1. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 1 SEAISI 2013 ASEAN Iron and Steel Sustainability Forum Global Steel Market Outlook 25-57 November 2013, Jakarta, Indonesia Atilla Widnell Senior Metals Analyst

2. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 2 Disclaimer: Prices and other information contained in this presentation have been obtained by us from various sources believed to be reliable. This information has not been independently verified by us. Those prices and price indices that are evaluated or calculated by us represent an approximate evaluation of current levels based upon dealings (if any) that may have been disclosed prior to publication to us. Such prices are collated through regular contact with producers, traders, dealers, brokers and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or publication of any specific price or index. Actual transaction prices will reflect quantities, grades and qualities, credit terms, and many other parameters. The prices are in no sense comparable to the quoted prices of commodities in which a formal futures market exists. Evaluations or calculations of prices and price indices by us are based upon certain market assumptions and evaluation methodologies, and may not conform to prices or information available from third parties. There may be errors or defects in such assumptions or methodologies that cause resultant evaluations to be inappropriate for use. Your use or reliance on any prices or other information published by us is at your sole risk. Neither we nor any of our providers of information make any representations or warranties, express or implied as to the accuracy, completeness or reliability of any advice, opinion, statement or other information forming any part of the published information or its fitness or suitability for a particular purpose or use. Neither we, nor any of our officers, employees or representatives shall be liable to any person for any losses or damages incurred, suffered or arising as a result of use or reliance on the prices or other information contained in this publication, howsoever arising, including but not limited to any direct, indirect, consequential, punitive, incidental, special or similar damage, losses or expenses. We are not an investment advisor, a financial advisor or a securities broker. The information published has been prepared solely for informational and educational purposes and is not intended for trading purposes or to address your particular requirements. The information provided is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, commodity, financial product, instrument or other investment or to participate in any particular trading strategy. Such information is intended to be available for your general information and is not intended to be relied upon by users in making (or refraining from making) any specific investment or other decisions. Your investment actions should be solely based upon your own decisions and research and appropriate independent advice should be obtained from a suitably qualified independent advisor before making any such decision.

3. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 3 Introduction Latest Developments Forecasts Conclusions

4. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 4 Steel news, prices & analysis Market Analysis and forecasts Company data for metal and mining industries Metal news, prices & analysis Prices for the physical spot iron ore market

5. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 5 Global news, prices & analysis Full market coverage Editorial locations worldwide Over 250 steel prices tracked Indices Trade logs Interviews News alerts Mobile site App coming soon!

6. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 6 Introduction Latest Developments: What have been the factors impacting steel consumption in key producing regions? How have steel producers responded in adjusting their levels of output? Forecasts: How will finished steel demand drive crude steel output in 2013/14? How will steel raw materials prices shape the outlook for the steel industry? Conclusions New MBR products: MBR Steel Scrap & Metallics Forecaster

7. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 7 Introduction Latest Developments Forecasts Conclusions

8. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 8 Source: CEIC, Eurostat Economic data highlights that EU European economies have continued to contract through much of 2013 year-on-year… …owing largely to the dour performance of manufacturing industry and the even poorer health of the construction sectors… …as a result of contraction in key steel-intensive sectors, finished steel demand has continued to suffer from 2012 and into 2013.

9. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 9 Source: World Steel Association, MBR Total European crude steel output declined 4.5% year-on-year in 2012… …and was almost 20% lower compared to pre- Global Financial Crisis levels witnessed in 2007… …as most mills in this key producing region scaled back output in response to falling consumption. Finished steel demand has continued to suffer through much of 2013 and this has prompted European steel producers to make further cut backs in output. As a result, MBR believe EU crude steel output will decline by almost 2% year-on-year in 2013.

10. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 10 Source: Bloomberg, ISM, CEIC At the same time, a similar situation has been witnessed in North America, typified by key benchmarks in the USA. Manufacturing and, particularly, construction and housing sectors have witnessed waning demand over the same period… …and only recently have economic benchmarks begun to turn more positive, providing support to sentiment in the US steel industry. That said, housing and non-residential indicators still lag in their recovery.

11. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 11 Source: MBR, WSA, AISI Meanwhile, US crude steel output has been climbing from a low base at the end of 2012. In fact, MBR estimate US crude steel output will fall to 87 million tonnes this year, from 89 million tonnes in 2012......owing largely to lower levels of finished steel production in the first half of the year. US crude steel output between January and October 2013 was almost 4% lower year-on-year......as steelmakers, particularly EAFs, responded to lower consumption and finished steel prices by scaling back output.

12. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 12 Source: MBR, WSA In Japan, however, increased government spending, economic stimulus packages and the access to cheaper capital have spurred on construction programmes… …and, as a result, Japans construction orders for the biggest 50 companies and total domestic housing starts have enjoyed a jubilant 2013.

13. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 13 Source: MBR, World Steel Association Consequently, Japanese crude steel production has climbed in tandem with improved domestic finished steel demand. At the same time, a sharp depreciation in the Japanese Yen has also made finished steel exports more cost competitive to consumers in South East Asia. Therefore, MBR estimate that domestic crude steel output will climb by almost 3% year-on-year in 2013.

14. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 14 Introduction Latest Developments Forecasts Conclusions

15. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 15 Source: World Steel Association, MBR Total European crude steel output declined 4.5% year-on-year in 2012… …and was almost 20% lower compared to pre- Global Financial Crisis levels witnessed in 2007. Finished steel demand has continued to suffer in 2013 and this has prompted European steel producers to maintain cut backs in output in early 2013. Looking forward, however, manufacturing and industrial production benchmarks have continued to improve through 2013... …and we look to be ending this year on a more stable footing, driving our forecasts for stronger steel consumption and production in 2014.

16. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 16 Source: MBR, OEF In 2014, MBR expects that improving growth in US industrial production and housing starts......will prompt domestic steel producers to raise output to meet strong end-user consumption in key steel-intensive sectors. This in turn is expected to lead to a 3% increase in US crude steel production next year, compared to the previous year.

17. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 17 Source: World Steel Association, MBR MBR forecast total US crude steel production will climb to 90 million tonnes in 2014, from an estimated 87 million tonnes in 2013…...owing partly to higher capacity utilisation rates at scrap-intensive electric arc furnace steel mills producing both flat and, in particular, long products… as mills raise output to meet improving demand from the automotive and construction sectors next year.

18. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 18 Source: World Steel Association, MBR Japanese steel output is expected to climb almost 3% in 2013 year-on-year, driven largely the improved demand from the construction sector which has benefited from government spending programmes. MBR believe domestic demand for finished steel will continue to climb in 1H 2014, as consumption is brought forward before the tax hike in April 2014. Thereafter, MBR anticipate steel consumption growth will slow in 2H 2014. Looking forward, we forecast that steel production will continue to struggle to reach pre-global financial crisis levels in the next 5 years.

19. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 19 Introduction Latest Developments Forecasts Conclusions

20. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 20 Conclusions: What have been the factors impacting steel consumption in key producing regions? Poor industrial production, manufacturing and even dour construction activity How have steel producers responded in adjusting their levels of output? Lower overall steel output in the USA and Europe in 2013 vs. 2012 How will finished steel demand drive crude steel output in 2013/14? 2013 finishing strongly and expect to witness firm year-on-year growth in 2014 How will steel raw materials prices shape the outlook for the steel industry? New DRI/HBI output will make some US steel producers more cost competitive

21. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 21

22. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 22 Thank you for your attention Questions & Answers

23. Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research www.metalbulletinresearch.com 23 Contact details for further information: Metal Bulletin Research Nestor House, Playhouse Yard, London EC4V 5EX +44 (0)20 7779 7999 Atilla Widnell Senior Metals Analyst +44 (0)20 7827 6480 awidnell@metalbulletinresearch.com