SME September 14, 2004 Washington, DC “THE NEW STEEL…THE NEW STEEL INDUSTRY” Lawrence W. Kavanagh

SMESeptember 14, 2004Washington, DC

“THE NEW STEEL…THE NEW STEEL INDUSTRY”

Lawrence W. Kavanagh American Iron & Steel Institute

Courtesy of Metal Strategies Inc., Christopher Plummer

Iron ore production has not kept pace with steel production in China; imports could reach 240 million

tonnes over the next few years

101 117143 150 159 162 181 168 167 175 194

221264

327 347 366 378352 341 341 352 364 377 390

050

100150200250300350400450

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

e20

04f

2005

f20

06f

2007

f20

08f

2009

f20

10f

2011

f20

12f

2013

f20

14f

Imported Iron Ore Domestic Iron Ore

Source: UNCTAD, TEX Report 2002-3,WSD, IISI, Hatch Internal

Forecast

Coke production has been decreasing in every region of the world except Asia, Africa and the Middle East

RegionProduction Trend (1991-2002 CAGR)

Western Europe - 4.8%

FSU - 2.4%

North America - 2.5%

South America - 0.2%

Africa/M.E. + 0.4%

Asia + 3.1%

Oceania - 2.3%

World - 0.3%

Source: IISI, RAG Trading, Australian Coal, USGS, EIA, Hatch Internal

Age Profile of Global CokeMaking Capacity 2002

< 10 yrs. 10%

11-20 yrs. 32%

21-30 yrs. 38%

31-40 yrs. 15%

>40 yrs. 5%

< 10 yrs. 10%

China’s role in coke production and consumption is surpassed by its role in trade

CountryMarket Share:

ProductionMarket Share:

Trade

China 37% 55%

Japan 12% 11%

CIS (Russia & Ukraine) 12% 13%

US 6% Net importer

India 4% Net importer

S. Korea 4% Net importer

Poland 3% 16%

World Volume (M Tonnes) 350 25

Source: EIA, CRU, BHPB, Hatch Internal

$200

$240

$280

$320

$360

$400

$440

$480

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03

$ pe

r ton

Hot-Rolled Spot PriceJanuary 1980 to May 2003

Source: Purchasing Magazine

Average for Period (January 1980 to May 2003)

Purchasing Magazine Transaction Price forHot-Rolled Sheet, Midwest Market Average

January 1980 - June 2004

$150

$200

$250

$300

$350

$400

$450

$500

$550

$600

$650

$700

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

$ pe

r ton

Source: Purchasing Magazine. 1980-2000 Avg.($339) vs. Jun 2004 ($627) = 85.0 % [July 2002 peak ($400) vs. Jun 2004 = 56.8 %]

METRICS – STEEL CONTENT

249 259 263 279 287 295 319 328 339 351 364 379

1711 1726 1739 1767 1779 1790 1810 1802 1787 1780 1799 1814

54.6 54.8 54.8 55.1 55 55.1 54.4 53.8 53.9 545555.5

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20030

10

20

30

40

50

60

70

80

90

100

HSSTotal SteelSteel %

1992 Average Vehicle3135 LBS. Curb Wt.

2003 Average Vehicle3358 LBS. Curb Wt.

Lbs.

Pe r

Veh

i cle

% S

teel

in V

ehic

le

1998 Average Vehicle3262 LBS. Curb Wt

ACHIEVEMENTS - CARSULSAB-AVC

• Safe – ( 5-Star Crash Rating)

• Affordable – ($10,000 Manufacturing Cost)

• Fuel Efficient - (52-68 miles/gallon)

• Environmentally Friendly – (2200 lbs./recyclable)

Slice 40%

Commercial Buildings 29%

Infrastructure 18%

Residential 53%

Infrastructure 18%

Commercial

Buildings29%

Residential 53%

Total U.S. Spending = $900 Billion

Source: DOC