UBS CONFERENCE CALL
SEPTEMBER 9, 2009
John Packard – Steel Market Update
Key HR Index Price Points
   July 2008 = $1070 per short ton average
   January 2009 = $510 per short ton average
   Ju...
Comparison HR Indexes

Price Comparison Indexes

as of 9/9/2009 ($/ton)          HR            CR    Galvanized   Galvalum...
Our three legged stool




                               Low service center inventories
Foreign steel
                Tig...
SERVICE CENTER
INVENTORIES
From Excessive to Balanced
AISI Mill Shipments by end user
                                                                        Service
          ...
Mill Shipment Reality



      25%
                                    Service Centers
10%                                ...
January 11, 2009 SMU Survey
August 27, 2009 SMU Survey
January vs. August Inventory
   January – 59.3% had two months or less on hand
   August – 80.2% had two months or less ...
DOMESTIC SUPPLY
Return from the debts of despair
North American Blast Furnaces - Then
                                         Running (13)
      AK Steel        Ashland  ...
ArcelorMittal Operating Levels
       East Chicago West                     30%
       East Chicago East                  ...
North American Blast Furnaces - Now
                                         Running (23)   EAF
      AK Steel        Ashl...
Tonnage Being Added
   Since the low of the market in early 2nd Quarter the
    domestic mills have brought back or repai...
Mini-Mills & Electric Arc Furnaces
   Running at low 40% for
    first 4-6 months 2009
   EAF’s running
    intermittent...
FOREIGN STEEL
Too much risk…
Foreign Imports All Products
   Foreign Imports 2007 = 33,244,000 short tons
   Foreign Imports 2008 = 31,927,000 short ...
CONCLUSION
More of the same until one leg falls
Steel Market Update Ubs Presentation Sept 9 2009
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Steel Market Update Ubs Presentation Sept 9 2009

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Steel Market Update Ubs Presentation Sept 9 2009

  1. 1. UBS CONFERENCE CALL SEPTEMBER 9, 2009 John Packard – Steel Market Update
  2. 2. Key HR Index Price Points  July 2008 = $1070 per short ton average  January 2009 = $510 per short ton average  June 2, 2009 = $380 per short ton average  September 9, 2009 = $540 per short ton average  Momentum is for higher prices
  3. 3. Comparison HR Indexes Price Comparison Indexes as of 9/9/2009 ($/ton) HR CR Galvanized Galvalume Steel Market Update 540 650 725 928 CRU 531 649 673 NA The Steel Index 548 648 702 NA SteelBenchmarker 514 621 NA NA Platts 540 635 NA NA To get cwt (hundred weight) pricing divide by 20.
  4. 4. Our three legged stool Low service center inventories Foreign steel Tight supply
  5. 5. SERVICE CENTER INVENTORIES From Excessive to Balanced
  6. 6. AISI Mill Shipments by end user Service Centers/Processors Construction 29% Automotive 28.7% Energy 15.4% 3% 12.6% Containers Exports 9.2% 2.1% Other Other includes non-classified shipments, rail, mining, agricultural, military
  7. 7. Mill Shipment Reality 25% Service Centers 10% Toll Processors 65% Direct to OEM's
  8. 8. January 11, 2009 SMU Survey
  9. 9. August 27, 2009 SMU Survey
  10. 10. January vs. August Inventory  January – 59.3% had two months or less on hand  August – 80.2% had two months or less on hand  January – 26.3% had three months on hand  August – 16.2% had three months on hand  January – 14.4% had four months or more on hand  August – 3.7% had four months or more on hand  Earlier in August 83.6% reported they wanted 2 months or less inventory on the floor
  11. 11. DOMESTIC SUPPLY Return from the debts of despair
  12. 12. North American Blast Furnaces - Then Running (13) AK Steel Ashland 1 AK Steel Middletown 0 ArcelorMittal Dofasco 2 ArcelorMittal Burns Harbor 1 ArcelorMittal Cleveland 0 ArcelorMittal Indiana Harbor E 1 ArcelorMittal Indiana Harbor W 0 Essar Algoma 1 Severstal Dearborn 1 Severstal Sparrows Point 1 Severstal Warren 0 US Steel Fairfield 1 US Steel Gary 2 US Steel Granite City 0 US Steel Great Lakes 0 US Steel Hamilton 0 US Steel Lake Erie* 0 US Steel Mon Valley 2
  13. 13. ArcelorMittal Operating Levels East Chicago West 30% East Chicago East 30% Burns Harbor 35% Cleveland 0% Riverdale 18% Coatesville 75% Steelton 80% Conshohocken 35% Weirton 90% Georgetown 0% Source: USW – Late 1st Quarter 2009
  14. 14. North American Blast Furnaces - Now Running (23) EAF AK Steel Ashland 1 AK Steel Middletown 1 ArcelorMittal Dofasco 2 1 ArcelorMittal Burns Harbor 1 ArcelorMittal Cleveland 1 ArcelorMittal Indiana Harbor E 3 ArcelorMittal Indiana Harbor W 0 Essar Algoma 1 Severstal Dearborn 1 Severstal Sparrows Point 1 Severstal Warren 0 US Steel Fairfield 1 US Steel Gary 4 US Steel Granite City 2 US Steel Great Lakes 1 US Steel Hamilton 1 US Steel Lake Erie 0 US Steel Mon Valley 2
  15. 15. Tonnage Being Added  Since the low of the market in early 2nd Quarter the domestic mills have brought back or repaired a number of furnaces.  Over the past month – August and now September the integrated mills have or are adding an additional 29,000 tons of new melt per day.  The question is once up and running where will all the steel go?
  16. 16. Mini-Mills & Electric Arc Furnaces  Running at low 40% for first 4-6 months 2009  EAF’s running intermittently with reduced work weeks  Now running between 70-100% of capacity (flat rolled)  Not automotive
  17. 17. FOREIGN STEEL Too much risk…
  18. 18. Foreign Imports All Products  Foreign Imports 2007 = 33,244,000 short tons  Foreign Imports 2008 = 31,927,000 short tons  Foreign Imports 2009 (projected) = 14,000,000 short tons  At issue – pricing and lead times. U.S. prices have been lower than foreign offers and with average 3 month lead time risk has been too high for U.S. companies to purchase large lots of foreign steel.
  19. 19. CONCLUSION More of the same until one leg falls

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