Steel Industry Executive Summary: February 2011

Highlights Based on annual data, Chinese steel mill exports to the world increased 76.3% in volume from 2009 to 2010. The U.S. December 2010 steel trade deficit is about 94% greater than the deficit in December 2009. U.S. monthly steel production increased 5.1% to 6.75 million metric tons in December 2010.

Table of Contents
Trade - Imports of Steel Mill Products ..................................................................................................... 2 Trade - China .......................................................................................................................................... 2 Trade - United States Trade Balance in Steel ........................................................................................... 7 Trade - Steel Import Changes by Country and Product ............................................................................. 8 Production ............................................................................................................................................... 9 Demand................................................................................................................................................. 11 Trade Remedy Case Determinations- January/February 2011................................................................. 13 Industry Status....................................................................................................................................... 13 SIMA Team Contact Information .......................................................................................................... 15

List of Figures
Figure 1 - US Imports of All Steel Mill Products from World .................................................................. 2 Figure 2 - China's Imports/Exports of Steel Mill Products ........................................................................ 3 Figure 3 - US Imports of All Steel Mill Products from China ................................................................... 4 Figure 4 - Chinese Exports of Steel Mill Products by Partner in December 2009 ...................................... 5 Figure 5 - Chinese Exports of Steel Mill Products by Partner in December 2010 ...................................... 5 Figure 6 Annual Chinese Exports of Steel Mill Products by Partner in 2009 .......................................... 6 Figure 7 Annual Chinese Exports of Steel Mill Products by Partner in 2010 .......................................... 6 Figure 8 - U.S. Trade of All Steel Mill Products - Monthly ...................................................................... 7 Figure 9 - U.S. Domestic Steel Capacity Utilization ................................................................................. 9 Figure 10 - Monthly World Crude Steel Production ............................................................................... 10 Figure 11 - Monthly Crude Steel Production - Major Producers ............................................................. 10 Figure 12 - Share of World Crude Steel Production ............................................................................... 11 Figure 13 - U.S. Apparent Consumption of Steel Mill Products.............................................................. 12 Figure 14 - Import Penetration for All Steel Mill Products ..................................................................... 12 Figure 15 - U.S. Steel Industry, Quarterly Net Income ........................................................................... 14 Figure 16 - Steel Stocks vs. S&P 500, 1 Year Activity ........................................................................... 15

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Trade - Imports of Steel Mill Products U.S. imports of all steel mill products increased 4.8% to 1.7 million metric tons in December 2010 from November 2010, according to final Census figures for December. o U.S. steel imports in December 2010 are 32.7% above the volume in December 2009. o December 2010 steel imports are 6.2% below the 2010 annual average. o Licensing data for January 2011 show imports about 4% higher than the 2010 average.

Figure 1 - US Imports of All Steel Mill Products from World

Trade - China Chinese steel mill exports declined slightly in December 2010, decreasing the trade surplus to 1.2 million metric tons. o From November to December 2010, Chinese exports decreased 3.5% to 2.6 million metric tons. o Chinese steel exports are 67% less than the August 2008 peak level and 17% less than December 2009 exports. o December 2010 steel mill exports are 52% lower than June 2010 exports and 44% below December 2007 figures. U.S. Department of Commerce | International Trade Administration 2

o Chinese imports increased 1.6% to 1.5 million metric tons from November 2010 to December 2010. Chinas steel imports for December 2010 are on par with June 2010 imports, 6% lower than imports a year ago, and 46% higher than the three year low of 1.01 million metric tons in January 2009.

Figure 2 - China's Imports/Exports of Steel Mill Products

According to the latest available data from the three NAFTA countries, imports from China into NAFTA countries increased 2% from October 2010 to November 2010. November 2010 steel imports from China into NAFTA countries increased 19.5% in volume from November 2009. Total November 2010 steel imports into NAFTA countries from the world were 62% higher in volume than November 2009. U.S. imports of steel mill products from China are significantly below levels from 2008 and 2009. o In December 2010 imports decreased 7.9% to 58.4 thousand metric tons, according to final Census data. o December 2010 imports from China are 10.2% below the 2010 average and 36.8% above the December 2009 volume. o U.S. imports from China represent a total of 3.4% of all U.S. steel imports, down from the 3.9% in November and comparable to the Chinese share in December 2009.

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Figure 3 - US Imports of All Steel Mill Products from China

Chinese steel mill exports decreased 17% from December 2009 to December 2010. o The United States received the 15th largest share of Chinese steel exports at 1.9% in December 2010. o The volume of Chinese steel exports to the United States decreased 9.9% to 0.05 million metric tons from December 2009 to December 2010. o From December 2009 to 2010, Chinas volume of steel mill exports to South Korea increased 3.5%. Based on annual figures, Chinese steel mill exports increased 76.3% in volume from 2009 to 2010. o The United States received the 14th largest share of Chinese steel exports in 2010, down from 2009. Chinese steel exports to the United States declined 10.6% from 2009 to 2010. o South Koreas overall share decreased in 2010, but the annual total volume of Chinese steel exports to South Korea increased 52.4%.

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Figure 4 - Chinese Exports of Steel Mill Products by Partner in December 2009

Figure 5 - Chinese Exports of Steel Mill Products by Partner in December 2010

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Figure 6 Annual Chinese Exports of Steel Mill Products by Partner in 2009

Figure 7 Annual Chinese Exports of Steel Mill Products by Partner in 2010

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Trade - United States Trade Balance in Steel U.S. imports of steel mill products have fluctuated in the past few years, while exports have remained relatively stable. The December 2010 steel trade deficit widened to -0.850 million metric tons, 23.5% more than the deficit in November 2010. o From November 2010 to December 2010, exports decreased 9.1% in volume, while imports increased by 4.8%. o December 2010 exports are 1% more than December 2009 exports; December 2010 imports are 32.7% more than the level a year ago, but 40% less than the most recent import peak of 2.8 million metric tons in October 2008.

Figure 8 - U.S. Trade of All Steel Mill Products - Monthly

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Trade - Steel Import Changes by Country and Product Notable Increases

Average monthly quantity Nov 2010 Jan 2011 (metric tons) 11,750 7,969 8,731 119,309 142,027 143,565 12,959 5,599 9,696 13,984 Average monthly Percent quantity Feb change from 2010 Historic to Oct 2010 Current (metric average tons) quantity 13 1,156 1,928 40,204 64,340 65,649 6,125 3,137 6,355 10,223 638% 589% 352% 196% 120% 118% 111% 78% 52% 36%

Country NETHERLANDS SOUTH AFRICA AUSTRALIA BRAZIL BRAZIL BRAZIL TURKEY WORLD WORLD WORLD

Product Blooms, Billets and Slabs -- C & A Wire Rods -- C & A Plates Cut Lengths -- C & A Blooms, Billets and Slabs -- C & A All Carbon & Alloy Products All Products Oil Country Goods -- C & A Plates in Coils -- S Pressure Tubing -- C & A Tool Steel -- C & A

Notable Decreases
Average monthly quantity Nov 2010 Jan 2011 (metric tons) 46,041 46,031 54,304 26,640 Average monthly quantity Feb 2010 Oct 2010 (metric tons) 115,504 115,502 141,243 88,009 Percent change from Historic to Current average quantity -60% -60% -61% -69%

Country RUSSIA RUSSIA CANADA RUSSIA All Products

Product

All Carbon & Alloy Products Blooms, Billets and Slabs -- C & A Blooms, Billets and Slabs -- C & A

SOURCE: US Department of Commerce, Import Administration, SIMA Table last modified February 14, 2011, with Licensing data collected through January 2011 and Final Census data compiled through December 2010. A notable change is defined here by a significant decrease in the current three month average quantity over the previous nine months average quantity; the program examines the largest importers within each product group. Steel mill categories are defined by 10-digit HTS codes

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Production U.S. domestic capacity utilization maintained modest gains over a historic dip. o In November 2010, estimated capacity utilization was 68.3%. o Capacity utilization reached its lowest point, 40.8%, in April 2009. Though the capacity utilization rate has increased 67.4% above this low point, it still remains below the historical averages. According to data from the World Steel Association, U.S. steel production increased by 5.1% to 6.75 million metric tons in December 2010 from 6.42 million metric tons in November 2010. This marks a 15.1% increase from the U.S. December 2009 production level.

Figure 9 - U.S. Domestic Steel Capacity Utilization

Global steel production increased 1.3% to 116.2 million metric tons in December 2010 from 114.6 million metric tons in November 2010. o Global production has increased by 7.8% over the December 2009 level. o Chinas December 2010 production level increased by 2.3% to 51.5 million metric tons from 50.2 million metric tons in November. o The European Union 27 remains the second largest producer behind China with a December 2010 production level of 13 million metric tons, an 11.6% decrease from November 2010.

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Figure 10 - Monthly World Crude Steel Production

Figure 11 - Monthly Crude Steel Production - Major Producers

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Chinas share of total world steel production remained at 44% between November and December 2010, accounting for nearly half of monthly total world production. Chinas share is larger than the combined production of the U.S., the EU 27, Russia, and Japan, which historically were the largest producers of steel.

Figure 12 - Share of World Crude Steel Production

Demand Apparent consumption (used to measure domestic demand) for steel, excluding semi-finished products, increased 9.4% to 7 million metric tons in December 2010 from 6.4 million metric tons in November 2010. o December 2010 demand has increased 23.3% from one year ago. o Demand in December 2010 was 34.5% lower than May 2006, when steel demand was at its highest level in recent years.

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Figure 13 - U.S. Apparent Consumption of Steel Mill Products

Import penetration for all steel mill products in December 2010 decreased to 23.2% from 24.4% in November. Import penetration remains well below its eight-year high point of 37.8% in January 2009 but has increased since the August 2009 low of 17%.

Figure 14 - Import Penetration for All Steel Mill Products

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Trade Remedy Case Determinations- January/February 2011 Informal tracking of anti-dumping and countervailing case initiations, investigations, and orders applicable to steel products. Trade Remedies undertaken by the U.S. Product Drill Pipe Drill Pipe Country China China Department of Commerce Finding Affirmative Final Antidumping Duty Determination Affirmative Final Countervailing Duty Determination
Factsheets available at http://ia.ita.doc.gov/ia-highlights-and-

SOURCE: US Department of Commerce, Import Administration. news.html.

Industry Status As a whole, the U.S. steel industry, as represented below, posted a net loss of $341 million in the 4th Quarter. o According to publicly available figures, Commercial Metals Company, Carpenter Technology, and Steel Dynamics posted net gains for Q4 2010. o US Steel incurred a net loss of $249 million, its eighth consecutive quarterly loss since Q1 2009. AK Steel reported a quarterly net loss of $98.3 million. o Nucor reported a quarterly net loss of $11.4 million, its first net loss since Q3 2009. o The net income chart includes AK Steel, Carpenter Technology, Commercial Metals Company, Nucor, Steel Dynamics, and US Steel.

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Figure 15 - U.S. Steel Industry, Quarterly Net Income

Some charted steel stocks opened 2011 slightly above 2010 opening levels. o Indexed to January 4, 2010, steel stocks declined in value from April to June 2010, but have slowly moved in an upward trend through January 2011. o The steel stocks charts include the S&P 500, US Steel, Nucor, Steel Dynamics, AK Steel, and Mittal.

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Figure 16 - Steel Stocks vs. S&P 500, 1 Year Activity

SIMA Team Contact Information

Import Administration Office of Policy 14th & Constitution Ave., NW, Suite 2837
P P

Washington, DC 20230 Phone: (202) 482-2105 Fax: (202) 501-1377 Steel.License@trade.gov http://ia.ita.doc.gov/steel/license/index.html

ished 2/17/2011

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