SBB Presentation

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Global Market Outlook Chiefly recovery Some
softness Mark Wiggett Editor, Global Market
Outlook SBB Meets - Dubai 19 November
2005 www.steelbb.com
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WHO IS SBB ?
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• 21 steel journalists and consultants world wide
  in-
• London
• Düsseldorf
• Pittsburgh
• New York
• Sao Paulo
• Singapore
• Shanghai
• Japan

WHO IS SBB ?
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World Wide Locations
More than 40 employees located in New York
London Shanghai Pittsburgh Düsseldorf Singapore S
ao Paulo Japan
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Structure of Presentation

• Where are we Now?
• Influences in 2006
• Forecasts for 2006
• Managing Volatility/Risk

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An Industry in Transition
Long Term Changes

• Companies Consolidate
• Consumption Growth Shifts
• Capital markets
• Costs and Prices cycles to continue

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Linked Price Cycles

• Scrap
• Commodity steels
• Iron ore, coke, coal
• Quality steels
• Sentiment

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Todays Market
Binge Buying and Hangover
November 2005 US and EU stocks returning to
normal prices rising in US Asia stocks
rising prices sliding
Price collapse from March
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Near Term Influences on the Steel Price in 2006
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Long Term Influences on the Steel Price in 2006
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Chinese Production
Mill t
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China

• Engine of Global Steel Economy?
• Growing Consumption gap?
• exports plant closures ?
• Fragmented industry
• Inefficient
• Capital intensive

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Russia Brazil India

• Strong growth
• Raw materials availability
• Growth in infrastructure
• Low kg/head consumption
• CIBERT

Cons kg/head
Source IISI, SBB Estimates
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Real GDP Growth ( change)
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Global Capacity Utilization
Mill t
87.1
89.2
79
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More Global Companies
Nascent Global Companies Posco
Shougang Bluescope Mechel JFE Nippon Tata
Global Essar CMC Baosteel Evraz ThyssenKrupp
Arcelor
Mittal
Ternium
Duferco
Gerdau
US Steel
Severstal
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Higher Iron Ore Prices
Winners
Losers
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Volatile Scrap (/t)
Source SBB
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More Reactive to Sentiment
US sets the tune Changeable Spot Prices -
Expectations - Inventories - International
trade
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Trade Flows in 2006
Japan to export more globally
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Turnaround in Imports
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4th Quarter of 2005

• US and EU
• Stocks back to normal
• Prices rising in US Europe?
• Asia
• Stocks rising
• Prices weakening

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Price Outlook 2006 HRC /t
Source Steel Business Briefing
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Price Outlook 2006 Rebar /t
Source Steel Business Briefing
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Price Outlook 2006 HRC /t
Source Steel Business Briefing
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Price Outlook 2006 HRC /t Euro/t
European Average
Source Steel Business Briefing
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Price Outlook 2006 Rebar /t
Source Steel Business Briefing
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Price Outlook 2006 Beams /t
World Average
Source Steel Business Briefing
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Price Outlook 2006 Beams /t
Global Forecast
Source Steel Business Briefing
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Price Outlook 2006 Beams /t EUR/t
European Average
Source Steel Business Briefing
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Contract prices 2006

• Fewer multi-year deals
• Up to 5-15 rise in 2006 (if Q4 stabilises)
• Impacts on financial results
• Linkage to raw materials

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Managing Volatility/Risk

• Risks in 2006
• China volatile scrap, excessive stocks,
  sentiment, lack of transparency
• Managing risk
• Hedging OTC, surcharges, indexation, LME?,
  active exchanges
• More Annual Contracts
• Managing Capacity

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Thank You
If you would like a copy of this presentation,
please email wiggett_at_steelbb.com
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CONTACT SBB
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responding to customer requirements and feedback
so please contact us if you have something to
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London Tel. [phone] Fax. 44 (0) 20
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