| Date Name

Market and Technology Trends in the Global PM Industry APMA 31 October, 2011 Per Engdahl, Höganäs

| 2 2009-05-07

1. The Global production of Metal Powders

2. Development of the Iron based Metal Powder Market

3. Development of the Automotive Industry

4. Technology trends in the Automotive Industry

5. Global trends in the PM Industry

6. Future development of the PM Industry-Success Factors

7. Conclusions

Content

| 3 Date

1. The Global Production of Metal Powders

| 4 Date

Höganäs estimate 2008 Tons

Production of Metal Powders, volume

0 200 400 600 800 1000 1200 1400

Au,Ag,Pt,Pd

Ta

Sn

Mg

HSS+Tool steel(excl HIP)

Ti

WC

Mo

Cr

SS+HSS,WA (excl HIP)

Co

Ni

WC

HSS+Tool steel(HIP)

Pb

Cu

NdFeB

Ferroalloy

Al

Zn

Fe

Applications •Structural parts •Soft and hard magnets •Welding electrodes •Bearings •Tools •Contact materials •Rocket fuel •Batteries •Surface coating •Super alloys •Pigments •Catalysts

| 5 Date

0 200 400 600 800 1000 1200 1400 1600 1800

MgSn

HSS+Tool steel(excl HIP)SS+HSS,WA (excl HIP)

CrTaPbTi

FerroalloyWZnCu

Au,Ag,Pt,PdHSS+Tool steel(HIP)

AlMo

NiCo

WCFe

NdFeB

Production of Metal Powders, value

Höganäs estimate 2008 MEUR

| 6 Date

2. Development of the Iron Based Metal Powder Market

| 7 Date

0

200

400

600

800

1000

1200

140019

91

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Höganäs estimate

Development of the total Global Iron Powder Market

| 8 Date

Global Iron Powder Market

99,91%%

0,09%

Crude iron

Iron powder

•The global production of Iron Powder represents less than 0,1 % of the total production of iron and steel

| 9 Date

Global Iron Powder Market

76%

24%

PM

Others

• Approximately 75 % of all Iron Powder is used for PM (pressed an sintered components.

•Other applications are welding electrodes, hot-bags, oxygen absorbers, chemical and metallurgical.

•Approximately 70 % of PM is for automotive applications

Total Iron Powder market

Höganäs estimate 2010

| 10 Date

Global Iron Powder Market Global Market for PM powders, 2010

32%

20%

48%Americas

Europe

Asia

•Asia is the largest market for PM .

•There are no fully reliable figures of the Chinese PM market and the estimate is based on a combination of many different sources and calculations.

Höganäs estimate 2010

| 11

What drives the Market for PM components?

Automotive ~70 %

1. Vehicle production (no of units)

2. Weight of metal powder based components per vehicle •Type of vehicle (car, SUV, motorcycle, electrical, hybrid), 0,5 – 40 kg/unit •Engine and vehicle design •PM penetration level •Big differences between different regions

Other applications ~30 % (Power Tools, Lawn and Garden, Recreations, Home Appliances, Furniture, HVAC, Pumps, Motors, Hydraulics, Locks, Arms…)

•GDP •Technology development •PM penetration level

| 12 Date

Relative development of global Vehicle and Iron Powder sales

| 13 Date

3. Development of the Automotive Industry

| 14 Date

Global Light Vehicle Sales

| 15 Date

0

5000

10000

15000

20000

25000

30000

35000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

x 1000 units

Production of CARS & LCV'sWORLDWIDE

Europe N America S AmericaE Asia Japan Others

Production of cars & LCV in major regions

| 16 Date

0

4000

8000

12000

16000

20000

24000

28000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

x 1000 unitsProduction of CARS & LCV's

Germany - USA - S Korea - Japan - China

Germany USA S Korea Japan China

Production of cars & LCV in the top 5 countries

| 17 Date

“The shift of innovation hubs towards Asia Markets is a logical trend, automotive is just the next industry”

Japanese and also Korea companies are well established as global automotive companies and will to continue to grow in export markets

China is the largest producer and also the largest markets for vehicles. The market and technology development is, however, still dominated by global automotive companies from USA, Europe, Korea and Japan.

| 18 Date

4. Technology trends in the Automotive Industry

|

Drivers of change

19 Date

Environmental legislation • Emissions: less and cleaner • Recycling

Fuel efficiency • Downsizing - reduced weight

Performance: increased horse-powder/liter (today >100 hp/l) Increased life Cost reductions and logistics

| 20 20111017

Environmental outlook, Euro 5-6

0

50

100

150

200

2005 2008 2012 2020

CO2 e

mis

sion

(g/k

m)

ActualTarget

|

This leads to and reinforces…

2011-

12

21 |

Smaller and more efficient engines/less cylinders Increased share of diesel engines(especially in Europe) Use of direct gas injection Increased compression Use of turbo-chargers General weight reduction higher strength materials Lower wear surface treatments Easy recycling Cost efficient and environmental friendly materials and alloys JIT deliveries and short development times Global support and cooperation, but local supply Standardization of materials Cost reductions Development of hybrid and EV technologies

| 22 Date

There are many examples of contributions from the PM industry

•P/F con-rods •Bearing end-caps •VVT •EGR •Light weight pulleys •Stainless steel flanges •Gasoline pump elements •Oil pumps with variable flow

•Composite cam shafts •Valve seat inserts •Common rail (diesel injection) •Gasoline injection •Power steering •Rolled teeth gears •Inductors for electrical drives

| 23 Date

5. Global trends in the Global PM Industry

| 24 24

Why use PM?

Environmentally friendly process Near net-shape in few steps Elimination of scrap Lowest per unit cost in long series Broad range of alloy compositions with

unique properties Design freedom Robust manufacturing process Close dimensional tolerances

Cost effectiveness PM is to a large extent a cost effective technology

| 25 25

Raw material utilization and energy requirement of various manufacturing processes

| 26

Global trends in the PM industry Components

Very complex shaped components specifically designed for PM (VVT, Carriers…) Automotive applications dominates but non-automotives applications have the same growth rate.

Medium densities are still dominating and growing but the growth

rate of high density components is much higher. Higher strengths

Soft magnetic components for EV and hybrid applications Big interest and high activity level for heavy loaded gears

| 27 111017

Automotive PM Applications, existing & potential

Shock

Absorbers

Synchronizing parts

Cam

lobes

VVT

Con rods

Turbo

charger

Transmission gears

| 28

Moving the limits example - Gears based on PM

• Automotive transmission gears: 70 million cars x average 13 gears (assumed average 5 speed transmission) x average weight of 600 g = 500.000 tons

• Engine timing gears: 70 million cars x average 2 gears at 300 g average weight = 42.000 tons

• Other applications, marine, heavy vehicles, motorcycles, industrial gear boxes etc. could be another ~ 300.000 tons

➨ The total market size is almost as big as the existing PM market

Project target: To make Powder Metal based gear solutions the first choice for future high-performance load carrying gears.

| 29

Global trends in the PM industry Materials and processes

Use and development of Integrated powder solutions supplied as customer specified press-ready mixes:

• Including machinability enhancing additives • Including specially designed lubricants • Based on advanced mixing and binding technologies

Use of lower alloying content but improved processing and higher densities (less Cu and Ni). Higher strength (density, alloy design and processing) Increased use of Cr alloyed materials Use of joining technologies(e g brazing) to produce complex shaped parts

| 30 Date

0

5

10

15

20

25

USA Japan Europe China

Content of locally produced PM components per vehicle

Global trends in the PM industry Market

kg/car

| 31 Date

Global trends in the PM industry Market

China is today the largest producer of automotives and production of components will be transferred from other regions. All major automotive producers and system suppliers have a strategy to localize production and sourcing. The primary reason is logistics (lead time, capital employed …)

In China, there are however, limitations in capacity and especially competence and know-how to produce high quality PM components , which limits the development of production.

Focus on logistics, inventory control and JIT deliveries. Global partnership but local supply solutions Increased production in South East Asia and India. Interest for Indonesia.

| 32 Date

6. Future development of the PM Industry-Success Factors

| 33 2011-12-13 33

Time

Properties Complexity Tolerances

•Co-operation suppliers/PM manufacturers/end users. Industry/Universities. Join forces. • Focus on improved properties and tolerances • Marketing of the PM technology to end-users (training and education) •Quality image •Knowledge about the applications and competing technologies •Time to market and “right timing” •Productivity improvements •Improve knowledge level (education, training and recruitment) •From replacement to innovation

How to develop the PM industry Success factors

| 34 Date

7. Conclusions

|

Conclusions Powder Metallurgy is a growing market. The development is

driven by continuous introduction of new materials and technologies. Powder Metallurgy has essential advantages compared to

competing technologies – high material utilization, design capabilities, unique material…

The development of technology within automotive industry and

also other areas , driven by higher material and energy costs, increases opportunities for Powder Metallurgy technologies.

35 Date

| 36 Date

0

20 000 000

40 000 000

60 000 000

80 000 000

100 000 000

120 000 000

140 000 000

160 000 000

Machining Ferrous Castings

Forgings Ferrous Powder

Global competition benchmarking

Tons

(PM)

| 37 Date

We in the Powder Metallurgy Industry must utilize our resources in a smarter and more efficient way than our “competitors” to drive our technology forward.

Key words are:

Cooperation in the whole value chain. Join forces!

Technology and development - Innovation.

Properties and tolerances

Quality

Timing

Knowledge

Recruitment and training

What does this means?