Reasons for price growth in

the world market and

prospects for their correction
/the long product market/

Alexander Markov
Chief Analyst
CIS Steel in the
Metal Expert
World Markets
11-13 April 2007,
Kiev, Ukraine
www.metalexpert-group.com
 Growth factors
SUPPLY < DEMAND

Supply decrease: Demand increase:

China: uncertainty as to export taxes Relatively mild winter
Russia: scrap exports decrease – fundamental change Inertia of the growing market
Brazil: seasonal cut in pig iron production Inflation
EU: seasonal cutback in steel output Growing prices in the real estate market
USA: lingering low utilization of production capacities
Other market factors set up by sellers

Average world prices, fob Jan 06 Apr 07 change Jul 08

Steel scrap 170-190 330-340 1.9 times 230-250

Square billet 280-320 490-560 1.7 times 370-400

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 mt

-1 .5
-1 .0
-0 .5
0 .0
0 .5
1 .0
1 .5
2 .0
2 .5
3 .0
3 .5
4 .0
4 .5
5 .0

Jan.05
Feb.05
Mar.05
Apr.05
May.05
Jun.05
Jul.05
Aug.05
Sep.05
Oct.05
Nov.05
Dec.05
Jan.06
Feb.06
Mar.06
Apr.06
May.06
Jun.06
Jul.06
Aug.06
Sep.06
Oct.06
Growth factors

Nov.06
Dec.06
Jan.07
Feb.07
Mar.07
China: Net export of steel products and semi-finished products

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 Growth factors
Russia: Scrap collection and distribution

3500 Export Shipped to the domestic market

3000

2500

2000
`000 tonnes

1500

1000

500

0
Jul.02

Jul.03

Jul.04

Jul.05

Jul.06
Jan.02
Apr.02

Jan.03
Apr.03

Jan.04
Apr.04

Jan.05
Apr.05

Jan.06
Apr.06

Jan.07
Oct.04

Oct.05

Oct.06
Oct.02

Oct.03

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 '000 tonnes

2100
2300
2500
2700
2900
3100

Jan.02
Apr.02
Jul.02
Oct.02

Feb/ Dec: -8 %
Jan.03

-1 0 %
Apr.03
Jul.03
Oct.03
Jan.04
-6 %

Apr.04
Jul.04
Oct.04
Jan.05
-8 %

Apr.05
Jul.05
-2 4 %

Oct.05
Brazil: Pig iron production

Jan.06
Growth factors

Apr.06
Jul.06
Oct.06
-1 5 %

Jan.07
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 Growth factors
EU-15: Average daily steel production

1 9 9 9 -2 0 0 5 average 2006

8 .9 %

8 .6 %
month’s share in the year

8 .2 %

7 .8 %

7 .4 %

7 .1 %

6 .7 %
Jul
Jun
Feb

May
Mar

Apr

Dec
Jan

Aug

Sep

Nov
Oct

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 Growth factors
US: raw steel production

2100

2000

1900

1800
'000 tonnes

1700

1600

1500

1400
01-2005

04-2005

10-2005

04-2006

01-2007
07-2005

01-2006

07-2006

10-2006
w e e k e nd

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 Real estate prices
USA and Russia: price dynamics in comparison USA: Median Price of Houses Sold including
Land Price
US: Price of Houses Russia: $ / м2 in Moscow 265000
4 .5 0
255000
4 .0 0
245000
3 .5 0
235000
3 .0 0
225000
Jan.1998=1

US$
2 .5 0
215000
2 .0 0
205000
1 .5 0
195000

1 .0 0
185000

0 .5 0
175000
1998

1999

2000

2001

2002

2004

2005

2006

2007
2003

2002

2003

2004

2005

2006

2007
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 Steel prices
Steel scrap Billet

US: fob West Coast Ukraine: fob Black Sea

350 in proportion to US M3 growth (Jan 0 4 =1 0 0 %) 600 in proportion to US M3 growth (Jan 0 4 =1 0 0 %)
in proportion to US PPI growth (Jan 0 4 =1 0 0 %) in proportion to US PPI growth (Jan 0 4 =1 0 0 %)
550
300

500

250
450
US$ per tonne

US$ per tonne

400
200

350
150
300

100 250
Jul.04

Jul.05

Jul.06

Jul.04

Jul.05

Jul.06
Jan.04

Apr.04

Jan.05

Apr.05

Jan.06

Apr.06

Jan.07

Apr.07

Jan.04

Apr.04

Jan.05

Apr.05

Jan.06

Apr.06

Jan.07

Apr.07
Oct.04

Oct.05

Oct.06

Oct.05
Oct.04

Oct.06
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 Steel prices
Steel scrap Billet

No.1 scrap, USA, fob West Coast in January 2 0 0 2 prices Billet, Ukraine, fob in January 2 0 0 2 prices
350 600

300
500

250
400

200
300
150

200
100

100
50

0 0
2003
2002

2004

2005

2006

2007

2008

2002

2003

2004

2006
2005

2007

2008
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 Thank you for your attention

e-mail: a.markov@metalcourier.com

CIS Steel in the

World Markets
11-13 April 2007,
Kiev, Ukraine
www.metalexpert-group.com