16. Liquid Steel Capacity (Mt) – ERDEMİR Group Since 2005, liquid steel capacity of the group increased by 70% to 9.1 Mt

  17. FinishedSteel Capacity (Mt) – ERDEMİR Group The finished steel capacity of the group increased by 82% to 11.1 Mt

  18. Production Volume (Mt) – ERDEMİR Group «Erdemir Group is continouslyincreasingitsproductionvolume» Long product portion decreased over time in line with İSDEMİR’s conversion to Flat production

  19. 2011 & 2012 Total Export Sales on RegionBasis 2011 2012 EXPORT TO EU DECREASED DUE TO LOW DEMAND

  20. 2012 Export Distribution on RegionBasis • MENA49% • EU 36% • CIS + OTHER 9% • AMERICA & CANADA 7%

  21. Products & Markets • Flat Products • HRC • Plate • CRC • HDG • Tinplate • Silicon Steel • Long Products • Wire rod • Billet • Domestic Markets • Turkey • Romania • Export Markets • EU • Other Europe & CIS • MENA • USA ERDEMİR is a regional steel hub between European and MENA markets with a diversified product portfolio

  22. ERDEMİR GroupPorts ERDEMIR Port 16 million mt/year, loading/unloading capacity Jetty : 1670m (8 Jetties) Draft : 20m Max.Vessel Size : 200,000 (DWT). Eregli and Iskenderun ports are two of the biggest ports in Turkey and the Region in terms of location and capacity. ISDEMIR Port 16,3 million mt/year, loading/unloading capacity Jetty: 1530 m (5 Jetties) Draft: 19m Max.Vessel Size : 200,000 (DWT)

  23. EXPORT TO EUROPE • GENERAL OUTLOOK OF TURKISH STEEL MARKET • ERDEMİR GROUP

  24. Annual GDP Forecastfor EU Markets • Italy & Spainnegative • France, Germany & UK slightlypositive Source: EuropeanCommission

  25. EU (27)Apparent Steel Use, finished steel Recovery of thedemand in main Europeanmarkets is slow Source:worldsteel

  26. Outlook of EuropeanUnion • Economy • Weak demand • Imbalance due to country differentials • Political & financial uncertainties • Recovery of GDP expected in 2014 • Steel Market • Slowing downin demand • Short term restocking in early 2013 • Downtrend in EUR/USD parity • Major steel mills reported losses in 2012 • Mergers and acquisitions expected • Pressure over the margins • Doubt on positioning

  27. 2013 Erdemir ExportTargetsto Europe 2012 ExportTonnage : 386.000 2013 ExportForecast : ? Advantages Euro pricingviahedging Alternativepaymentsolutions R&D studieswiththeclients Improvementin logistics

  28. LogisticsAdvantages of Erdemir & Turkey • Mainly by bulk vessels • Shortlead time toneighbourmarkets • No inland handling in Turkeyduetoourownports • Combination possibilities for cost efficiency • Container & bargedeliverypossibilities • JIT – Just in time deliveries

  29. DISCLAIMER EreğliDemir Çelik Fabrikaları T.A.Ş. (Erdemir) may, when necessary, make written or verbal announcements about forward-looking information, expectations, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through its Disclosure Policy and has shared such policy with the public through the Erdemir website, in accordance with the Capital Markets Board regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that, actual results could materially differ from estimates taking into account the fact that they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors which are beyond the control of our Company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are no longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that, when a party is coming to a judgementbased on estimates and forward-looking statements, our Company may not have made a revision at that particular time. Our Company makes no commitment to make regular revisions which would fully cover changes in every parameter. New factors may arise in the future which may not be possible to foresee at this moment in time.

  30. Thank you for your attention…

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