UK Steel Industry Review January 2008

UK STEEL INDUSTRY REVIEW AGENDA Steel demand Steel imports and exports Trading partners Scrap and semis trade flows Competitiveness issues Opportunities …

Steel demand

Steel imports and exports

Trading partners

Scrap and semis trade flows

Competitiveness issues

Opportunities …

STEEL DEMAND Finished steel market in the UK is ~13mt/year Imports at 5-6 mt/year satisfy some 50% of this demand Finished steel exports are ~4 mt/year Source: MCI assessments. 13,380 12,526 Total steel 2,312 2,174 Other products 1,908 1,699 Hot rolled sections 462 419 Hot rolled bars in lengths 578 571 Rods and bars in coil 1,414 1,278 Reinforcing 1,018 1,027 Other coated 2,468 2,154 Galvanised 830 823 Cold rolled 912 830 HR plate lengths 1,478 1,551 HR coil and sheet lengths 2007 2006 000’s tonnes Year UK finished steel demand

Finished steel market in the UK is ~13mt/year

Imports at 5-6 mt/year satisfy some 50% of this demand

Finished steel exports are ~4 mt/year

STEEL IMPORTS AND EXPORTS Source: MCI assessments. 4,043 4,015 5,763 5,094 Total steel n/a n/a n/a n/a Other products 403 529 873 692 Hot rolled sections 485 433 251 197 Hot rolled bars in lengths 1,038 767 377 291 Rods and bars in coil 160 82 431 382 Reinforcing 639 586 399 460 Other coated 183 217 1,655 1,529 Galvanised 329 417 464 456 Cold rolled 543 570 629 521 HR plate lengths 263 414 683 566 HR coil and sheet lengths 2007 2006 2007 2006 Exports Imports 000s tonnes

TRADING PARTNERS Biggest exporters into the UK are the larger countries in the Euro- zone Germany is in lead import volume position Significant steel import volumes from China Source: MCI calculations. 11% China Far East 9% France 11% Belgium 17% Germany EU % imports Country Region

Biggest exporters into the UK are the larger countries in the Euro- zone

Germany is in lead import volume position

Significant steel import volumes from China

SCRAP AND SEMIS TRADE FLOWS Source: MCI estimates. Other semis are steel billets and slabs with >0.25% carbon content. 36 224 257 212 Other semis 2,463 1,635 500 651 Slabs 543 373 119 94 Billets 151 135 32 6 Ingots 5,595 7,426 204 161 Ferrous scrap 2007 2006 2007 2006 Exports Imports 000s tonnes

COMPETITIVENESS ISSUES UK steelmaking disadvantaged by lack of local ore and coal, high energy and high labour costs; trade export statistics do reflect some distortions Better for UK to import semis instead? Downstream options a good option; less capex and closeness to steel market Ferrous scrap related opportunities?

UK steelmaking disadvantaged by lack of local ore and coal, high energy and high labour costs; trade export statistics do reflect some distortions

Better for UK to import semis instead?

Downstream options a good option; less capex and closeness to steel market

Ferrous scrap related opportunities?

OPPORTUNITIES … Can MCI help you develop your presence in the UK steel sector? Can we provide an update of the slides above? Help with more detailed product demand analysis? Review of steel investment options / opportunities? Review or optimisation of your entry strategy? Please contact: Andrew Kotas, Managing Director, MCI Website: http://www.steelonthenet.com Email: [email_address] Mobile: +44 (0) 775 149 0885

Can MCI help you develop your presence in the UK steel sector?

Can we provide an update of the slides above?

Help with more detailed product demand analysis?

Review of steel investment options / opportunities?

Review or optimisation of your entry strategy?

OPPORTUNITIES … For more steel information visit us: http:// www.steelonthenet.com