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US steel industry is equipped to lead due to ample

supplies of affordable energy through natural gas,

stable labor relations, a vast steel market and a drive

for innovation. Besides these factors, rising

technology and innovation is also continue to drive

the steel industry through challenges faced whether

its trade issues, environmental, or the general

volatility of the global steel economy.

Further, steel has long been considered the

backbone of the country's manufacturing sector,

providing an essential material for downstream

manufacturers in the automotive, energy,

machinery and equipment, container, appliance and

rail industries.

Presently, construction industry accounts major

share of steel consumption in the country followed

by automotive and machinery & equipment

industry. In future, along with construction and

automobile sector, energy sector is also expected to

grow tremendously on the back of tremendous

growth of demand from oil & gas sector.

US Steel Industry - Overview

Figure 1: Steel Shipments by Sector (%), 2012 & 2017

Source: American Iron and Steel Institute, IhS Global InsightNote: Data is estimated

Source: RNCOS

The US is the third largest crude steel

producer in the world after China

(Production 716.5 Million Metric Tons in

2012) and Japan (Production 107.2

Million Metric Tons in 2012). In 2012,

Crude steel production in the country

witnessed an increase of more than 2.5%

to reach 88.6 Million Metric Tons

compared to the previous year. Further, it

is expected to grow at CAGR of around

4.5% during 2012-2017. Besides, country's

share in world's crude steel production in

2012 was 5.7%.

US Steel Industry - Market Size and Growth Rate

Figure 2: Crude Steel Production (Million Metric Tons),2009-2012 & 2017

Source: World Steel Association, RNCOSNote: f = RNCOS Forecast

Figure 3: Apparent Steel Consumption (Million Metric Tons),2009-2012 & 2017

Source: RNCOSNote: Crude Steel Equivalents

With the improving demand from

various industrial sectors, steel

consumption (Crude Steel Equivalent)

in 2011 grew 10.7% compared to 2010.

However, apparent steel consumption is

anticipated to grow at CAGR of around

4.3% during 2012-17 to reach around

130 Million Metric Tons by the end of

2017.

Further, apparent consumption for finished steel

products is grew 8.4% in 2012 from the previous year.

In future, due to the automotive and energy sectors

and an increasingly resilient construction recovery,

apparent steel consumption is forecasted to at a

CAGR of more than 4% during 2012-2017.

Figure 4: Apparent Finished Steel Consumption(Million Metric Tons), 2012 & 2017

Source: World Steel Association, RNCOSNote: f = RNCOS Forecast

In 2012, steel exports and import grew more than 10.5% and 1% respectively compared to previous year. In coming

years, export is anticipated to rise further as domestic demand is not expected to reach pre-recession levels before

2015 as construction spending languishes. However, imports growth is expected to be affected by high antidumping

and countervailing duties imposed by the US authorities.

Figure 5: Export and Import of Steel (Million Net Tons), 2010-2012

Source: World Steel Association, RNCOS

In the US, major fraction of the crude steel produced is of continuously cast steel type accounting 98% of the total crude

steel production. Moreover, it is expected that ingots production share will further decline in the coming years due to

high cost of production and various other disadvantages over continuously cast steel process.

US Steel Industry - Market Breakup/Segmentation

Figure 6: Crude Steel Production by Type (2012)

Source: RNCOS

In the US, flat products account for a major share in total apparent steel consumption in the country. In 2012, share

of flat products consumption is estimated to 58% share in total steel consumption, followed by long products.

Figure 7: Apparent Steel Consumption by Type (2012)

Source: RNCOS

US Steel Industry - Opportunities and Challenges

▪ Positive momentum from the construction sector will prosper steel industry. Recently, MTA (Metropolitan

Transportation Authority) announced to buy steel from domestic companies for its Verrazano bridge project which

has a demand of 15,000 Tons of steel plate.

▪ The strong growth from automotive industry.

▪ Demand from energy sector is also growing. For instance, US shale gas revolution is going to create a need for more

steel that goes into the pipes to bring the gas to the user.

▪ Upcoming breakthrough technologies as next generation of iron and steel making technologies that reduce or

eliminate CO2 emissions and manufacturing of lighter steel for automobiles will also boost the growth of steel industry.

▪ Rising import levels hurting country's steel manufacturers.

▪ Volatility in raw material costs are making domestic production costly.

▪ General economic uncertainty due to country's tax reforms and spending cuts. (Though the best case scenario is a

slight improvement in steel demand in the US with a GDP growth of 2.5%, if Congress is unable to reach a

compromise on tax reforms, it could lead to market uncertainty and economic disruptions).

▪ New EPA (Environmental Protection Agency) rules are also going to have an effect on the steel sector - particularly

those supplying to the automotive industry. Vehicles will have to be lighter, and therefore there is the threat of

aluminum or plastic substitution.

US Steel Industry - Future OutlookIn future, growth in the United States will be supported by

strong momentum in the auto sector which is expected to

account around 27% share of steel consumption by the end

of 2017. Automobile production in US is growing at CAGR

of around 15% during 2010-12, exhibiting ample

opportunities for steel industry to grow.

In addition to that, recovery in construction sector is also

boosting the country's steel industry and expected to

account 42% share of total steel consumption in the

country.

Also, demand from US$ 235 Million worth Verrazano

Bridge project will boost the demand of steel orthotropic

decks in the country. MTA is going to spend US$ 201

Million on U.S. products and labor.

Additionally, demand for steel tubes to use for drills, well

casing, pipelines and other equipment will also rise on the

back of country's shale gas revolution. Companies such as

U.S. Steel and ArcelorMittal have been racing to develop

steel for the resurgent Detroit auto industry and pipes for

the shale gas revolution.

Oil and gas industry might be responsible for about a third

of expected 20% growth in the US steel market by 2020.

Even so, other uses such as construction and the car

industry are still very important.

Besides that, various companies such as Pro-Tec Coating

Co. and NanoSteel are working towards research and

development in the field of steel for making it lighter,

stronger, more easily formable steel to help automakers

meet the tougher fuel economy and safety standards which

will help the steel industry to grow further and to

overcome EPA norms' challenge.

Although country's US steel industry is growing

countinuously; huge global overcapacity, sluggish demand

in many sectors, and prices that have been falling steadily

since 2011, are still the major challenges in US Steel

Industry.

US Steel Industry - Key Players

▪ Nucor Corporation

▪ United States Steel Corporation

▪ Gerdau Ameristeel

▪ Commercial Metals Company

▪ Steel Dynamics, Inc.

▪ AK Steel Holding Corporation

▪ Arcelormittal Holdings Inc.

▪ Allegheny Technologies

In 2012, global production of crude steel hit a record 1.55 Billion Tons, up 1.2% from 2011. Even in the U.S., where the

manufacturing sector is not seeing its finest days, steel production led by mills run by U.S. Steel Corp. and Arcelor

Mittal in the Midwest, and Nucor Corp. in the South, rose 2.5% to 88.5 Million Tons last year. While all the three

companies faced revenue drop in 2012. Revenue of U.S. Steel Corp., Arcelor Mittal and Nucor Corp. declined by 2.8%,

10.38% and 2.97% respectively from 2011.

RNCOS is a leading business consultancy services company believes that in today's cut-throat environment, companies

need to understand their business environment better.

Critical questions that businesses need to address:

● What geographies to target?

● How to identify & increase the customer base?

● How to enhance the brand image?

● How to launch new products and find distributors?

● What is the current market structure and market size?

We understand your immediate needs and your long-term goals and objective and work with you on how to accomplish

them.

RNCOS blends the best of strategy consulting with the best of market research to provide organizations with accurate,

succinct answers to their most important business questions.

What is the market size

Structure of the market

Who are your buyers

Buyers’ buying behavior

Expectations from the product

Similar products in the market

Features, attributes & market share ofthese products

Customer preferences

Price range of these products

Most suitable distributors andchannels for your business.

Analyzing their strength, credibility,scale of operations.

Assisting in distributor selection.

Financial & strategic analysis ofexisting competition

Acceptance level among customers

Emerging competitors

New market entrants

GROWTH PARTNER

We help you make informed decisions

through the practical application of research,

hand holding you to your success…

RNCOS is a business consultancy services firm that provides services to clients across the Globe. With more than a

decade of industry experience and expertise, we boast of a distinguished clientele' across multi geographies and industry

verticals. Our strength lies in the healthcare sector besides Retail and Information Technology.

Be it market testing, product launch, competition assessment, customer satisfaction study, pricing analysis or any other

requirement, RNCOS custom research team acts proactively to fit in the best possible solution for our valued clients.

We believe in multi-level client interaction and complete transparency from the project commencement till effective

implementation, thus ensuring total customer satisfaction at the end.

Having served close to 200 renowned as well as start-ups globally, our strength lies in multilingual and multi geography

tie-ups with leading market survey partners who assist us in gaining vital primary insight straight from the horse's

mouth.

Vartika Sehgal

Sr. Research Specialist

RNCOS

B-129, Sector - 6, Noida - 201301

Phone: + 91 (120) 4224700

Fax: +91 (120) 4224707

Email: marketing@rncos.com

Website: http://www.rncos.com

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