Trends

Prices

Momentum Missing

info

News

it

31 years actively selling flat rolled steel

Newsletter developed for active buyers & sellers of flat rolled steel (we let the financial community tag

along).

Prices – Momentum –Trends – Analysis

SMU now in 2nd Year

Chinese Curse

Where we came from…

Where are we now…

Where are we going…

Who cares…

East Chicago West 30%

East Chicago East 30%

Burns Harbor 35%

Cleveland 0%

Riverdale 18%

Coatesville 75%

Steelton 80%

Conshohocken 35%

Weirton 90%

Georgetown 0%

Source: USW

Estimated low 40%

SDI & Nucor projecting 1Q loss

Can shut on & off

EAF‟s running intermittently with reduced work weeks

Running (12) BF's (33)

AK Steel Ashland 1 1

AK Steel Middletown 0 1

ArcelorMittal Dofasco 2 3

ArcelorMittal Burns Harbor 1 2

ArcelorMittal Cleveland 0 2

ArcelorMittal Indiana Harbor E 1 5

ArcelorMittal Indiana Harbor W 1 1

Essar Algoma 1 2

Severstal Dearborn 1 2

Severstal Sparrows Point 1 1

Severstal Warren 0 1

US Steel Fairfield 1 1

US Steel Gary 2 4

US Steel Granite City 0 2

US Steel Great Lakes 0 3

US Steel Hamilton 0 1

US Steel Lake Erie* 0 1

Muni bond market is working, but not bank lending

Rising vacancies for office, retail, hotel

Tax revenue shortfalls deeper spending cuts

No job growth, rising unemployment

Stimulus (details: www.agc.org/stimulus)

Source: AGC

2

Source: AGC

$49 billion

up to $35 billion

$30 billion

$21 billion

4

vs. 8/09 vs. 9/08

+4% -9%

-15% -67%

vs. 8/09 vs. 9/08

-3% -15%

+6% -56%

vs. 7/09 vs. 8/08

+5% -40%

+7% -4%

-4% -36%

9

14

AK-5%

WA-16%

OR-15%

CA-19%

ID-14%

MT-13%

WY-17%

NV-28%

AZ-25%

CO-16%

NM-16%

ND-0.5%

SD-6%

NE-3%

KS-13%

OK-4%

TX-14%

MN-14%

IA-12%

MO-13%

LA+2%

WI-13%

IL-

15%

MI-22%

IN-

17%KY

-20%

TN-22%

MS-8%

AL-19%

OH-17%

NY-10%

PA-10%

VA- -13%

NC-15%

SC- -16%GA

-19%

FL-

14%

ME-14%

WV-14%

AR-8%

UT-18%

NH-

18%VT-

16%

CT-

20%

RI-

16%

MA-

17%

DE-

11%

NJ-

14%MD-

15%

HI-

15%

State Construction Employment9/08 to 9/09 (U.S. -15.3%)

0 to 2%

-1 to -14%

-15 to -28%

DC-5%

14

Nonres spending: -3 to -7% (up: power, mfg., BRAC, stimulus; down: developer-, state & local gov-funded)

Res: -30 to -40% (SF up in 2d half, MF down all year)

Total res + nonres (full year 09 vs. 08): -12 to -18%

Materials costs (Dec. 09 vs. Dec. 08): -4% to 0%

Labor costs (Dec. 09 vs. Dec. 09): +2% to +3%

15

Nonres spending: 0 to -5% (more stimulus put in place, maybe gains in retail, higher ed, hospitals)

Res: +5 to +10% (SF up, MF down all year)

Total construction spending: -4% to +2%

Materials costs: 0% to +8%

Labor costs: +3% or less

16

SF: starts, permits now rising steadily; totals should begin to top year-ago figures in late „09

MF: No improvement likely until „11

- Rental demand hurt by job losses among would-be renters

- Supply swelled by owners who are trying to rent out houses and condos

- Banks remain unwilling to lend to developers

Source: Author

10

Residential in $BN 2008 $162.1 2009 $113.5 -30% 2010 $147.3 +30% 2011 $218.3 +48% 2012 $314.6 +44% 2013 $337.8 +7% 2014 $325.6 -4% Residential forecast… single and multi-

family combined

Looking at Residential SF volume only in Millions SF

2008 1,582

2009 1,103 -30%

2010 1,408 +28%

2011 2,025 +44%

2012 2,830 +40%

2013 2,954 +4%

2014 2,766 -6%

2010 – SF = 560 MF = 160 = 720

2011 – SF = 815 MF = 215 = 1030

2012 – SF = 1130 MF = 320 = 1450

2013 – SF = 1120 MF = 445 = 1565

2014 – SF = 1035 MF = 440 = 1475

2006 = 1378 Total (SF+MF)

2007 = 979 Total (SF+MF)

2008 = 905 Total (SF+MF)

Total Building 2178 2955 4057 4420 4236

(millions of sqft) 14% 36% 37% 9% -4%

Nonresidential 770 930 1227 1466 1470

-4% 21% 32% 19% 0

Commercial &

Industiral 372 501 752 939 933

-7% 34% 50% 25% -1%

Institutional 398 429 475 526 538

-2% 8% 11% 11% 2%

Residential 1408 2025 2830 2954 2766

28% 44% 40% 4% -6%

1. Construction is 45% of total flat rolled steel market. This includes residential which represents only 5% of the steel used in the construction sector.

2. Automotive is 20% of the flat rolled market with NAFTA producing 14.8+ units/year.

3. Pipe & Tube is 15% of the flat rolled market

4. All other = 20% of the remaining market

Scrap prices and steel prices trend on same path

Current “short term” trend is slightly lower

Current domestic steel price trend is slightly lower

Longer term scrap trend is tight supply and higher

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

39

44

8

39

47

9

39

50

8

39

53

9

39

56

9

39

60

0

39

63

0

39

66

1

39

69

2

39

72

2

39

75

3

39

78

3

39

81

4

39

84

5

39

87

3

39

90

4

39

93

4

39

96

5

39

99

5

40

02

6

40

05

7

40

08

7

HOT ROLLED & SCRAP AVG MONTHLY PRICES 2008-2009

Series1

Series2

0

200

400

600

800

1000

1200

1400

Jan 0

4

Mar

04

May 0

4

Jul 0

4

Sep 0

4

Nov 0

4

Jan 0

5

Mar

05

May 0

5

Jul 0

5

Sep 0

5

Nov 0

5

Jan 0

6

Mar

06

May 0

6

Jul 0

6

Sep 0

6

Nov 0

6

Jan 0

7

Mar

07

May 0

7

Jul 0

7

Sep 0

7

Nov 0

7

Jan 0

8

Mar

08

May 0

8

Jul 0

8

Sep 0

8

CRC/HRC/GALV

PERIOD - JAN 2004 - SEP 2008SBB Steel Prices, copyright SBB 08

CRC min

HRC min

GALV min

0

100

200

300

400

500

600

700

800

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09

Steel Market Update Galvanized Pricing 2009

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

$80.00

Feb 3

, 2

00

6

Feb 1

0, 2

00

6

Mar

20

, 2

00

6

Apr

8, 2

00

6

Apr

24

, 2

00

6

Sep 2

1, 2

00

6

Oct 2

3, 2

00

6

Nov 2

0, 2

00

6

Mar

17

, 2

00

7

May 2

1, 2

00

7

Aug 6

, 2

00

7

Aug 2

2, 2

00

7

Sep 1

5, 2

00

7

Oct 1

2, 2

00

7

Oct 2

2, 2

00

7

Nov 1

, 2

00

7

Mar

13

, 2

00

8

Mar

17

, 2

00

8

Mar

21

, 2

00

8

Apr

7, 2

00

8

Apr

22

, 2

00

8

Apr

30

, 2

00

8

May 6

,20

08

Jun 2

, 2

00

8

Jun 6

, 2

00

8

Jun 1

9, 2

00

8

Jul 8

, 2

00

8

Aug 7

, 2

00

8

Aug 1

2, 2

00

8

Aug 2

0, 2

00

8

Aug 2

6, 2

00

8

Aug 2

8, 2

00

8

Sep 1

1, 2

00

8

Sep 1

7, 2

00

8

.012 NOM X G30 GALVANIZED

Peak of pricing was at beginning of year $60-$70.00/cwt range (most mfg. did not pay $70)

Trough occurred in June when prices dipped to under $30.00/cwt domestically and $30-$32.00/cwt foreign.

Prices appear to be “turning” again at $40.00/cwt level (+/- $1.00/cwt)

Expect 2010 Prices to Swing up and down

-100.0

-75.0

-50.0

-25.0

0.0

25.0

50.0

75.0

100.0

11

/3

/2

00

8

11

/2

6/2

00

8

12

/2

9/2

00

8

1/1

1/2

00

9

1/2

5/2

00

9

2/9

/2

00

9

2/2

3/2

00

9

3/9

/2

00

9

3/2

5/2

00

9

4/7

/2

00

9

4/2

0/2

00

9

5/4

/2

00

9

5/1

9/2

00

9

6/2

/2

00

9

6/1

6/2

00

9

7/1

/2

00

9

7/1

4/2

00

9

7/2

8/2

00

9

8/1

3/2

00

9

8/2

6/2

00

9

9/1

5/2

00

9

9/2

9/2

00

9

10

/1

3/2

00

9

10

/2

7/2

00

9

Steel Buyers Sentiment

Updated: 10/27/2009

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