WORLD Inside Track #194

STEEL Steel’s “Last Hurrah.”

HRB export price spike by next spring;

DYNAMICS ®
Steel demand stagnates there-after
due to rising inflation.
Early Warning System

CONTENTS
Page

 Steel’s “Last Hurrah.” 1

 Hot-rolled band export price outlook. 2
 Why an HRB export price spike early next year? 3
 WSD Waterfall Price Analysis 6
 Macroeconomic imponderables 7
 Iron ore: No full price recovery. Coking coal: Prices headed down. 9
 Different proportions for various steel industry “Times” over the cycle. 12
 Chinese steel production encapsulated. 12
 Steel demand outlook for 2022 15
 Why the “Last Hurrah?” 18
 Prime steel scrap is “King.” 18
 Cost advantage for well-positioned USA integrated mills 21
 Steel Price Rollercoaster forecasts from peak levels in H2 2022. 22
 Global steel marketplace developments – all over the lot. 24
 Some countries and regions with severe overcapacity. 28
 Price “spreads” in a number of cases at unsustainable highs. 28
 Green Revolution impacting steel market psychology more than volume. 32

Steel’s “Last Hurrah”

Despite the current weaker pricing on the global steel market, an “extreme” steel shortage is
forecast to occur by the spring of 2022. The hot-rolled band export price is expected to rise to
“Exospheric” levels – i.e., about $1,000-1,100 per tonne, FOB the port of export. We place the
odds at 60% on this scenario.

The shortage, if it occurs, will probably be the steel industry’s “Last Hurrah” in this cycle. By
the summer of 2022, less than a year from now, WSD thinks that rising inflation and higher
interest rates in many countries will have slowed the pace of the economic recovery outside of
China. And, in China, the residential construction market may still be stagnant because of
developers’ excess debt – which may restrain the country’s GDP growth to only about 4% per
annum.

October 12, 2021 Peter F. Marcus (201) 503-0902

Philipp G. Englin (201) 503-0908
Adam P. Green (201) 503-0916
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WORLDSTEELDYNAMICS
In 2023, relatively high inflation and boosted interest rates may cause global growth to be only
moderate. Hence, global steel oversupply and lower steel export prices may be “the norm” that
year.

The critical development in the second half of 2022, and in 2023, will be just how well home-
country prices hold up granted that the export market is weak. WSD’s expectation is that home-
market prices will hold up relatively well in good part because the steel industry in 2016 entered
an “Age of Protectionism” – that’s still in effect. Home market prices in a number of regions,
including North America, Europe, Russia/Ukraine and South America, should be sufficiently
high to provide the steel mills with fair to good profit opportunities. In an action that provides
support of this concept, ArcelorMittal on October 7, 2021 announced a 50 euro per tonne
surcharge on long steel products.

Hot-rolled band export price outlook

Please see our Steel Price Rollercoaster exhibit (page 20) for price forecasts for a variety of steel
products given different industry conditions. Regarding the hot-rolled band export price, FOB
the port of export:

 The current average HRB export price is about $900 per tonne – down from a high of
about $1,070 per tonne in May 2021. We understand that the Chinese are not making
any offerings, although the lack of offerings could be a function of the “Golden Week”
holiday that began on October 1st.

 Before year-end 2021, the HRB export price is forecast to bottom out at $750 - $800
per tonne. In fact, as of early October 2021, the Russian export price, FOB Black Sea
ports, is already down to $795-805 per tonne. (Note: A $700 per tonne export price
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WORLDSTEELDYNAMICS
might later this year might still qualify as a “shortage price” granted that the mills are
still be generating highs profit when exporting – which, for sure, will be the case
especially if iron ore prices stay down, after the decline from much ultra-high levels a
few months ago, and coking coal prices recede significantly from what WSD views to
be the current unsustainable high.)

 By the Spring of 2022, the price spikes up to $1,000- 1,100 per tonne. The critical
“driving force,” we believe, will be restrained Chinese steel production. Chinese steel
production annualized in early 2022 may be only about 0.98 billion tonnes – down 13%
from the peak rate of 1.12 billion tonnes in the first half of 2021. China’s steel
oversupply is now encapsulated in the country. A “wild card” in the months ahead is
the extent to which Chinese buyers step up their purchases of offshore scrap, billet, slab
and hot-rolled band – with some traders we speak to claiming that Chinese buyers are
currently in the market to purchase slab delivered to their ports at $725-$775 per tonne.

 In the third quarter of 2022, the price falls back to about $700 per tonne in a Good
Times industry environment. And, in the fourth quarter 2022, it drops to only about
$625 per tonne granted it’s a Fair Times industry environment. Steel buyers no longer
will be adding to inventory. Global steel demand will be stagnant.

 In the first quarter of 2023, the price hits a low of only about $475 per tonne in a Bad
Times industry environment. Then, it recovers as the year progresses to about $525 per
tonne assuming a Fair Times industry environment. (Note: The prospect for rising
global steel demand, reflecting rising Green Revolution investments, will not yet be
much of a factor in 2023.)

 In 2024-2030, the export price over the steel cycle averages about $515 per tonne.

Why an HRB export price spike early next year?

Sizable steel industry spot price movements are “de rigueur” – fashionable – because the steel
marketplace consists of never-ending psychological warfare between steel buyers and sellers.

HRB export prices may rally sharply, once the current period of price weakness ends, later this
year and early next year these reasons:

 Steel buyers will seek more inventory when they perceive the HRB steel export price has
bottomed. They already are witnessing energy shortages and other phenomena that’s
making them fearful about the supply of steel in 2022. If steel buyers seek to add 50
million tonnes to inventory over a period of three months, this amounts to 200 million
tonnes annualized. Hence, on a temporary basis, non-Chinese apparent steel demand in
early 2022 could even be up 10% year-to-year. Of course, during “steel buyers’ panics,”
the mills’ order backlogs escalate.

 China’s government policymakers in the next few months, in WSD’s opinion, will shift
to a far more promotional economic posture. They are no doubt painfully well aware of
the slowing economy. In fact, the government may even decide to support apartment
prices since these are now showing signs of substantial decline (a frightening prospect
since so many Chinese citizens have acquired wealth because of the price appreciation of
3
WORLDSTEELDYNAMICS
their apartments). (Note: Some apartment values per square meter in Shanghai and
Beijing rival those in New York, Tokyo, London and Paris.

 Chinese offerings of hot-rolled band on the world market will be down sharply to only
minor levels. Although, the Chinese mills will still be exporting higher-value-added
products including cold-rolled and galvanized coil, our trading contacts detect
diminishing enthusiasm on the part of the Chinese mills to export hot-rolled band.

 Policymakers in early 2022 will restrict steel output in the Beijing region in order to
lessen the air pollution risk during the Winter Olympics taking place in February in that
city. Holding back steel production is a double benefit for Chinese policymakers: first, it
diminishes the country’s energy intensity, which is as important a national goal of CO2
reduction; and, second, it helps to cap the country’s CO2 emissions (of which the steel
industry accounts for about 15% of the total).

 Surging natural gas prices in the USA, Europe and elsewhere will be boosting
steelmakers’ costs – given that many steel companies are sizable natural gas users. In the
United States, given the rise in heating needs this winter, some observers think that the
natural gas price – that’s already up to about $5.60 per million BTU versus $3.00 per
million BTU a few months ago – may rise briefly to $10 per million BTU. The natural
gas price in Europe has just risen to $39 per million BTU from $24 per million BTU a
few weeks ago and still surging. The export price of liquid petroleum gas (propane) from
the USA had a rare summer rally in 2021, with the price topping $1 per gallon for the
first time since 2004 (up 53% from the five-year average for June according to the
Energy Information Administration).

Natural Gas Price (USA)

15

13
$ per MBTU

10

Source: Thomson Reuters data

 The Brent crude oil price, at about $81 per barrel in early October 2021, is boosting the
expectation for: a) a significant rise in USA drilling activity – stimulating at least a one
million ton rise in oil country tubular goods demand from the current depressed level; and
b) a rekindling of spending on infrastructure projects especially in Russia and the Middle
East, given the improving cash flows of oil producing countries.

4
WORLDSTEELDYNAMICS
 Automotive production will be recovering globally as: a) the shortage of computer chips
is being rectified; and b) automotive dealerships will seek to replenish depleted
inventory.

 Fixed asset investment (FAI) outside of China as a share of the GDP will likely rise in
2022. If so, this development would be an important positive for steel demand since FAI
accounts for about 85% of non-Chinese steel demand and perhaps 93% of Chinese steel
demand.

 Capital spending will increase in many countries – as is already the case in China –
reflecting sharply improved profits for many industrial companies.
 Infrastructure spending rises as country policymakers allocate more funds to this
activity since they are expending less funds to stimulate their economy.

 Steel mill production costs will still be lofty in early 2022 assuming: a) prime steel scrap
prices are still elevated – negatively impacting EAF-based mini-sheet mills that typically
use about 30-40% of this type of steel scrap in their ”melt;” and b) coking coal prices are
still at lofty levels – although well down from the current $400 per tonne, FOB Australia.
In September 2021, based on WSD’s monthly World Cost Curve results, the median-cost
Chinese steel mill had an HRB operating cost including plant overhead of $696 per
tonne, with the non-Chinese median-cost mill at $615 per tonne. The figures in April
2020 were $468 and $465 per tonne, respectively.

 Many steel middleman companies – traders, steel service centers and processors – will
still find it difficult to finance the amount of inventory they need because the price is so
high. Many have used up their bank credits, with the banks less willing to make new
loans because, correctly, they fear steel price declines and the diminishment of inventory
values. Hence, many middleman companies, including traders, are not fully satisfying
their customers need for steel. (Note: We are in a new era in which the steel mills have
by far the greatest financial strength, not the middleman companies. Look for the steel
mills to acquire some of these.)

 Seaborne freight rates will remain high, in part because of an insufficient supply of ships
to carry the steel and also because too many are in queue at ports waiting to be unloaded.
The seaborne freight cost to deliver steel products from Black Sea ports to the Middle
East, North America and South America, in many cases, have at least doubled from the
normal historic figure of about $35 per tonne – with some quotes now in excess of $100
per tonne. High freight costs, of course, elevate home-market prices since the cost to
bring in steel from abroad has risen.

 The “spread” between the prices of different steel products and steel-related products in a
number of cases have widened in the past year to a point that WSD thinks is
unsustainable on a long-term basis; but, not necessarily to lower levels in a number of
cases by next Spring. Of course, the widening and contracting of spreads profoundly
impacts steel prices, with the steel mills usually the beneficiaries of widening spreads.
Here are two examples of unsustainable spreads:

5
WORLDSTEELDYNAMICS
 The Turkish export price for rebar, at $695 per tonne, FOB the port of export, is $232
per tonne above 80:20 steel scrap import price of about $463 per tonne. However, the
Turkish mini-mills’ operating cost to convert the scrap to rebar and re-load it on the
boat for export may only be about $160 per tonne. Hence, they are generating huge
profits.

 The USA home-market hot-rolled band price, ex-works, at $2,150 per tonne is almost
$1,300 per tonne above the HRB export price, FOB the port of export. Hence, even
with the USA’s Section 232 import tax of 25% – that’s been eliminated for Mexico
and Canada and may be waived for the EU steel mills this coming December 1st – the
USA market is an uniquely attractive outlet for foreign steel mills (especially in those
cases where deliveries are not already restricted by prior steel trade suits actins).

 The impact of the coronavirus epidemic in the next year may be lessened for the global
economy as more country policymakers learn how to cope with it.

WSD Waterfall Analysis: “Shifting HRB export “pricing power” for the steel mills

In the accompanying exhibit, we seek to investigate how much “pricing power” is in the hot-
rolled band export price when making adjustments for: a) the May 1, 2021 elimination of
China’s nonrefundable value-added tax on hot-rolled band exports; and b) the prices and usage
rates for iron ore delivered to China (for 62%-Fe sinter feed), good quality coking coal (FOB
Australia) and steel scrap (delivered to Turkey for the 80:20 heavy melting grade).

Pre-Covid Recent Mid-2022

*
(Q1 2020) Peak Current (Assumed)
Domestic China HRB Price $440 $805 $763 $650
13% VAT Removal Impact -- $105 $99 $85
Iron Ore ( usage = 1.6) $89 $233 $118 $110
Coking Coal (usage = 0.67) $156 $125 $390 $200
Scrap (usage = 0.20) $270 $525 $440 $360
$301 $562 $539 $382
Raw Materials Cost Impact -- $261 $238 $81
World Export HRB Price ** $483 $1,100 $911 $674
less derived World Export HRB Price $848 $820 $649
= Implied Supply "Tightness" Impact $252 $91 $25
* R eflects rou g h ly s im u ltan eou s p eak p rice p eriod s for iron ore p rice in May-Ju n e 2021, s crap an d HR P rices

**W orld P rice = P re Covid Q12020 p rice p lu s 13% V A T rem oval im p act p lu s R M cos t im p act

We also include the Chinese ex-works HRB price and the world HRB export price.

The starting point is the pre-Covid price in the first quarter of 2020. Second, we consider the
May-June 2021 time frame when the iron ore price delivered to China was at a peak of $233 per
tonne (versus the current $118 per tonne). Third, we make a forecast for the prices in mid-2022.

Then, when we compare the actual world export price to the derived price, the different is the
steel mills’ “pricing power” – which was nil in the first quarter of 2020, an estimated $252 per
6
WORLDSTEELDYNAMICS
tonne when prices were peaked in May-June 2021; about $91 per tonne at present; and estimated
to be $25 per tonne in mid-2022.

Regarding the pre-Covid price hot-rolled band export price, it was $483 per tonne, FOB the port
of export.

As of May-June 2021 peak time, it was the pre-Covid price of $483 per tonne, plus $105 per
tonne for the elimination of the Chinese 13% value added tax and $261 per tonne for the rise in
the prices of iron ore, coking coal and steel scrap, for a total of $848 per tonne. Hence, with the
export price peaked at $1,100 per tonne, the difference of $252 per tonne was the mills’ “pricing
power – or, one might say, their “economic rent.”

At the current time, the “pricing power” figure is $91 per tonne.

Looking ahead to the mid-2022, given our price assumption for the raw materials, the derived
price is $649 per tonne. However, if the mills’ “pricing power” at that time is $25 per tonne, the
derived HRB export price is $674 per tonne.

On balance, WSD hopes that this theoretical approach to the factors impacting the HRB export
price provides some insights into the real world pricing possibilities in the future.

Macroeconomic imponderables

The tie-in between the debt and cash in the global financial system and inflation is far from
precise given the complexity and continuously evolving structure of system. Yet, the rise in
money supply and government debt since 2019 has been sufficient for many observers, including
WSD, to worry that a significant rise in global inflation and interest rates may be less than two
years away. For example:

 Central banks since 2008 have pumped over $25 trillion into the global economy,
including $9 trillion in response to COVID-19 alone according to Bloomberg. Global
GDP, in comparison, is about $100 trillion per year. The four major central banks are the
USA’s Federal Reserve Bank, the Bank of Japan, the European Central Bank and the
Bank of England.

 “Quantitative easing” activities by Central Governments are just beginning to be lessened

– as “tapering” begins. Might this slow global economic growth? (Note: Quantitative
easing is an unconventional monetary policy in which a central bank purchases longer-
term securities in the open market in order to increase the money supply and encourage
lending and investment. In the USA’s case, the purchase of government bonds by the
Federal Reserve Bank are currently about $120 billion per month.)

 Global debt was approaching $300 trillion as of the third quarter of 2021, versus $250
trillion in 2019 and $210 trillion in 2015, according to the IIF (Institute of International
Finance).

7
WORLDSTEELDYNAMICS

 Since 2010, the U.S. Federal Reserve’s “quantitative easing” bond purchases have added
about $2 trillion to its assets according to the Atlantic Council’s “Global QE Tracker.”
(Note: The market value of the USA’s government bonds is about $46 trillion, while the
size of the global government bond market is about $119 trillion according to the
Securities Industry and Financial Markets Association (SIFMA). Huge investments in
the USA’s 10-year Treasury Notes have been made by investors needing to “park” a
portion of their funds, not yet invested, in these notes because they offer safety, liquidity
and, as of early October, 2021, an annual yield of 1.4%.

 The USA in 2021 will have a fiscal budget deficit at about 12.6% of GDP, the highest for
any advanced country (with Great Britain next at -10.9%). Its current account balance
deficit, that includes the trade balance, is 3.0% of GDP. The trade weighted value of the
U.S. dollar index is 106, up from 104 in July 2021, although down from a one-day peak
of 117 in March 23, 2020. A rise in USA interest rates, that seems to be anticipated,
would probably cause a further rush into the dollar.
USA Trade-Weighted Dollar Index
120

2
115 3 years
years
110
7
105 years
3
Index Jan 2006 = 100

2 years
years
100 4
years

95

90

85 3
years

80
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: Fred St. Louis

8
 WORLDSTEELDYNAMICS
Iron ore and coking coal

The price of these steelmakers’ raw materials at times, but not always as we’ve seen in the recent
upside spike in coking coal prices, is strongly impacted by Chinese pig iron production. For the
first eight months of 2021, Chinese pig iron output was up 0.6% year-to-year compared to a
5.3% rise in Chinese steel output.

Chinese pig iron production in 2022 is forecast, once again, to lag Chinese steel production
because: a) perhaps 20 million tonnes of new EAF steelmaking capacity will be commissioned
(part of the Chinese steel industry’s capital outlays of about $60-70 billion per year); and b) a
higher proportion of obsolete steel scrap, rather than pig iron, is charged into BOF steelmaking
furnaces in order to hold down CO2 emissions tied to pig iron production.

China’s Steel Supply: August 2021

Annualized Annualized
In Jan- Jan- Output Output
Aug., Aug.,
10,000 Product YoY YoY% Aug., Aug., YoY YoY% (Based on (Based on
2021 2020
tons 2021 2020 Aug. Jan-Aug.
Output) Output)
Crude
8324 9590 -1266 -13.2 73302 69613 3689 5.3 98008 110104
Steel
Output Pig Iron 7153 8046 -893 -11.1 60538 60177 361 0.6 84221 90932
Steel
10880 12102 -1222 -10.1 91833 85585 6248 7.3 128103 137938
Products
Steel -
106.3 224.0 -52.5 946.0 1218.6 -272.6 -22.4 1252 1421
Products 117.7
-
Import Billet 100 322.4 0 778 1137.4 -359.4 -31.6 1177 1169
222.4
Crude -
213.1 560.7 -62 1784.4 2433.8 -649.4 -26.7 2509 2680
steel 347.6
Steel
505.3 367.8 137.5 37.4 4810.4 3655.3 1155.1 31.6 5950 7225
Products
Export Billet 0 0 0 0 0.5 1 0 0 0 1
Crude
537.6 391.3 146.3 37.4 5117.9 3889.6 1228.3 31.6 6329 7687
steel
Steel
399 143.8 255.2 177.5 3864.4 2436.7 1427.7 58.6 4698 5805
Products
Net -
Billet -100 -322.4 222.4 0 -777.5 358.9 -31.6 -1177 -1168
Export 1136.4
Crude
324.5 -169.4 493.9 -291.5 3333.6 1455.8 1877.7 129 3820 5007
steel
Crude
8000 9759 -1760 -18 69968.4 68157 1812 2.7 94188 105097
Steel
Supply
Steel
10481 11959 -1478 -12.4 87968.6 83149 4820 5.8 123405 132134
Products
Source: SteelHome, NBS

 Iron ore in early October 2021 is priced at about $118 per tonne for 62% Fe sinter feed
delivered to China and is currently at $137 per tonne. This price is up from a recent brief
low of $90 per tonne, and down from a high of $233 per tonne in May 2021.

9
WORLDSTEELDYNAMICS
China Ex-Works Hot-Rolled Band Price vs
TSI Iron Ore 62% Fe CFR China
900 240

800 210

700 180
Iron Ore Price (RHS)

USD per Metric Tonne

USD per Metric Tonne

600 150

500 120

HRB Price (LHS)

400 90

Coefficient of Correlation
300 = .79 60

200 30
Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Jul-10
Oct-10

Jul-11
Oct-11

Jul-12
Oct-12

Jul-13
Oct-13

Jul-14
Oct-14

Jul-15
Oct-15

Jul-16
Oct-16

Jul-17
Oct-17

Jul-18
Oct-18

Jul-19
Oct-19

Jul-20
Oct-20

Jul-21
Oct-21
Apr-11

Apr-13
Apr-10

Apr-12

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18

Apr-19

Apr-20

Apr-21
Source: Steelbenchmarker, TSI

If a renewed brief hot-rolled band extreme steel export price peak recurs as forecast by
the spring of 2022, the iron ore price delivered to China may rally only to about $155 per
tonne (for 62% Fe sinter feed), if that, because Chinese pig iron output will be
constrained.

 Coking coal, FOB Australia, by next spring, given some rise in spot sales and little
change in usage rates, could fall back to $220 per tonne from the current ultra-elevated
figure of about $400 per tonne. Other coking coal prices are also vulnerable, including
the current $460 per tonne for good quality coking coal delivered to China, and $560 per
tonne, FOB the coal mines in China’s Shanxi Province.

In China, deliveries of mid-quality coking coal from Mongolia are apparently being
somewhat restrained by truck driver Covid problems. With coking coal deliveries from
Australia banned since October 2020, the deliveries of about 40 million tonnes coming
from Australia per annum are being offset by rising deliveries from the USA, Canada and
Russia. (Note: The Australian coking coal producers’ operating cost, delivered to the
port of export, is about $80-90 per tonne, says a key contact.)

Key development: Because of severe steam coal shortages, China is now encouraging its
coal mines to ramp up their output of this product.

10
WORLDSTEELDYNAMICS
Australian Coking Coal FOB vs China Shanxi Coking Coal
600

500

Australian Premium Low Vol Coking Coal

400
USD per tonne

300

200

China Shanxi Coking Coal

100
(ex-works)

0
Aug-08

Aug-15
Aug-05
Feb-06
Aug-06
Feb-07
Aug-07
Feb-08

Feb-09
Aug-09
Feb-10
Aug-10
Feb-11
Aug-11
Feb-12
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15

Feb-16
Aug-16
Feb-17
Aug-17
Feb-18
Aug-18
Feb-19
Aug-19
Feb-20
Aug-20
Feb-21
Aug-21
Source: SBB, Steelhome, Thomson Reuters

The USA steel mills in 2021, say our contacts, bought a good portion of their coking coal
at a price of about $120 per tonne delivered to the steel plant; or, about $80 per ton at the
coal mines’ preparation plants. In 2022, these steel mills will likely be facing a $100 per
tonne boost in the price for coking coal. (Note: USA steam and coking coal production
in the last seven years has fallen from about 1 billion short tons per year to about 535
million tonnes per year. Our contacts say that, presently, there’s no spot coking coal
available for sale.)

11
WORLDSTEELDYNAMICS
Different shares of the steel cycle for different industry “Times”

Some of the developments that have caused the current steel industry to be transformed to a
“Golden Profit Age” are medium- to longer-term in nature. Hence, in order to reflect the impact
of these new developments, WSD is adjusting its estimate for the share of different “times” to be
in effect over the steel cycle.

Portion of Steel “Times” over the Steel Cycle

(measured in terms of the HRB export price)

Time Prior Assumption New Assumption

- - - - - proportion of the cycle - - - - -

Shake-Out Times 5% 5%

Bad Times 25% 25%

Fair Times 30% 25%

Good Times 30% 35%

Boom Times* 10% 10%

*Share of the shortages that will

include a surge in the HRB export
price to lofty “Exosphere” levels.
40% 75%

Odds for Various “Times” Over the Steel Cycle

(based on the price of hot-rolled band export price per tonne )
Over Cycle
Scenario/Odds Oct. 21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2-4/23 2024-2030
----------------(percent)----------------
Shake-out times 0 0 0 5 10 10 20 15 10
Bad times 0 0 5 5 20 25 30 25 20
Fair times 0 5 10 10 20 30 25 30 25
Good times 0 5 25 25 30 20 15 15 35
Boom times 100 90 60 55 20 15 10 15 10
Note: Pricing “death spirals,” that occur only in Shake-Out Times, last only a few months.

Hooray! China’s oversupply of steel is encapsulated in the country

The mandated Chinese steel production restraints, with hints of this policy becoming evident in
late 2020, are quite the miracle for non-Chinese steelmakers. Chinese steel mills will not be
permitted by mandate to respond strongly when export prices are well above the home price – as
is currently the case with the export price at $925 per tonne, FOB the port of export, and the
domestic price delivered to the local marketplace at $771 per tonne (before at least an extra $15
per tonne to ship the product to the port of export, or an estimated $25 per tonne to deliver the
product to the port of export and to load it on the boat and incur other expenses).
12
WORLDSTEELDYNAMICS
 Chinese steel production in the second half of 2021 may amount to only 490-500 million
tonnes versus 560 million tonnes in the first half of 2021- with the current reduced rate
likely at least in the early months of 2022.

 At the just-completed latest U.N. General Assembly Meeting in New York, Xi Jinping,
the country’s President, reiterated his September 2021 commitment that the Chinese
economy will become “carbon neutral” by 2060. (Note: Of course, all Chinese
policymakers at the Central Government, provincial and municipal level have “bought
into” this prospect – they are working to reduce the economy’s energy intensity and
suppress steel production that accounts for about 15% of China’s CO2 emissions.) It was
also announced at the recent U.N. meeting that the Chinese will no longer be financing
the construction of coal-based power plants outside of the country.

 The inflation rate in China is the highest in 13 years, and Chinese bank credit growth is
the slowest since February 2020.

Steel production outside of China has the potential to rise significantly by next summer

The Supply Constraint is evident in the fact steel production has yet to rebound or exceed pre-
Covid levels in any part of the world; net export regions such as Advanced Asia and CIS are still
under-producing thereby contributing to tight international markets.

Regional Steel Production Trends: Covid Lows v. Current Situation

0%

-10%

-20%

-30%

-40%

-50%

-60%

-70%
European Other Europe C.I.S. (6) North America South America Middle East China Asia ex China Advanced Asia Other Asia
Union (27)
2020 Low v. Recent High April 2021 v. Recent High Aug 2021 v. Recent High

13
 WORLDSTEELDYNAMICS
As indicated in the following table, annualized steel production in August 2021 was well below
the monthly peak since 2019 in the European Union, North America, the CIS and Advanced
Asia.

Steel Production August 2021, Recent Peak versus Upside Annualized

(million metric tonnes)

Dec. 2020 Aug. 2021 Dec. 2020 Aug. 2021 Peak since Aug. 2021 vs Peak
Country/Region Annualized Annualized 2019 Upside Annualized
Steel production
European Union 11.3 11.6 133.1 136.5 15.0 (41.4)
Latin America 3.7 4.0 43.9 46.6 4.0 (0.0)
North America 9.2 10.2 108.7 119.8 10.7 (5.7)
CIS 9.2 8.8 108.7 104.1 9.2 (4.6)
Advanced Asia 15.3 16.0 181.2 188.4 17.4 (16.6)
Subtotal
(5 regions above) 48.7 50.6 575.5 595.4 56.3 (68.4)
USA 6.4 7.5 75.6 88.6 7.7 (2.0)
China 91.2 83.2 1,076.7 980.1 99.5 (194.6)
World ex-China 69.6 73.6 821.7 866.2 76.6 (36.1)
World total 160.8 156.8 1,898.5 1,846.3 176.0 (230.7)
Source: WSA, WSD Estimates

World Steel Dynamics' Crude Steel Forecast

(million metric tonnes)

2015 2018 2019 2020 2021e 2022e 2030e 2050e

Year Year Q1 Q2 Q3 Q4 Year

Advanced Countries 448 461 447 392 109 113 117 120 459 474 443 417
Japan 105.1 104.3 99.3 83.2 23.4 24.3 25.0 26.0 98.7 101.0 89.0 85.0
South Korea 69.7 72.4 71.4 66.8 17.6 17.6 18.6 19.0 72.8 74.2 73.0 72.0
Western Europe 137.8 136.6 130.6 114.3 33.2 34.9 36.0 37.0 141.1 146.0 130.0 120.0
United States 78.8 86.6 87.9 72.7 20.4 21.6 22.5 23.0 87.5 90.4 94.3 80.0
Small Cap. Adv. 56.8 61.1 58.1 55.1 14.5 14.2 15.0 15.0 58.7 62.0 57.0 60.0
China* 869 928 996 1,054 269 294 252 250 1,065 1,060 1,000 800

Developing World ex-China 368 416 423 403 112 111 113 116 452 474 583 767
Africa 6.6 6.5 5.9 4.1 1.7 1.7 1.7 1.7 6.8 7.2 9.9 11.0
Brazil 33.3 34.7 32.2 31.0 8.7 9.4 9.3 9.6 37.0 38.5 41.0 43.0
CIS 101.6 101.3 100.6 102.0 26.3 27.0 27.0 27.5 107.8 110.8 105.2 110.0
Eastern Europe 15.0 17.7 15.8 14.0 3.7 3.8 3.9 4.0 15.4 17.0 17.0 20.0
Developing Asia 23.8 33.9 41.1 38.6 11.4 11.4 11.4 11.4 45.6 48.0 94.2 127.0
India 89.0 106.5 111.2 99.6 30.1 27.8 29.5 30.5 117.9 125.0 175.0 300.0
Latin America 30.3 30.8 28.6 25.0 6.9 7.0 7.1 7.2 28.2 29.9 37.1 40.0
MENA 36.5 47.3 53.9 53.2 13.5 13.4 13.5 13.7 54.1 56.5 61.2 71.0
Turkey 31.5 37.3 33.8 35.8 9.8 9.9 9.9 10.0 39.6 41.0 42.0 45.0
World Total 1,685 1,805 1,866 1,850 490 518 482 486 1,976 2,008 2,026 1,984
World Ex-China 815.9 877.1 870 795 221.2 224.0 230.4 235.6 911 947.6 1026.0 1184.0
Source: WSD Estimates, WSA
*Includes WSD's estimates for induction furnace production

14
WORLDSTEELDYNAMICS
One factor restraining output is that, given the steel industry’s ongoing “Age of Protectionism,”
that’s been in effect since the Fall of 2016, is some of the major steel companies are acting like
oligopolists – i.e., not fearing a surge of imports even when they restrain steel output.

 In the EU, where the issuances of CO2 production allowances will be declining each year,
some steel mills may not be boosting output because they are reluctant to pay a carbon
tax of about $144 per tonne (with two tonnes of carbon needed to be purchased per tonne
of extra output).

 In the USA, the integrated steel mills understand that, if their output is boosted sharply,
the industry’s steel sheet supply/demand balance – that’s already on the verge of turning
negative because of rising imports and major hot-rolled band capacity additions in
Northern Mexico and the U.S. Gulf – will worsen.

Steel production outside of China in early 2022 may not be sufficient

Non-Chinese steel production could fall short in the first quarter of 2022 when compared to
what’s needed to balance global steel demand and supply. This possibility assumes: a) a
moderate rise in apparent steel demand in China – let’s say 2%; b) a strong gain in non-Chinese
apparent steel demand – perhaps temporarily as much as 7% year-to-year when including steel
buyer inventory accumulations; and c) restrained Chinese steel production early in the year to
less than a 1.0 billion tonne annual rate. If so, non-Chinese output in 2022, especially early in
the year, might need to rise to a 1.0 billion tonne annual rate versus 795 million tonnes in 2020
and the August 2021 annual rate at 866 million tonnes.

Here’s a wild card. Steel market psychology will shift strongly to the non-Chinese steel mills’
favor if Chinese buyers, as was the case for five months in 2021, begin to purchase sizable
offshore quantities of pig iron, steel scrap, directly reduced iron, billet, slab and hot-rolled band.
This development could trigger a “volcanic” rise in steel export prices, in WSD’s opinion.

The steel demand outlook for early 2022 appears to be quite favorable

Chinese apparent steel demand in 2022, after perhaps a decline of 0.6% in 2021 versus 2020 –
and the current 15% year-to-year decline, largely due to stagnating residential construction
activity, may range from a fall of 2% to a rise of 4% depending on: a) the extent of the
government’s economic stimulation efforts; and b) steel buyers’ inventory intentions. In recent
months, new home sales have been down about 25% year-to-year; existing home sales have been
off more than 40% year-to-year, and land sales (a sizable source of municipal revenues) are
down 15-25%, if not more. The country’s land sales in 2020 peaked at $1.3 trillion – or, about
9% of the country’s GDP at that time.

Regarding the $300 billion of debt that Evergrande, a leading Chinese property developer, can’t
refinance, a number of the company’s bondholders are apparently destined to suffer huge losses.
However, we assume that the Chinese financial system is so vast, and in some respects flexible
because it’s part of a “command” economic system, that the country’s credit rating won’t be
destroyed.

15
WORLDSTEELDYNAMICS
A new problem for housing prices in China, say press articles, is significant cuts in the prices of
apartments by private construction companies in order to generate enough cash to improve their
balance sheet.

Selected Factoids on the China’s Economy

These include:

 Fixed asset investment (FAI) spending at about 43% of GDP – including

infrastructure spending at about 10%; residential construction at about 15% and
capital spending by industry at about 18%.

 Roughly 25% of China’s manufacturing economy is devoted to exports, which are

booming because its high quality products are offered for sale at favorable prices.

 The country’s savings rate, at about to 48% of GDP, is the aggregation of about 22%
for industry (in the form of retained earnings), 20% for households and 6% for
government. The high savings rate generates huge cash flows for the country’s state-
owned banks. (Note: If the household savings rate in China has plummeted in recent
years, which is the opinion of some observers, perhaps the savings rate is closer to
40% of GDP.)

 Chinese GDP consists of about 54% services, 8% agriculture and 38% industry.

 China’s offshore debt, including dollar-denominated debt, at the end of 2020 reached
$2.4 trillion, which compares to its estimated GDP in 2021 of $14.6 trillion (versus
about $23 trillion for the United States).

 When it so wishes, in WSD’s opinion, the Chinese Central Government can refinance
its municipalities’ sizable short-term debt with higher interest rate paying long-term
debt.

Currently, Chinese monthly apparent steel demand is down about 15% on a year-to-year basis.
Please see the accompanying table. Already, the Chinese government, as of mid-year 2021, has
been promoting a rise in infrastructure spending.

16
WORLDSTEELDYNAMICS
Numerical Realities: China
Net Trade Production Production % ASC ASC %
mt mt y/y y/y
2014 79.4 813 734
2015 99.6 801 -1.6% 701 -4.5%
2016 96.7 807 0.8% 710 1.3%
2017 62.3 848 5.1% 786 10.6%
2018 56.3 928 9.4% 871 10.9%
2019 52.0 996 7.4% 944 8.3%
2020 33.4 1,055 5.9% 1,021 8.2%
2020H1 43.1 1,011 1.5% 968 2.5%
2020H2 24.0 1,098 10.2% 1,074 13.8%
2021H1 30.0 1,136 7.7% 1,106 8.3%
2021/2022 Forecast Scenarios
2021F 39.8 1,055 0.0% 1,015 -0.6%
2022-Low 40.1 1,035 -1.9% 995 -2.0%
2022-Mid 19.5 1,055 0.0% 1,036 2.0%
2022-High 9.2 1,065 0.9% 1,056 4.0%
Jan-Aug 2021
Annualized 58.0 1,097 1,039

Outside of China in 2022, apparent steel demand is expected by WSD to rise no less than 2%
year-to-year, and perhaps as much as 7% given the many upside “multipliers” currently at work
in the global non-Chinese economy, plus the impact of possible steel inventory additions. As
noted earlier, positives for steel demand are forecast to include: a) higher capital spending by
enterprises in most countries in response to increased profitability; b) boosted infrastructure
spending as governments divert more funds to this activity; and c) increased consumer spending
despite reports that household savings rates in a number of countries are rising.

Numerical Realities: World ex-China

Net Trade Production Production % ASC ASC % *Supply Δ HRB HRB %
2014 -79.4 847 933 $544
2015 -99.6 816 -3.7% 924 -1.0% -29 $370 -32%
2016 -96.7 819 0.4% 924 0.0% 3 $382 3%
2017 -62.3 857 4.6% 925 0.0% 35 $530 39%
2018 -56.3 877 2.3% 938 1.5% 19 $586 11%
2019 -52.0 870 -0.8% 927 -1.3% -7 $498 -15%
2020 -33.4 795 -8.6% 831 -10.3% -77 $487 -2%
2020H1 -43.1 752 -13.6% 799 -13.8% -119 $443 -11%
2020H2 -24.0 795 -8.6% 821 -11.4% -77 $546 10%
2021H1 -30.0 888 11.8% 921 10.8% 93 $899 85%
2021/2022 Forecast Scenarios
2021F -39.8 911 14.6% 954 14.8% 116
2022-Low -40.1 930 2.1% 973 2.0% 33
2022-Mid -19.5 981 7.7% 1002 5.0% 195
2022-High -9.2 1,011 11.0% 1,021 7.0% 100
Jan-Aug 2021 $900
Annualized -58.0 885 948 (Sep 2021)
*Change in apparent steel consumption and change in net exports from China.
Source: WSA, Steelhome, WSD Estimates, Steelbenchmarker

17
WORLDSTEELDYNAMICS
Why the “Last Hurrah”?

The fundamental reason is slowed global steel demand growth starting perhaps in mid-2022,
reflecting rising interest rates, that’s sufficient to create global steel oversupply.

Inflation indicators are sprouting. Natural gas prices are taking off. Energy shortages and
brownouts are now appearing in China and the European Union, with perhaps the USA next in
line. Food prices are up sharply. Ports are congested. Products with extended manufacturing
processes are suffering from production disruptions. In the USA, the United Parcel Service has
raised its rates about 12% in the past two years.

Steam coal shortages have developed in China, with the price of steam coal up to about $212 per
tonne from about $80 per tonne excluding VAT – with electricity shortages likely to continue in
the months ahead. China’s producer price index is recently up 9.5% year-to-year, the most in 13
years.
Report

Prime steel scrap is “King”

WSD is boosting its estimate for the prime steel scrap price delivered to the USA steel plant over
the steel cycle to $450 per tonne from $350 per tonne. Reasons include:

 The supply of prime steel scrap is price inelastic. Its supply is just above 200 million
tonnes per year – i.e., about 11.5% of the steel products delivered to steel users (that at
present is about 1.8 billion tonnes per year assuming a 90% steel product to steel
production ratio). The generation of new steel scrap in the United States is about 11.5
million tonnes per year.

 Demand for prime steel scrap will rise significantly in the next decade due to: a) the
rising number of EAF-based mini-sheet mills that depend on prime scrap or its
alternatives (directly reduced iron and purchased pig iron) for at least 40-50% of their
metallics charge; and b) new EAF steelmaking units to be installed in integrated steel
plants that are part of new process routes to lessen CO2 emissions.

 In the USA, Nucor and U.S. Steel have each just announced a new 3 million ton per
year EAF-based hot-rolled band producing plant – Nucor’s will serve the industrial
Midwest, while the U.S. Steel unit could be located on the river system in the southern
portion of the United States.

A transformative USA steel industry development is the Cleveland Cliffs just-

announced acquisition of the Midwest’s Ferrous Processing Company (FPT) for
$775 million. FPT has an estimated 15% share of the USA’s prime steel scrap market. It
has about 22 scrap processing locations and processes about 3 million tonnes of steel
scrap per year.

 The Nucor and USS capacity additions come on top of roughly 12 million tons of
capacity already just completed and/or in the completion process. The list includes
Big River Steel in Arkansas at 1.5 mmtpy, which will boost its output to 3.0 mmtpy;
Nucor at 2.0 mmtpy at several plants including Gallatin, Kentucky; ArcelorMittal/Nippon
18
WORLDSTEELDYNAMICS
Steel with 1.5 mmtpy of new EAF steelmaking capacity at Calvert, Alabama; JSW of
India with 1.3 mmtpy at Mingo Junction just to the southwest of Pittsburgh; North Star
Steel in Ohio at 1.5 mmtpy; SDI in Sinton, Texas, near Corpus Christi at 3.0 mmtpy; and,
USS at 1.5 mmtpy at its Fairfield, Alabama plant near Birmingham.

World HRB Price vs. USA Prime Industrial Scrap Price

1,200

1,000 Global HRB Price,

FOB the port
Dollars per Tonne

800

600

400

200
USA Prime Industrial
Scrap

0
Jan-07

Jan-16
Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Source: WSD PriceTracker and SteelBenchmarkerTM

 Steel scrap is an international commodity. Global steel scrap trade is about 100
million tonnes per year.

 Steel scrap consumption by the global steel and foundry industries in 2021 is estimated as
follows:

 Home scrap for the steel industry amounts to about 11.5% of crude production =
about 230 million tonnes per year (mmtpy).
 Prime scrap amounts to about 11.5% of the steel finished products and semis
delivered to steel users = 11.5% X 1.8 billion tonnes per year = 207 mmtpy

 Obsolete scrap is a function of the size of the obsolete steel scrap reservoir that’s 10-
40 years old. It’s currently about 15 billion tonnes / 31 years = about 483 million
tonnes in 2020. Given the prodigious rise that will be assuring in this reservoir by
2045, there will be a huge excess supply of obsolete scrap in China:

 In 2020, the obsolete steel scrap reservoir 10-40 years old was 4.3 billion tonnes
in China and 10.6 billion tonnes in the Rest of World.

19
WORLDSTEELDYNAMICS
 In 2045, the figures will be about 18 billion tonnes for China and 15 billion tonnes
for the Rest of World. Hence, the reservoir 10-40 years old in China’s case rises
by from 4 billion tonnes in 2020 to 18 billion tonnes in 2045 – which, if we divide
by the holdings in the reservoir over 31 means, indicated that Chinese steel scrap
recovery rises to 580 million tonnes in 2045 from 140 million tonnes in 2020, for
a gain of 440 million tonnes.

 Global scrap consumption for the steel and steel foundry industries in 2020 was about
928 million tonnes per year.

 The global supply of prime steel scrap supply in 2050 may be 15% lower than in 2020
reflecting: a) no growth of global steel demand due to the decline in China; and b) more
tailored steel products and more effective manufacturing techniques that, together,
generate perhaps 15% less prime scrap per tonne as a share of what’s shipped to steel
users. If global steel production is the same in 2050 as in 2020 – which is WSD’s
forecast – and the share of new scrap that’s generated declines to 10.0% of what’s
delivered to the manufacturer versus 11.5% at present, about 20 million tonnes less new
scrap will be generated per annum than at the present time.

 The rise in the copper residuals in obsolete steel scrap in the years ahead will require that
more new scrap will be needed to “sweeten” the scrap that’s charged into the steelmaking
furnace.

 Pig iron production for international sales could be restricted because blast furnaces are
one of the steel industry’s major sources of CO2 emissions.

New prime steel scrap price estimates over the steel cycle

The forecast price over the steel cycle rise is higher by $130 per tonne, as indicated below:

Prime Steel Scrap Price Over The Cycle

(per tonne, delivered to USA steel plant)

What part of steel cycle? Prior Assumption New Assumption

% of Time Price % of Time Price

Shake-Out Times 5% $180 5% $260

Bad Times 25% $225 25% $360

Fair Times 30% $325 25% $430

Good Times 30% $430 35% $495

Boom Times* 10% $575 10% $620

AVERAGE OVER CYCLE -- $350 -- $450

20
WORLDSTEELDYNAMICS
Cost advantage for well-positioned USA integrated mills

When prime steel scrap is so high priced, and because its price impacts the prices of DRI
(directly reduced iron) and merchant pig iron, EAF-based mini-sheet mills are currently suffering
a significant – at least $200 per tonne – operating cost disadvantage to produce hot-rolled band
versus well-positioned USA integrated steel plants with their own iron ore mines.

 Several leading USA-based integrated steel plants, with their own iron ore pellet supply,
have an HRB operating cost of about $530 per metric tonne versus about $710 per tonne
for leading EAF-based mini-mill plants – based on WSD’s monthly World Cost Curve
September 2021 data. If the price of coking coal in 2022 rises by about $100 per tonne
delivered to the integrated steel plant, as expected, this development will boost the USA
integrated steel plants HRB operating costs by $50-60 per tonne – which would reduce
their HRB operating cost advantage versus the EAF-based mini-sheet mills to less than
$180 per tonne. (Note: The mini-sheet mills typically enjoy lower costs per tonne than
their integrated mill competitors when converting hot-rolled band to cold-rolled and
galvanized coil – although, a higher proportion of the integrated mills’ product may have
higher value-added characteristics.)

A number of integrated steelmakers elsewhere in the world have ultra-low operating

costs:

 In Russia, integrated producers with their own iron ore and coking coal mines
have an HRB operating cost in the $295 to $320 per tonne.

 In India, the HRB operating cost for the lower cost plants is in the $296- $398 per
tonne range.

USA HRB Cost: Integrated Mill vs. Mini Mill

$800 $350

$750 $300

$700 $250

$650 $200

$600 $150

$550 $100

$500 $50

$450 $0

$400 -$50

$350 -$100

$300 -$150
Nov-11 Oct-12 Apr-13 Aug-14 Dec-15 May-16 Dec-16 May-17 Dec-17 May-18 Dec-18 Mar-19 Dec-19 Feb-20 Apr-20 Dec-20 Mar-21 Jun-21 Sep-21
Integrated (left scale) Mini (left scale) Difference to Mini (right scale)

21
WORLDSTEELDYNAMICS
Steel Price Rollercoaster forecasts

The hot-rolled band export price, FOB the port of export is THE bellwether global price for the
steel sheet business because, sooner or later, this price impact the others. In the accompanying
Steel Price Rollercoaster, it is forecast as follows:

Q4 2021: The price recedes from the current $900 per tonne, but remains high enough
to still be in the steel shortage price territory. It is not expected to fall below
$700 per tonne; possibly averaging about $800 per tonne.

Q1 2022: Price rallies to $1,000-1,200 per tonne in the first quarter, and/or by April
2022. The price is far above the mills’ cost.

Q2 2022: The price declines during the quarter, averaging about $900 per tonne –
although, the price is high enough to sustain the shortage condition.

Q3 2022: The price drops to about $700 per tonne. It’s no longer a shortage condition.
The industry is in the “Good Times” portion of the cycle.

Q4 2022: Price falls to $625 per tonne in a “Fair Times” industry environment.

Q1 2023: In a “Bad Times” industry environment, the price bottoms at about $440 per
tonne; and, averages about $475 per tonne.

Q2 to Q4
2023: Industry in a “Fair Times” environment. Price averages $525 per tonne.

2024 to
2030: For this seven year period, the price over the steel cycle averages $515 per
tonne.

22
 World Steel Dynamics' Steel Price Rollercoaster Worksheet
(as of Oct. 12, 2021) (USD per tonne)
Apr Aug Sept. Oct.
2015
Mar 2016
2016 2017 2018 2019 2020 2021 2022 2023 2024-2030
Product/Price 2020 2021 2021 2021
Oct. Q4 Q1 Q2 Q3 Q4 Q1 Q2-Q4 Over
Shortage Early Shortage Shortage Boom Boom Good Fair Bad Fair the Cycle
Times Times Times Times Times Times Average
Hot-rolled band (mt) Odds 100% 90% 60% 55% 30% 30% 30% 30% 35%
World export market (FOB)* 370 382 530 580 498 487 390 970 900 900 850 800 1,000 900 700 625 475 525 515
China export (FOB)** 302 344 506 563 489 490 390 925 927 925 850 800 980 900 690 620 475 560 490
USA (ex-works)* 512 580 685 916 677 647 520 2,100 2,160 2,150 2,000 1,800 1,600 1,300 950 750 640 720 690
European Union (ex-works)* 419 460 603 659 527 527 457 1,330 1,230 1,210 1,250 1,200 1,100 1,000 850 700 580 670 680
China (ex-works)** 301 353 474 523 465 468 402 747 761 771 740 750 775 750 560 500 435 470 470
China REBAR (ex-works)** 297 313 479 528 480 457 418 678 752 770 680 700 735 700 550 500 425 440 450
Turkey export REBAR 406 391 472 533 450 448 380 675 660 695 685 580 750 680 600 450 440 530 530
5-2 104 -34 -30
HRB Operating Cost median-cost mill
China (ex-works) 374 398 456 484 494 502 468 693 696 752e - - - - - - - - -
All but China (ex-works) 384 404 472 490 490 478 465 638 615 655e - - - - - - - - -

Steel Production (mt) / (annualized)

China 804 808 832 927 996 1,053 1,037 - - - - - - - - - - - -
All but China 816 819 860 880 871 776 646 - - - - - - - - - - - -

Semi-Finished Products
Billet (FOB Black Sea)** 329 327 435 488 408 410 355 605 595 610 620 650 750 650 600 425 360 420 432
Slab (FOB Black Sea)** 289 321 438 503 409 424 335 785 715 670 700 700 900 800 700 450 360 420 435
Raw materials
Iron Ore sinter feed (to China)** 55 57 69 68 93 111 84 137 112 137 137 120 130 155 130 110 90 100 84
Chinese iron ore (Hebei province) 76 86 94 95 109 119 98 187 144 153 153 150 150 175 150 125 105 115 110
Pellet premium** 31 31 45 58 29 29 31 78 75 55 55 50 50 60 45 30 30 35 45

23
Coking coal spot (FOB Australia)** 87 142 189 205 178 125 130 230 400 401 401 350 300 220 180 140 120 130 135
Coking coal (Shanxi province)# 93 128 182 208 198 156 162 348 548 548 548 450 370 240 200 180 125 135 135
Pig Iron N. Brazil FOB## 256 253 358 385 332 332 300 545 480 490 490 500 600 610 530 500 305 420 490
Met. Coke (FOB China)## 144 193 303 350 323 289 260 501 626 621 621 650 500 375 300 250 330 350 186

Steel scrap (lt) 40

USA #1 HM (to mill)* 212 204 273 325 254 242 193 443 418 418 430 410 480 455 400 350 270 320 335
WORLDSTEELDYNAMICS

USA shredded (to mill)* 236 229 296 354 282 277 227 483 460 465 480 445 535 500 450 380 290 360 365
USA prime (to mill)* 239 238 358 396 303 302 265 650 595 620 580 540 630 600 520 500 345 425 450
80/20 HM to Turkey** 236 236 301 336 286 293 256 448 433 463 465 435 500 475 415 370 290 355 370
iron ore + coking coal cost 204 256 318 331 346 327 289 463 576 617 617 544 515 483 407 339 289 314 293
80/20 premium (discount) vs IO + CC cost 32 -20 -17 6 -60 -34 -33 -15 -143 -154 -152 -109 -15 -8 8 31 1 41 77
Spreads
World export HRB less Iron Ore/Coal Cost 166 126 212 250 152 160 101 507 324 283 233 256 485 417 293 286 186 211 222
USA HRB vs USA Shredded Scrap 276 351 389 562 395 370 293 1,617 1,700 1,685 1520 1355 1065 800 500 370 350 360 325
USA HRB vs World Export HRB 142 198 155 336 179 160 130 1,130 1,260 1,250 1150 1000 600 400 250 125 165 195 175
Turkey Export REBAR less 80/20 HM to Turkey170 155 171 197 164 155 124 227 227 232 220 145 250 205 185 80 150 175 160
Slab less Iron Ore/Coal Cost 85 65 120 173 63 97 46 322 139 53 83 156 385 317 293 111 71 106 142
USA HRB vs China HRB 211 227 211 383 212 179 140 1,353 1,399 1,379 1260 1050 825 550 390 250 205 250 220
USA HRB vs Europe HRB 93 120 82 257 150 120 63 770 930 940 750 600 500 300 100 50 60 50 10
China HRB (ex-works) less Iron Ore/Coal Cost 97 97 156 193 119 141 113 284 185 154 123 206 260 267 153 161 146 156 177
Brazilian Pig Iron vs Prime Scrap 17 15 0 -11 29 30 35 -105 -115 -130 -90 -40 -30 10 10 0 -40 -5 40
Other
10 year Treasury Note interest rate 2.09 2.43 2.33 2.92 2.08 0.83 0.64 1.28 1.33 1.47 - - - - - - - - -
RMB per U.S. dollar 6.29 6.65 6.73 6.64 6.90 6.89 7.07 6.47 6.45 6.45 - - - - - - - - -
U.S. Dollar per Euro 1.103 1.103 1.139 1.178 1.117 1.148 1.087 1.18 1.19 1.16 - - - - - - - - -
Brent Crude oil price per barrel 54 57 56 65 65 43 26 71 73 81 - - - - - - - - -
EU Emissions Carbon Price (USD per tonne) 9 6 7 21 28 29 22 68 73 72 - - - - - - - - -
Sources:
*Steelbenchmarker **SBB #Mysteel ##Metal Expert
Note:These forecasts are speculative and are not to be used for transactions
WORLDSTEELDYNAMICS
Global steel marketplace “hi-jinks”

As of early October 2021, the average hot-rolled band export price is about $900 per tonne, FOB
the port of export. The Russian-Ukrainian steel mills, FOB Black Sea ports, appears to be
making offerings at roughly $800 per tonne, which is the low end of the range.

The Chinese steel mills’ export quotes, surprisingly, are now near the high-end of the range at
about $925 per tonne reflecting the governmental mandate that steel production be reduced and
exports limited. Chinese steel production may average only about 80 million tonnes per month
in the last four months of 2021, versus 96 million tonnes per month in March to June of 2021.
Chinese apparent steel demand the past few months has been down 10-15% on a year-to-year
basis, in good part due to lower residential construction activity.

China Steel Import Export

Finished Finished Semi-finished Semi-finished Net Export
ASC Production Import Export Import Export
Million Y/Y % change (mt) (mt) (mt) (mt) (mt) (mt)
Jan-20 69.6 5.5% 79.92 1.02 3.91 0.60 0.002601 2.28
Feb-20 65.0 7.5% 74.78 1.02 3.91 0.60 0.002601 2.28
Mar-20 66.3 -1.0% 78.98 1.14 6.48 0.54 0.002770 4.80
Apr-20 71.7 0.8% 85.03 1.01 6.32 0.48 0.002274 4.84
May-20 80.8 7.6% 92.27 1.28 4.40 0.85 0.000597 2.27
Jun-20 82.9 11.0% 91.58 1.88 3.70 2.48 0.002214 -0.66
Jul-20 85.1 17.3% 93.36 2.61 4.18 2.61 0.000031 -1.04
Aug-20 87.1 16.2% 94.85 2.24 3.68 3.22 0.002124 -1.78
Sep-20 85.1 19.5% 92.56 2.89 3.83 2.79 0.014205 -1.84
Oct-20 83.7 19.5% 92.20 1.93 4.04 2.81 0.003000 -0.70
Nov-20 78.0 11.2% 87.66 1.85 4.40 1.69 0.000009 0.86
Dec-20 79.5 8.2% 91.25 1.38 4.85 0.86 0.000897 2.61
Jan-21 79.7 14.4% 91.94 1.31 5.24 0.83 0.000828 3.09
Feb-21 71.7 10.3% 83.05 1.08 4.90 0.78 0.000146 3.04
Mar-21 79.1 19.4% 94.02 1.32 7.54 0.73 0.000084 5.49
Apr-21 82.1 14.6% 97.85 1.17 7.97 0.87 0.000304 5.93
May-21 86.7 7.3% 99.45 1.21 5.27 1.23 0.000220 2.83
Jun-21 80.6 -2.7% 93.88 1.25 6.46 1.30 0.001672 3.91
Jul-21 74.5 -12.4% 86.79 1.05 5.67 1.04 0.000110 3.58
Aug-21 72.0 -15.3% 83.24 1.06 5.05 1.12 0.000060 2.87
Sep-21e 73.8 -15.3% 84.00 1.00 4.00 1.20 0.000000 1.80
Source: NBS, Steelhome, ISSB, WSD Estimates

Note: Sept. 2021 numbers are forecast and reported numbers by SteelHome, ASC includes semi-finished and finished import and export

24
WORLDSTEELDYNAMICS
HRB prices in some home markets at present are holding up better that the HRB export price.

In the USA, the HRB price, FOB the steel mill, remains close to the peak price at about $2,150
per tonne. However, USA steel imports have been rising. And, sizable oversupply condition for
hot-rolled band has developed in Mexico now that Ternium has started up its new wide hot strip
mill (located not far from Monterrey, a major steel-consuming city in Northern Mexico).
World Export and USA Hot-Rolled Band Spot Prices and Spread

2,200 1000
2,000 900
1,800 800
USA HRB Spot Price (LHS)
1,600 700
1,400 600
$ per Tonne

1,200 500
1,000 400
Spread: USAHRB vs World Export Price (RHS)
800 300
600 200
400 100
200 0
World HRB Export Price (LHS)
0 -100
Jan-99

Jan-01

Jan-04

Jan-07

Jan-10

Jan-13

Jan-18

Jan-21
Jan-97
Jan-98

Jan-00

Jan-02
Jan-03

Jan-05
Jan-06

Jan-08
Jan-09

Jan-11
Jan-12

Jan-14
Jan-15
Jan-16
Jan-17

Jan-19
Jan-20
Source: WSD PriceTracker & SteelBenchmarkerTM

The HRB price in the European Union may have slipped to 975 euros from 1,015 Euros per
tonne; however, when converting to U.S. dollars at 1.18 dollars per year, the current price is still
a lofty $1,150 to $1,200 per tonne – although almost $1,000 per tonne below the USA home-
market price.

USA and Western Europe Hot-Rolled Band Spot Prices

and Spread
2,500 800
USA Spot Price
700
2,000 600
500
1,500 400
$ per Tonne

Spread: USA vs Western Europe HRB

Price (RHS) 300
1,000 200
100
500 0
Western Europe HRB Spot Price -100
0 -200
Jan-11

Jan-14

Jan-17

Jan-19

Jan-20
Jan-10

Jan-12

Jan-13

Jan-15

Jan-16

Jan-18

Jan-21

Source: WSD PriceTracker & SteelBenchmarkerTM

25
WORLDSTEELDYNAMICS
In Japan, there’s an attempt by the major mills to set the price for “Big Buyers” on a quarterly
basis, rather than a semiannual basis. Also, the mills wish to stop shipping steel at the old price
when new prices are being negotiated for the same time period.

Prime steel scrap, delivered to the USA steel plant, at $620 per gross ton in early October 2021,
is selling at a sizable premium of $155 per ton to the shredded steel scrap price (at $465 per ton).

USA Shredded Scrap Prices vs USA Prime Industrial Scrap

900
Prime Industrial Scrap
800

700
$ per Gross Ton, delivered

600

500

400

300

200
Shredded Scrap
100

0
Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Oct-05

Oct-12

Apr-18
Apr-05

Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Jul-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12

Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Jul-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17

Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Jul-05

Jul-06

Jul-07

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Source: WSD Estimates, AMM, Steelbenchmarker
Source: AMM

Chinese mills have apparently not made sizable purchases of offshore steel scrap, reportedly
because it’s too expensive. If China’s purchase of offshore steel scrap, billet, slab, pig iron and
directly reduced iron were to rise significantly in early 2022, this development could “trigger” a
major rise in the world hot-rolled band price.

In China, energy intensive industries, including steel, aluminum and cement, will be more
impacted than others by the recent power rationing in many provinces. Rolling blackouts are
now planned for at least five major cities.

Regarding Chinese steel developments:

 When the iron ore price delivered to China plummeted to less than $100 per tonne for
62%-Fe sinter feed, several weeks ago, iron ore bookings from India to China were cut
back, say our contacts.

 Chinese pig iron production for the first 8 months of 2021 was 605 mmt, up 0.6% from
August 2020. Steel production, on the same basis, was 733 million tonnes, up 5.3% year
to year. Chinese pig iron output in August 2021 was 71.5 million tonnes, down 11.1%
year to year.

 Coke makers in China are facing strict environmental controls. They are currently being
operated at a reduced operating rate in Hebei Province.

26
WORLDSTEELDYNAMICS
 Some pig iron from Black Sea ports has been sold to Chinese buyers at $550 per tonne,
CFR, which is about $485 FOB Black Sea. At this juncture, it’s not clear if these sales
will continue.

 Chinese steel production Sept 1-20, at 2.68 million tonnes per day, was down 13% year
to year to a 978 million tonne annual rate.
China 10-day Annualized Steel Production Rate
(million tonnes)
1,400

1,300

1,200

1,100

1,000

900

800

700

600

500
2nd

2nd

2nd
2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd

2nd
3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd

3rd
1st

1st

1st

1st

1st

1st

1st

1st

1st

1st
3rd

1st

1st

1st
3rd

3rd
1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st

1st
3rd

1st

1st

1st

3rd
1st
Mar
MayJulSepNovJanMar
MayJulSepNov.
Jan.Mar
MayJulSepNovJanMar
MayJulSepNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
SeptNovJanMar
MayJuly
Sept

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: CISA and WSD estimates

 Chinese government officials are apparently asking local coking coal producers,
including those in Shanxi Province, to cap the price at about $543 per tonne.

The Capesize seaborne freight iron ore expense from Port Dampier, Australia (in the Pilbara
region) to Qingdao, China (northwest of Shanghai) is about $19 per tonne. Historically, this
price at times has been as low as $8-10 per tonne – especially when bunker fuel prices were
depressed (not the current case).

The seaborne Capesize freight rate to Oita, Japan from Brazil is now about $42 per tonne. As
well, the rate from Tubarao, Brazil to Qingdao, China is about $36-38 per tonne, versus a price
as low as $11-14 per tonne at times in the past.

In India, the home-country HRB price is about $880 per tonne, delivered to steel buyers.

In Vietnam, the landed price for hot-rolled band from Kazakhstan may be only about $870 per
tonne – with this steel being delivered to China’s West Coast by rail for shipment to Vietnam.

Turkey is boosting its cold-rolled coil exports to the USA.

27
WORLDSTEELDYNAMICS
Countries and regions with severe overcapacity

These include:

 Vietnam: With Formosa Ha Tinh having completed its second large blast furnace and
Hoa Phat soon to be operating four 1.2 mmtpy blast furnaces at its $3.7 billion facility
(the Dung Quat steel complex), both companies will have excess capacity to provide hot-
rolled band to serve the Vietnamese market. Yet, the government will not provide the
mills with protection because of the many independent cold-rolling and galvanizing
facilities in the country.

 Indonesia: Krakatau Steel, the country’s traditional producer, is starting up a new 1.5
mmtpy plant to produce slab and hot-rolled band – to be expanded to a capacity of 4
million tonnes per year. POSCO has partial ownership of a sizable steel plant that
produces semis. China’s Hebei Bishi Industry Group is also planning a new steel plant.
The country is in the midst of a construction boom.

 Russia and Ukraine: Traditionally, these producers are ultra-low cost given their own
iron ore mines and coking coal mines. Usually, they need to export more than 50% of
their product.

 South Korea: POSCO and Hyundai Steel are both powerhouses that export a fair share of
their product, a good portion of which is high end automotive sheet in POSCO’s case. If
North and South Korea become integrated economically, this development would be a
huge positive for these companies.

 Japan: The country’s two major producers, Nippon Steel and JFE, export more than one-
third of their output, with perhaps half of this amount going to offshore affiliated
companies.

 Southern USA and Northern Mexico: Three new state-of-the-art hot strip mills have been
under construction to serve this market – Ternium near Monterrey (just started up),
ArcelorMittal at Lazaro Cardenas on the West Coast (year-end 2021 start up) and the
Steel Dynamics’ thin-slab/HRB plant near Corpus Christi (year-end 2021 start up). As
well, given today’s lofty steel prices, AHMSA in Monclova is also operating its hot strip
mill. Adding further to the complications, the Houston region is traditionally a
destination for sizable offshore flat-rolled and long steel products.

Spreads

Usually, there’s a widening of “spreads” in the global steel business during steel shortage
conditions. These widened spreads, in fact, contain the price/cost relationships that have created
the current teel mills’ “Golden Profit Age.” Following are 8 examples as depicted in the Steel
Price Rollercoaster exhibit, based on the per tonne figures in effect as of October 12, 2021:

 World export HRB price ($900) less the iron ore/coking coal cost ($617), for a spread of
$283 per tonne. In 2019, the figures were $498, $346 and $152 per tonne, respectively.
Hence, the current spread is $131 per tonne higher.
28
WORLDSTEELDYNAMICS
HRB World Export Price versus Iron Ore/Coal Index and Spread
$1,200 $900

$1,100 $800

$1,000 $700

$900 $600

$800 $500
$ per tonne

$ per tonne
$700 $400

$600 $300

$500 $200

$400 $100

$300 $0

$200 -$100

$100 -$200
Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Apr-10

Oct-10

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

Oct-15

Apr-16

Apr-20
Oct-16

Apr-17

Oct-17

Apr-18

Oct-18

Apr-19

Oct-19

Oct-20

Apr-21

Oct-21
Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Spread v. HRB W. Export (RHS) Iron Ore/Coal Index HRB World Export Price
Source: WSD Estimates, Steelbenchmarker, SBB

 USA hot-rolled band price ($2,150) versus world price, FOB the port of export ($900),
for a spread of $1,250 per tonne. In 2019, the figures were $677, $498 and $179 per
tonne, respectively.

 USA hot-rolled band price ($2,150) versus the shredded steel scrap price ($465), for a
spread of $1,685 per tonne. In 2019, the figures were $677, $282 and $395 per tonne,
respectively. Hence, the current spread is $1,290 per tonne higher.

USA HRB Price vs USA Shredded Scrap Price

2200 1650

2000 1500

1800 1350

1600 1200
USA Shredded scrap $/gt
Dollars per tonne

1400 1050
Dollars per metric tonne

Spread: USA HRB Price less USA

USA HRB
Shredded Scrap Price
1200 900

1000 750

800 600

600 450

400 300

200 150

0 0
Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Apr-05
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21

Source: Steelbenchmarker, AMM, SBB

29
WORLDSTEELDYNAMICS
 The Turkish mills’ export price for rebar ($695) versus Turkish import price for 80:20
steel scrap ($463), for a spread of $232 per tonne. In 2019, the figures were $450, $286
and $164 per tonne, respectively. Hence, the current spread is $68 per tonne higher.

Turkey Rebar Export Price vs Turkey 80/20

Scrap and Spread
800 350
700 300
USD per tonne

600 250
500 200
400 150
300 100
200 50
100 0
Aug-12

Aug-14

Aug-16

Aug-18

Aug-20
Aug-10

Aug-11

Aug-13

Aug-15

Aug-17

Aug-19

Aug-21
Dec-10
Apr-11

Dec-12
Apr-13

Dec-14

Apr-16
Dec-16

Apr-18

Dec-19
Apr-20
Apr-10

Dec-11
Apr-12

Dec-13
Apr-14

Apr-15
Dec-15

Apr-17
Dec-17

Dec-18
Apr-19

Dec-20
Apr-21
Spread RHS
Source: SBB, WSD Estimates TSI Import HMS 1&2 80:20 CFR Turkey
Turkey Rebar Export

 Slab export price, Black Sea ports ($670), versus iron ore/coking coal cost ($617) for a
spread of $54 per tonne. In 2019, the figures were $409, $346 and $63 per tonne,
respectively. Hence, the current spread is $9 per tonne lower. (Note: While this is an
interesting comparison, the fact is that most of the companies selling slab have their own
iron ore, and some with their own coking coal mines.)
Black Sea Slab Price versus Iron Ore/Coal Index and Spread
$1,000 $700

$900 $600

$800 $500

$700 $400
$ per tonne

$ per tonne

$600 $300

$500 $200

$400 $100

$300 $0

$200 -$100

$100 -$200
Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Jul-19

Jul-20

Jul-21
Apr-10

Apr-20
Oct-10

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

Apr-15

Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18

Apr-19

Oct-19

Oct-20

Apr-21

Oct-21
Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Spread: Slab less IO CC Cost (RHS) Iron Ore/Coal Index Black Sea Slab
Source: WSD Estimates, Steelbenchmarker, SBB

30
WORLDSTEELDYNAMICS
 USA home-market hot-rolled band price ($2,150) versus Chinese home-market ex-works
price excluding the 13% value added tax ($775), for a spread of $1,375 per tonne. In
2019, the figures were $677, $465 and $212 per tonne, respectively.

USA and China Hot-Rolled Band Spot Prices and Spread

2,200 450
Spread: USA vs China HRB Price (RHS)
1,900 375

1,600 300
USA HRB Price (LHS)

$ per Tonne
$ per Tonne

1,300 225

1,000 150

700 75

400 0
China HRB Spot Price (LHS)
100 -75
Jan-02
Jan-03
Jan-04

Jan-12
Jan-13
Jan-14
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01

Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11

Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Source: WSD PriceTracker & SteelBenchmarkerTM

 Chinese HRB ex-works price ($771) versus iron ore/coking coal cost ($617), for a spread
of $154 per tonne. In 2019, the figures were $465, $346 and $119 per tonne,
respectively. Hence, the current spread is $35 per tonne higher.

China HRB Domestic Price versus Iron Ore/Coal Index and Spread
$900 350.00

$800 300.00

$700 250.00

$600 200.00
$ per tonne

$500 150.00

$400 100.00

$300 50.00

$200 -

$100 (50.00)

$0 (100.00)
Jul-13

Jul-18
Jul-10

Jul-11

Jul-16

Jul-17

Jul-19

Jul-20

Jul-21
Oct-10

Oct-11

Jul-12

Jul-14

Jul-15
Oct-12

Oct-13

Oct-14

Oct-15

Oct-16

Oct-17

Oct-18

Oct-19

Oct-20

Oct-21
Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21
Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18

Apr-19

Apr-20

Apr-21

Spread: China HRB vs IO Coal (RHS) Iron Ore/Coal Index HRB China
Source: WSD Estimates, Steelbenchmarker, SBB

31
WORLDSTEELDYNAMICS
 Northern Brazil pig iron export price ($490) versus USA prime steel scrap price delivered
to the steel mill ($620), for a discount of $90. In 2019, the figures were $232, $303 and
$71 per tonne, respectively. Hence, the current spread is $19 per tonne higher.

Brazilian Pig Iron vs USA Prime Industrial Scrap Price

700 400

600 300
$ per Tonne

500 200

$ per tonne
400 100

300 0

200 -100

100 -200

0 -300
Sep-10

Sep-11

Sep-12
Jan-13

Jan-14

Jan-15

Sep-17

Sep-18

Jan-20

Jan-21
Jan-10

Jan-11

Jan-12

Sep-13

Sep-14

Sep-15
Jan-16

Sep-16
Jan-17

Jan-18

Jan-19

Sep-19

Sep-20

Sep-21
May-10

May-15

May-16

May-17
May-11

May-12

May-13

May-14

May-18

May-19

May-20

May-21
Spread: Pig Iron N. Brazil vs Prime Scrap Pig Iron North Brazil
"USA Prime Industrial Scrap"
Source: WSD Estimates, Metal Expert, SBB, AMM

 USA hot-rolled band price ($2,150) versus European Union hot-rolled band price
($1,210), for a spread of $940 per tonne. In 2019, the figures were $677, $465 and $217
per tonne, respectively.

The global “Green Revolution” is strongly impacting the steel business

A critical development in the past six months is the loss of confidence on the part of many
owners of “legacy” steel mills – that, outside of China, have roughly 300 million tonnes of
capacity (or, about 50% of non-Chinese annual integrated steel mill capacity of about 600
million tonnes). These plants are apparently not positioned to be reconfigured to emit far less
CO2. As a consequence, a number of these plants are being sold at bargain prices – such as
Arcelor-Mittal’s sale of its northern USA steel plant asset to Cleveland-Cliffs for about $1.4
billion (that boosts Cleveland Cliffs to the #1 steel producer for flat-rolled steels in the USA).
The recent financial results for Cleveland-Cliffs are prodigious, with its EBITDA in the third
quarter perhaps approximating $2 billion.

Longer-term, with the industrial structure of societies being revamped to make use of renewable
energy, the rise in steel demand can be substantial perhaps as much as 50 million tonnes per
year. Huge investments needed to create replaceable electric energy – wind and solar power
outside of China, plus nuclear power in China.

32
WORLDSTEELDYNAMICS
Some Green Revolution pros and cons for the steel mills include:

Positives

 Policymakers in many countries the past two years have become more supportive of the
steel mills’ huge capital needs, and 20-50% rise in operating expenses, if they are to
sharply pare CO2 emissions. Hence, they are more prone to erecting trade barriers to
protect their steel mills. Government policymakers in the European Union and Canada
(that’s developing its own price index for carbon) are willing to provide some equity and
sizable “green loans” to help the steel mills finance new process routes in their facilities.

 Steel mills the world over are “talking a good game” when it comes to their plans to
reduce CO2 emissions. They are demonstrating flexibility in their choice of solutions to
reduce CO2 emissions – based on the availability of hydrogen and/or or the capture,
processing and sequestration of CO2. (Note: Hence, if governments are tardy in their
provision of renewable power, the mills will be “off the hook” until sufficient renewable
power is provided at a good price.)

 Nucor, the USA’s largest steelmaker, has announced it will be selling sizable amounts of
“ECONIG” carbon free steel in the future, with the deliveries to General Motors
beginning in the first quarter of 2022; and, by the end of 2022, all of its deliveries to
General Motors to consist of this carbon free steel. This special achievement is possible
because: a) the company is an electric arc furnace steelmaking producer; b) it has long-
term contracts to purchase huge quantities of renewable electric power from wind farms
that are located in Texas; c) it is applying new technologies to this effort; and d) a few
years ago, it became “qualified” to ship a variety of special grades of high-strength
automotive sheet to General Motors. Nucor, as well, has committed to a 35% lessening
in its greenhouse gas emissions by 2030, which will reduce its emissions to 77% less –
perhaps about 0.4 tonnes of carbon per tonne of steel – than today’s global steelmaking
average.

 Policymakers in the European Union are in an advanced planning stage to impose carbon
border taxes on imported steel products based on the generation of CO2 during the
manufacture of the product. Such an effort requires the existence of a “carbon exchange”
on which the price of a tonne of CO2 is determined. (Note: The current EU CO2 price is
$72 per tonne. China and Canada are planning their own carbon exchange.)

 China is best positioned to pare CO2 emissions given the immense funds that can be
diverted to this effort. Similar to huge infrastructure projects, the near-term return on
investment is only of minor consequence to Chinese policymakers.

 The Green Revolution challenge will boost many countries “steel intensity” via the
mechanism of rising fixed asset investment as a share of GDP.

 Longer term, there’s talk about “modular” smaller-sized nuclear plants will be built in
good part offsite and assembled onsite. These plants would not emit CO2 and would be
lead cooled.

33
WORLDSTEELDYNAMICS
 The Dillinger Group in Germany’s Ruhr is providing 45,000 tonnes of 45-94 mm
thick plate to a Danish offshore wind farm with 72 wind turbines – with an installed
capacity of 604 megawatts. The usage of plate amounts to 625 tonnes per turbine.

Negatives

 The funds needed by the steel mills to become carbon free producers is prodigious –
along with a massive infrastructure spending on the part of their government to provide
renewable electric power at a low price. Capital spending needs for the global steel
industry to achieve its CO2 reduction goals exceed $1 trillion in the next 20 years.

 The companies need major government support in order to achieve a low CO2 emission
status – no matter which political party in their country may be in power in the future.

 A “level playing field,” in which policymakers in all countries in the next thirty years
pursue complimentary actions to reduce CO2 emissions, is most probably a “pipe dream.”
Hence, steel producers in countries with less severe mandates to cut CO2 emissions will
have a cost advantage. Also, policymakers in Developing World countries that have
cost-effective mega-sized plants at coastal locations will probably never close down these
plants because of their excessive CO2 emissions.

 The higher the price of a country’s steel products, the greater the likelihood that steel
consuming industries – theoretically speaking, but often not the real world case – will
locate manufacturing facilities outside the country.

 If CO2 emissions are to be largely eliminated, the rise in operating costs – when the
process route either makes use of hydrogen to produce the steel and/or to capture, process
and sequester the CO2 that’s emitted – will typically range from 25% to 50% for an
integrated steel plant. For EAF-based steelmakers, its operating costs will be inflated by
the high prices for prime steel scrap and related products (directly reduced iron and
purchased pig iron).

 Many countries will not meet their renewable energy production targets because they lack
the funds to accomplish such an undertaking.

 Nuclear plants may be the best way to create renewable energy sources because only a
small amount of CO2 is emitted when the nuclear fuel is processed. But, except for
China, these plants are not included as a renewable energy source. A new nuclear plant
might have a capacity of 1,000 megawatts per annum, with a construction cost in China
of $4-5 billion and, outside of China, perhaps $6 billion.

 Major technological breakthroughs and subsidized renewable energy prices are necessary
if the hydrogen cost is to be only $2 per kilogram. Yet, even at this cost for hydrogen,
based on the 60 kilograms of hydrogen needed per tonne of directly reduced iron, the
hydrogen expense per tonne of DRI would be $120 versus only about $30-35 per tonne
for DRI plants based on low cost natural gas.

34
WORLDSTEELDYNAMICS
 Higher steel prices will accelerate efforts by steel users to engineer their steel-intensive
products to use lesser amounts of steel – i.e., price allocates resource.

 The price of carbon is now impacting steel prices in the European Union, which will
cause them to be higher than in many other parts of the world. Since 2018, as indicated
in the accompanying graphic, the European price of carbon was so low that it had little
correlation with the price of 80:20 steel scrap delivered to Turkey. However, this
situation changed once the EU carbon price started to rise sharply in 2018.

CO2 European Emission Allowance Price in USD and Turkey 80/20

HMS 1/2 Scrap Spot Prices
600 90.00
Turkey 80/20 Scrap Price (LHS)

500 75.00

400 60.00

USD per tonne

$ per Tonne

300 45.00

200 CO2 price (USD )(RHS)

30.00

100 15.00

0 0.00
Oct-11

Oct-15

Oct-19
Oct-09

Oct-10

Oct-12

Oct-13

Oct-14

Oct-16

Oct-17

Oct-18

Oct-20
Apr-11

Apr-12

Apr-16

Apr-20
Apr-10

Apr-13

Apr-14

Apr-15

Apr-17

Apr-18

Apr-19

Apr-21
Source: WSD PriceTracker & SteelBenchmarkerTM, , Reuters, Market Business Insider, Ember Climate

This report includes forward-looking statements that are based on current expectations about future events and are subject to uncertainties and factors relating to operations and the business
environment, all of which are difficult to predict. Although we believe that the expectations reflected in our forward-looking statements are reasonable, they can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties, including among other things, changes in prices, shifts in demand, variations in supply, movements in international
currency, developments in technology, actions by governments and/or other factors.

The information contained in this report is based upon or derived from sources that are believed to be reliable; however, no representation is made that such information is accurate or complete
in all material respects, and reliance upon such information as the basis for taking any action is neither authorized nor warranted. WSD does not solicit, and avoids receiving, non -public
material information from its clients and contacts in the course of its business. The information that we publish in our reports and communicate to our clients is not based on material non-public
information.

The officers, directors, employees or stockholders of World Steel Dynamics Inc. do not directly or indirectly hold securities of, or that are related to, one or more of the companies that are
referred to herein. World Steel Dynamics Inc. may act as a consultant to, and/or sell its subscription services to, one or more of the companies mentioned in this report.

Copyright  2021 by World Steel Dynamics Inc. all rights reserved

35
WORLDSTEELDYNAMICS
Daily Benchmark Prices *, China
(dollars per metric tonne)
Ex-works Sep-21 Oct-21
22nd 23rd 24th 26th 27th 28th 29th 30th 8th 9th 11th 12th

Hot-rolled band 758 758 756 757 758 758 761 762 775 778 778 771
(5mm thick x 1200-1500mm wide)
Cold-rolled coil 866 865 865 865 865 864 864 864 874 875 877 874
(0.7mm x 1200-1500mm wide)
Rebar #5 * * 741 743 741 741 743 748 752 762 776 779 780 770
(16mm in diameter)
Standard plate 753 753 753 754 754 755 757 758 773 776 778 775
(24mm x 2400mm x 6000mm)
Scrap (incl VAT) 584 584 586 586 590 590 590 590 593 595 596 598
(6 - 10mm thickness)
Exchange rate (RMB per US $) 6.4674 6.4685 6.4604 6.4599 6.4598 6.4582 6.4635 6.4620 6.4473 6.4435 6.4351 6.4538
* Ex-works (the same as FOB mill), $ per metric tonne. Hot-rolled band is the first product off the hot strip mill.
Source: www.steelhome.cn

36
 S
$ per tonne
$ Per Tonne, CIF, Chinese Port

25
50
75
100
125
150
175
200
225
250
275
200
300
400
500
600
700
800
900
1,000
May-05 Jan-11
Oct-05 Mar-11
Mar-06 Jun-11
Aug-06 Sep-11
Dec-11
Jan-07
Mar-12
Jun-07

Source: SteelHome, WSD Estimates

Source: MySteel
May-12
Nov-07 Aug-12

(left axis)
Chinese Port
Apr-08 Nov-12

Iron Ore CIF,

Price of Imported
Sep-08 Jan-13
Feb-09 Apr-13
Jul-09
Jul-13
Oct-13
Dec-09
Jan-14
May-10 Mar-14
Oct-10 Jun-14
Mar-11 Aug-14
Aug-11 Nov-14
Jan-12 Feb-15
May-15
Jun-12
Jul-15
Nov-12 Oct-15
Apr-13 Jan-16
Sep-13

37
Apr-16
Feb-14 Jun-16
Jul-14 Sep-16
Dec-14
Dec-16
Mar-17
( US$ per tonne)

May-15
May-17
Oct-15 Aug-17
Rebar
WORLDSTEELDYNAMICS

the Ports
Iron Ore
Mar-16

Imported
Nov-17

(right axis)
Inventory at
Aug-16 Jan-18
Jan-17 Apr-18
Jun-17 Jul-18
Sep-18
Nov-17
Dec-18
Apr-18 Mar-19
Sep-18 Jun-19
China Daily Benchmark Prices of HRB and Rebar

Feb-19 Aug-19
Jul-19 Nov-19
Dec-19 Feb-20
May-20
May-20
Imported Ore CIF Price and Inventory at Main Chinese Ports
HRB

Jul-20
Oct-20
Oct-20
Mar-21 Jan-21
Aug-21 Mar-21
Jun-21
Sep-21

15.00
45.00
90.00

30.00
60.00
75.00
105.00
120.00
135.00
150.00
165.00

Million Tonnes
 USD per Metric Tonne
$ per Tonne of Iron Ore

0
100
120

20
40
60
80

$200
$250
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
$800
$850
$900
Jan-02

0
Oct-02
Jul-03
Apr-04
Jan-05
Oct-05
Jul-06
Apr-07

Source: SSY & TEX Report

Jan-08
Oct-08

100
Jul 09
Apr 10
$ per Tonne of Iron Ore Jan 11
Oct 11

10
20
40

30
50

0
Jul 12
Jan-02 Apr 13
Jul-02
Jan-03 Jan 14
Brazil to China

Jul-03 Oct 14
Jan-04 Jul 15
Jul-04

200
Jan-05 Apr 16

September 2018
Jul-05 Jan 17
Jan-06
Jul-06 Oct 17
Jan-07 Jul 18
Ocean Freight Rate, Capesize Vessel

Jul-07

Source: SSY & TEX Report

Jan-08 Apr 19
Jul-08 Jan-20
Jan-09
Jul 09 Oct-20
Jan 10 Jul-21
Jul 10
Jan 11

300
Jul 11

38
Jan 12
Jul 12
Jan 13 $ per Tonne of Iron Ore
Jul 13
Jan 14
20
30
40
60

10
50

Jul 14
0

Jan 15
Jul 15 Jan-02
W. Australia to China

Jan 16 Jul-02
Jul 16 Jan-03
Jan 17 Jul-03
Jul 17 Jan-04
WORLDSTEELDYNAMICS

Jan 18 Jul-04

400

Cumulative Capacity (million metric tonnes)

Jul 18 Jan-05
Ocean Freight Rate, Capesize Vessel
OCEAN FREIGHT RATES

Jan 19 Jul-05
Jul 19 Jan-06
($ per metric tonne, including overhead) Jan-20
Jul-20
Jul-06
Jan-07

September 2019
Jul-07
Source: SSY & TEX Report

Jan-21
Jul-21 Jan-08
Jul-08
World Cost Curve for Hot-rolled Band

Jan-09
Jul 09
Jan 10
Jul 10
Jan 11

500
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Brazil to Rotterdam

September 2020
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
September 2021

Jul 16
Jan 17
Ocean Freight Rate, Capesize Vessel

Jul 17
Jan 18

600
Jul 18
Jan 19
Jul 19
Jan-20
Jul-20
Jan-21
Jul-21
WORLDSTEELDYNAMICS
Components of IDX (2004=100) as of July 2021 & 2020

Y/Y Share Share Y/Y

Indicator Index Figure Weighted Index % Chg of Index of Index First
July July July July July July 7 month
2021 2020 2021 2020 2021 % Chg
CES : Short-Lead-Time Capital Goods
Oil & Gas Well Drilling 38.8 21.6 1.16 0.65 79.4% 3.0% 1.1%
Railroad Rail & Miscellaneous 182.9 135.0 5.49 4.05 35.5% 3.0% 5.2%
Business Equipment 169.4 154.4 8.47 7.72 9.7% 5.0% 8.0%
Trucks (Not Seasonally Adjusted) 74.9 71.6 5.24 5.01 4.7% 7.0% 5.0%
Fabricated Metals 121.9 114.9 14.63 13.78 6.2% 12.0% 13.8%
Non-Electrical Machinery 160.8 131.9 19.29 15.83 21.9% 12.0% 18.2%
Total 54.29 47.04 15.4% 42.0% 51.3% 15.3%
CEL : Long-Lead-Time Capital Goods
Ships & Boats Construction 90.5 95.3 0.91 0.95 -5.0% 1.0% 0.9%
Electrical Equipment 135.5 124.8 6.78 6.24 8.6% 5.0% 6.4%
Non-Residential Construction (NSA) 90.7 96.4 20.86 22.16 -5.9% 23.0% 19.7%
Total 28.54 29.35 -2.8% 29.0% 27.0% -5.2%
CDIDX : Consumer Goods
Residential Housing (Not Seas. Adj.) 84.8 67.7 2.54 2.03 25.3% 3.0% 2.4%
Household Appliance 109.4 106.4 4.37 4.26 2.8% 4.0% 4.1%
Automobiles (Not Seasonally Adj.) 67.4 86.2 10.79 13.79 -21.8% 16.0% 10.2%
Total 17.71 20.08 -11.8% 23.0% 16.7% 23.3%
MIDX : Miscellaneous Industries
Defense & Space Equipment 162.1 139.1 1.62 1.39 16.5% 1.0% 1.5%
Farm Equipment 107.0 81.3 2.14 1.63 31.7% 2.0% 2.0%
Metal Cans 48.8 49.6 1.46 1.49 -1.7% 3.0% 1.4%
Total 5.23 4.51 16.0% 6.0% 4.9% 16.4%

Total 105.77 100.98 4.7% 100.0% 100.0% 10.5%

U.S.A. - Components of WSD Index of Steel Activity

120

IDX
110 ( Index : 2004=100 )

100

90

80
IDX=CES+CEL+CDIDX+MIDX
Components:
70 CES - Short-Lead-Time Capital Goods CES
CEL - Long-Lead-Time Capital Goods
CDIDX - Consumer Goods
MIDX - Miscellaneous Industries
60 (Three Month Moving Average Basis) CEL
Index

50

40

30

20
MIDX
CDIDX
10

0
Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

39
 Thousand Metric Tonnes Thousand Short Tons $ per tonne

3000
4000
5000
6000
7000

2000
8000

1,600
2,000

1,200

800

400

0
$200
$300
$400
$500
$700

$100
$600

$0
Jan-05 Q1 05
Apr-05 Q2 05 May-10
Jul-05 Q3 05
Oct-05 Q4 05 Jul-10
Jan-06 Q1 06
Apr-06 Q2 06 Sep-10
Jul-06 Q3 06
Oct-06 Q4 06 Nov-10
Jan-07 Q1 07
Apr-07 Q2 07 Jan-11
Jul-07 Q3 07

Source: The Tex Report

Oct-07 Q4 07 Mar-11
Jan-08 Q1 08
Apr-08 Q2 08 May-11
Jul-08 Q3 08

Source: Commerce Department

Oct-08 Q4 08
Jan-09 Q1 09
Jul-11
Apr-09 Q2 09
Jul-09 Sep-11
Oct-09 Q3 09
Jan-10 Q4 09 Nov-11
Apr-10 Q1 10
Jul-10 Q2 10 Jan-12
Oct-10 Q3 10
Jan-11 Q4 10 Mar-12
Apr-11 Q1 11
Jul-11 Q2 11 May-12
Oct-11 Q3 11

Source: WSD Estimates, Platts, Steelbenchmarker

Jan-12 Q4 11 Jul-12
Apr-12

US Production
Jul-12 Q1 12 Sep-12
Oct-12 Q2 12
Jan-13 Q3 12 Nov-12
Apr-13 Q4 12
Jul-13 Q1 13 Jan-13
Oct-13 Q2 13
Jan-14 Q3 13 Mar-13
Apr-14 Q4 13
Jul-14 Q1 14 May-13
Oct-14 Q2 14
Jan-15 Q3 14 Jul-13
Apr-15 Q4 14
Jul-15 Q1 15 Sep-13
Oct-15 Q2 15
Jan-16 Q3 15 Nov-13
Apr-16 Q4 15
Jul-16 Q1 16 Jan-14
Oct-16 Q2 16

China Coke Exports (Monthly)

Jan-17

Net Imports
Apr-17 Q3 16 Mar-14
Jul-17 Q4 16

USA Coke Consumption (Quarterly)

Oct-17 Q1 17 May-14
Jan-18 Q2 17
Apr-18 Q3 17 Jul-14
Jul-18 Q4 17
Oct-18 Q1 18 Sep-14
Jan-19 Q2 18

Spread v. Turkey Scrap (RHS)

Apr-19 Q3 18 Nov-14
Jul-19 Q4 18
Oct-19 Q1 19 Jan-15
Jan-20 Q2 19
Apr-20 Q3 19 Mar-15
Jul-20 Q4 19
Oct-20 Q1 20 May-15
Jan-21 Q2 20
Apr-21 Q3 20 Jul-15
Jul-21 Q4 20
Q1 21 Sep-15
Nov-15
Jan-16

40
Mar-16
$ per Tonne, FOB Thousand Metric Tonnes May-16
Jul-16
Sep-16

-95
205
405
605

105
305
505
Nov-16

200
300
500
700
800

100
400
600
Jan-17
Jan-05

COKE & PIG IRON

Mar-17
Jul-05

Source: WSD
May-17
Jan-06 Jul-17

Iron Ore/Coal Index

Jul-06 Sep-17
WORLDSTEELDYNAMICS

Jan-07 Nov-17
Jul-07

GLOBAL METALLICS BALANCE

Jan-18
Jan-08
Turkey scrap HM 80/20 versus

Mar-18
Jul-08 May-18

Source: Commerce Department

Jan-09 Jul-18
Jul-09 Sep-18
Jan-10 Nov-18
Jul-10 Jan-19
Weighted Iron Ore/Coking Coal Price Index

Jan-11 Mar-19
Jul-11 May-19
Jan-12 Jul-19
Jul-12 Sep-19
Jan-13 Nov-19
Jul-13 Jan-20
Jan-14 Mar-20
Jul-14 May-20
Jan-15 Jul-20
Jul-15 Sep-20
Jan-16 Nov-20

Chinese Coke Export Price

Turkey Scrap Del'd (RHS)

USA Coke Imports (Monthly)

Jul-16 Jan-21
Jan-17 Mar-21
Jul-17 May-21

10.5% ash content prior to 2003

Jan-18 Jul-21
Jul-18 Sep-21

12.5% ash content through most of 2003

Jan-19
Jul-19
$0
$50

Jan-20
-$50
$100
$150
$200
$250

-$200
-$150
-$100

Jul-20
Jan-21 $ per tonne
Jul-21
WORLD
STEEL
DYNAMICS
Global Steel Information System (GSIS)
Interactive Web-Based Data Platform
WSD has created the Global Steel Information System (GSIS) – a multi-dimensional platform of
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direct download into Excel for your own analysis and manipulation.
The existing and soon to be developed components of the GSIS include:
 World Cost Curve for Steel Sheet  Global Metallics Balances System
 World Cost Curve for Billet/Wire Rod  Plantfacts Capacity Database
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shipments by country and market plus trade flows
 World Cost Curve for Galvanized Sheet

Hot-Rolled Band Operating Costs Wire Rod Operating Costs

*****
The Interactive Global Steel Information System is priced at $30,000 annually.

Please contact Philipp Englin for additional information

Tel: (201) 503-0900 e-mail: wsd@worldsteeldynamics.com
or visit http://gsis.worldsteeldynamics.com

41
 WSD Consulting
The combination of experience, information and insight that World Steel Dynamics brings
to its consulting services is unparalleled in the industry. World Steel Dynamics Consulting
provides highly customized advisory services to US and international steelmakers,
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the full range of stakeholders with an interest in the strategic issues facing the industry.
Our Consulting group draws upon the information and resources of the entire World Steel
Dynamics enterprise, whose professionals have more than 250 years of combined
experience in serving the needs of the international steel industry.

In recent years, the steel industry has experienced feast, famine and every state in between.
We expect sustained (if erratic) long-term growth in steel demand on a global basis with
continued modernization and urbanization of developing economies acting as the key
driver; however, this masks dramatic differences between world regions. Steel industry
conditions in slow growth economies suggest the need for facility rationalization and cost
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but must consolidate, modernize and control raw material costs. All steel and raw material
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Our consulting team can draw upon the world’s most comprehensive data and analysis of
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Please contact WSD to discuss your specific consulting needs.

Philipp Englin Richard McLaughlin

Tel: (201) 503-0908 Tel: (412) 915-4043
Email: penglin@worldsteeldynamics.com Email: rmclaughlin@worldsteeldynamics.com

42
 Interactive Web-Based
Plantfacts Capacity Database
Powered by data from the Stahlinstitute VDEh Plantacts – an unparalleled database with over 35 years
of accumulated information – WSD’s online interactive system allows users to understand the global
landscape of steelmaking capacity on both a macro and micro level. The system gives users access to
in-depth equipment detail for over 12,000 facilities in 110 countries.

For each facility, steelmaking equipment is categorized into as many as 36 equipment types, providing
users with information detailing the entire steelmaking supply chain ranging from pelletizing and coke
making to steelmaking furnace specifications and finished product capabilities. Equipment data
includes essential information on start-up and modernization dates, nominal capacity, operating status,
equipment manufacturer and other technical equipment specifications. Details for announced capacity
changes (i.e., announced closures, expansion of existing facilities and Greenfield plant development)
are noted where available. Such is the depth and breadth of WSD’s online system.

Key features of the Plantfacts Capacity system include:

 Quarterly updates  12 Regional groupings
 36 steelmaking equipment types  Over 12,000 facilities
 110 countries represented  Excel download capability

*****
Please contact Philipp Englin for information on access and pricing
Tel: (201) 503-0900 e-mail: wsd@worldsteeldynamics.com
or visit http://www.WorldSteelDynamics.com or gsis.worldsteeldynamics.com

43
WORLD
STEEL
DYNAMICS
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44
45