Steel Industry Update/254 September 2010

Locker Associates, 225 Broadway, Suite 2625 New York NY 10007 Tel: 212-962-2980

Table 1: Selected U.S. Steel Industry Data, July & Year-To-Date

Month of July Year-to-Date
(000 net tons) 2010 2009 % Chg 2010 2009 % Chg
Raw Steel Production ............... 7,456 5,556 34.2% 52,539 32,307 62.6%
Capacity Utilization ................. 69.6 52.4 -- 71.7 44.6 --
Mill Shipments .......................... 6,481 5,271 23.0% 48,790 31,428 55.2%
Exports ..................................... 896 707 26.7% 7,119 4,644 53.3%
Total Imports............................. 2,425 991 144.7% 14,131 9,615 47.0%
Finished Steel Imports ............ 1,803 891 102.4% 10,992 8,948 22.8%
Apparent Steel Supply*............. 7,388 5,455 35.4% 52,663 35,732 47.4%
Imports as % of Supply*.......... 24.4 16.3 -- 20.9 25.0 --
Average Spot Price** ($/ton) ...... 699 563 24.3% 694 602 15.3%
Scrap Price# ($/gross ton) .......... 316 255 23.9% 340 204 67.0%
Source: AISI, Steel Snapshot *Excl semi-finished imports **Avg price of 8 carbon products #shredded bundles

Table 2: World Crude Steel Production by Region, July & Year-To-Date

(000 metric tons) Month of July Year-to-Date
Region 2010 2009 % Chg 2010 2009 % Chg
European Union.......... 13,926 11,330 22.9% 103,722 73,571 41.0%
Other Europe .............. 2,639 2,557 3.2% 18,160 15,882 14.3%
C.I.S............................ 8,700 8,328 4.5% 61,699 52,924 16.6%
North America............. 9,166 6,913 32.6% 65,398 42,283 54.7%
South America ............ 3,764 3,405 10.5% 24,901 19,393 28.4%
Africa .......................... 1,401 1,248 12.3% 9,493 8,366 13.5%
Middle East................. 1,417 1,391 1.9% 10,999 9,950 10.5%
Asia............................. 73,045 69,086 5.7% 521,881 431,906 20.8%
Oceania ...................... 736 443 66.3% 4,710 2,747 71.5%
Total ........................... 114,794 104,701 9.6% 820,965 657,022 25.0%
Countries
China………………… 51,743 50,644 2.2% 375,478 317,530 18.2%
Japan………………... 9,222 7,660 20.4% 63,800 44,350 43.9%
United States……….. 6,699 5,040 32.9% 47,597 29,308 62.4%
India.………………… (e)5,750 5,440 5.7% 38,868 35,806 8.6%
Russia………..……… 5,595 5,017 11.5% 38,280 32,259 18.7%
South Korea..………. 4,760 4,095 16.2% 33,096 26,038 27.1%
Germany.…………… 3,492 2,692 29.7% 26,237 16,526 58.8%
Ukraine …………….. 2,406 2,662 -9.6% 18,764 16,277 15.3%
All Others…………... 25,127 21,451 17.1% 178,845 138,928 28.7%
Source: World Steel Association, 9/10; e=estimate

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Table 3: US Steel Exports by Country, Year-to-Date 2010

Country July, ‘10 July, ‘09 % Chg YTD '10 YTD '09 % Chg
Canada 485,759 375,369 29.4% 4,115,679 2,343,335 75.6%
Mexico 196,358 164,777 19.2% 1,435,780 1,080,778 32.8%
EU 32,800 18,670 75.7% 251,558 174,593 44.1%
Russia 1,092 1,059 3.1% 6,231 14,359 -56.6%
Turkey 1,848 1,747 5.8% 14,959 10,699 39.8%
Brazil 26,765 5,971 348.2% 93,870 63,340 48.2%
Venezuela 13,441 4,499 198.8% 41,408 51,821 -20.1%
Ecuador 1,545 862 79.2% 28,756 30,602 -6.0%
Argentina 1,087 193 463.2% 9,576 5,274 81.6%
Colombia 7,769 3,872 100.6% 69,249 24,524 182.4%
Trinidad & Tobago 1,347 1,525 -11.7% 6,441 20,916 -69.2%
Peru 19,910 2,006 892.5% 71,232 18,124 293.0%
Chile 2,604 647 302.5% 24,545 8,775 179.7%
Dom Republic 784 571 37.3% 215,753 30,843 599.5%
Panama 6,232 1,063 486.3% 52,298 46,796 11.8%
Other W. Hemi 17,032 25,142 -32.3% 89,340 84,353 5.9%
Africa 4,833 24,154 -80.0% 51,073 142,082 -64.1%
Australia 3,806 977 289.6% 21,481 10,119 112.3%
China 11,835 21,190 -44.1% 72,442 118,134 -38.7%
Korea 3,838 5,734 -33.1% 46,643 31,160 49.7%
India 13,718 15,080 -9.0% 112,112 118,821 -5.6%
UAE 2,910 1,012 187.5% 14,325 13,407 6.8%
Pakistan 3,589 2,415 48.6% 26,755 34,896 -23.3%
Singapore 2,301 2,429 -5.3% 26,900 22,596 19.0%
Vietnam 2,196 4,532 -51.5% 9,977 18,452 -45.9%
Japan 1,355 1,092 -29.1% 8,847 8,669 -90.8%
Other Asia 28,565 18,821 51.8% 191,016 95,866 830.7%
Others 1,147 1,910 -39.9% 10,378 20,524 -49.4%
Total 896,466 707,319 26.7% 7,118,624 4,643,858 53.3%
Source: AIIS, 9/20/10; in tonnes

Table 4: Total US Steel Exports by Region, Year-to-Date 2010

Region YTD '10 YTD '09 % Chg
NAFTA 5,551,459 3,424,113 62.1%
Non-NAFTA W. Hemi 702,468 385,368 82.3%
Total Europe 110,301 42,502 159.5%
Africa 51,073 142,082 -64.1%
Total Asia 509,017 482,525 5.5%
Total Exports 7,118,624 4,643,858 53.3%
Source: AIIS, 9/20/10; in tonnes

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Table 5: World Crude Steel Production 2009 & Forecast

Region 2009 2010f 2014f
Europe 168.2 201.0 232.0
CIS 97.5 104.9 118.0
NAFTA 82.4 107.2 125.0
South America 38.1 42.9 55.0
Africa/Middle East 32.9 37.0 45.5
PR China 567.8 627.0 743.0
Japan 87.5 107.0 112.5
Other Asia 143.7 160.4 185.7
Oceania 6.0 7.7 8.3
World Total 1,224.3 1,395.0 1,625.0
Source: MEPS, 8/25/10; in million tonnes

Table 6: World Finished Steel Apparent Consumption, 2009 & Forecast

Region 2009 2010f 2014f
Europe 142.2 172.5 207.0
CIS 42.5 46.0 55.0
NAFTA 84.6 112.0 135.0
South America 33.0 40.5 51.0
Africa 26.4 27.0 30.0
Middle East 40.7 42.5 48.0
China 514.4 570.0 663.0
Japan 49.3 62.0 76.0
Other Asia 155.1 177.0 204.0
Oceania 6.0 7.5 8.0
World Total 1094.0 1257.0 1477.0
Source: MEPS, 9/8/10; in million tonnes

Table 7: Severstal Financial Results, First Half 2010

(in US$ million) H1'10 H1'09 % Chg
Revenue $7,387 $4,810 53.6%
EBITDA 1,447 -30 na
Profit /(loss) from operations 1,026 -426 na
Net (loss)/profit -593 -946 -37.3%
EPS -0.59 -0.94 na
Source: Steel Guru, 9/7/10

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Table 8: US Steel Industry Political Contribution Trends, 1990-2010

Election Total Individual PAC Donations Donations % to % to
Cycle Rank+ Contributions Contributions Contributions to Dems to Reps Dems Reps
2010** 68 $1,513 $883 $630 $643 $864 43% 57%
2008* 70 $3,605 $2,425 $1,180 $1,132 $2,465 31% 68%
2006* 71 $1,928 $1,131 $797 $525 $1,368 27% 71%
2004* 70 $2,122 $1,553 $569 $569 $1,555 27% 73%
2002 70 $2,245 $1,021 $431 $755 $1,487 34% 66%
2000 69 $2,747 $1,302 $429 $697 $2,042 25% 74%
1998 73 $1,563 $869 $325 $596 $964 38% 62%
1996 68 $2,111 $1,052 $336 $763 $1,346 36% 64%
1994 70 $1,387 $705 $338 $634 $751 46% 54%
1992 71 $1,431 $846 $302 $528 $902 37% 63%
1990 69 $755 $463 $293 $384 $371 51% 49%
Total 70 $21,406 $12,251 $5,628 $7,222 $14,116 34% 66%
Source: OpenSecrets.org, 9/14/10; +These numbers show how the industry ranks in total campaign giving as compared to
more than 80 other industries. *Figures do not include donations of "Levin" funds to state and local party committee which
were created by the Bipartisan Campaign Reform Act of 2002. **2010 contributions are year-to-date as of 9/14/10.

Table 9: Top 20 US Steel Industry Political Contributions, 2010

Rank Organization Amount Dems Reps

1 Nucor Corp $280,200 60% 40%
2 US Steel $190,558 59% 41%
3 AK Steel $116,600 50% 49%
4 Renco Group $86,200 2% 98%
5 American Iron & Steel Institute $69,812 69% 31%
6 Ellwood Group $57,450 0% 100%
7 Arcelormittal $51,250 79% 21%
8 Worthington Industries $36,300 0% 100%
9 Kenwal Steel $32,300 18% 82%
10 San Antonio Steel $25,800 0% 100%
11 Isaacson Structural Steel $22,200 0% 100%
12 Olympic Steel $21,295 91% 9%
13 American Strip Steel $21,100 79% 21%
14 Charlotte Pipe & Foundry $20,206 0% 100%
15 Delong's Inc $17,800 0% 100%
16 Funk Linko $17,000 100% 0%
17 General Iron Industries $15,400 100% 0%
18 Archer Steel Erecting $15,000 100% 0%
18 Middletown Tube Works $15,000 0% 100%
20 Pelco Structural $13,950 84% 16%
Source: OpenSecrets.org, 9/13/10; in US$; Note: Data is based on contributions from
PACs and individuals giving $200 or more. In many cases, the organizations themselves
did not donate money; rather the money came from the organization's PAC, its individual
members or employees or owners and those individuals' immediate families. Totals
include subsidiaries and affiliates. All donations took place during the 2009-2010 election
cycle and were released by the Federal Election Commission on August 22, 2010.

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Table 10: Top Recipients of US Steel Campaign Contributions, 2010

Rank Candidate Office Amount
1 Portman, Rob (R-OH) Candidate $78,608
2 Visclosky, Pete (D-IN) House $27,500
3 Boehner, John (R-OH) House $26,150
4 Levin, Sander (D-MI) House $25,500
5 Burr, Richard (R-NC) Senate $25,296
6 Tiberi, Patrick J (R-OH) House $20,650
7 Dahlkemper, Kathleen (D-PA) House $19,862
8 Murphy, Tim (R-PA) House $19,025
9 Hagan, Kay R (D-NC) Senate $19,000
10 Stivers, Steve (R-OH) Candidate $18,350
Source: The numbers on this page are based on contributions from PACs and
individuals giving $200 or more. All donations took place during the 2009-2010
election cycle and were released by the Federal Election Commission on Sunday,
August 22, 2010

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Table 11: US Steel Industry Political Donations, 2008

# of Average Total
House Members Contribution Contributions
Democrats 91 $5,318 $483,966
Republicans 95 $5,691 $540,634
Total 186 $5,509 $1,024,600

Senate
Democrats 24 $13,553 $325,274
Republicans 34 $19,249 $654,471
Total 58 $16,892 $979,745
Source: OpenSecrets.org, 9/20/10; Note: Data is based on contributions from
PACs and individuals giving more than $200 during the 2007-2008 election
cycle (Presidential election) and were released by the FEC on May 12, 2009

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Locker Associates Steel Track: Spot Prices

U.S. Flat-Rolled Prices U.S. Other Product Prices
1100 1350
($ per ton) ($ per ton)
1250
1000
Plate 1150
900
1050

800
CF Bar (SBQ)
950
CR Sheet
700 850

600 750
Beam
650
500
Wire Rod
HR Sheet 550
400
450

300
350

200 250
89 93 97 04 05 07 08 09 O N D J F M A M J J A 89 93 97 04 05 07 08 09 O N D J F M A M J J A

Locker Associates Steel Track: Performance

U.S. Raw Steel Production 100%
U.S. Capacity Utilization
10.0
(mil net tons)
2010 2010 2009
9.0 2009 90%

8.0 80%

7.0 70%

6.0 60%

5.0 50%

4.0 40%

3.0 30%
J F M A M J J A S O N D J F M A M J J A S O N D
2010 6.9 6.9 7.8 7.7 8.0 7.8 7.5 2010 64% 71% 73% 74% 75% 75% 72%
2009 4.5 4.4 4.4 4.2 4.5 4.8 5.6 6.1 6.4 6.6 6.3 6.5 2009 43% 46% 43% 41% 43% 47% 52% 58% 62% 62% 61% 61%

U.S. Spot Prices for Selected Steel Products, August & Year-to-Date
Month of August Year-To-Date
($ per net ton) 2010 2009 % Chg 2010 2009 % Chg
Hot Rolled Sheet………….. 568 475 19.6% 619 448 38.2%
Cold Rolled Sheet......…….. 682 568 20.1% 729 536 35.9%
HD Galvanized Sheet..…… 743 580 28.1% 776 600 29.3%
Coiled Plate................……. 653 525 24.4% 640 618 3.6%
Cold-Finished Bar (SBQ)….. 894 840 6.4% 833 803 3.7%
Wide-Flange Beams....…… 717 640 12.0% 719 737 -2.5%
Wire Rod/Low Carbon.…… 659 531 24.1% 657 555 18.3%
Rebar.........................…….. 568 517 9.9% 571 501 13.9%
Average Spot Price+…….. 686 585 17.3% 693 600 15.5%
OCTG Seamless Tube…… 1,854 1,510 22.8% 1,733 1,805 -4.0%
Scrap ($/gross ton)*....………. 340 269 26.4% 340 212 60.6%
Sources: Steel Snapshot, Spears Research +Comp price of 8 carbon products *shredded bundles

Update
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Locker Associates, Inc.

LOCKER ASSOCIATES is a business-consulting firm that specializes in enhancing the
competitiveness of businesses and industries on behalf of unions, corporate and government
clients. By combining expert business and financial analysis with a sensitivity to labor issues,
the firm is uniquely qualified to help clients manage change by:
♦ leading joint labor/management business improvement initiatives;
♦ facilitating ownership transitions to secure the long-term viability of a business;
♦ conducting strategic industry studies to identify future challenges and opportunities;
♦ representing unions in strategic planning, workplace reorganization and bankruptcy
♦ formulating business plans for turnaround situations; and
♦ performing due diligence for equity and debt investors.

Over the last 28 years, the firm has directed over 225 projects spanning manufacturing,
transportation, distribution and mining industries. Typical projects involve in-depth analysis of a
firm’s market, financial and operating performance on behalf of a cooperative labor-
management effort. Locker Associates also produces a widely read monthly newsletter, Steel
Industry Update that circulates throughout the U.S. and Canadian steel industry.
MAJOR CLIENTS
Bank of Boston Air Line Pilots Association/Delta Air Lines MEC
Lazard Freres Sharpsville Quality Products
Congress Financial IPSCO
Santander Investment Securities International Association of Machinists
AEIF-IAM/AK Steel Middletown CSEA/AFSCME
Prudential Securities United Auto Workers
US Steel Joint Labor-Mgmt Comm Service Employees International Union
LTV Steel Joint Labor-Mgmt Committee American Fed of Television & Radio Artists
Int’l Union of Electrical Workers Supervalu
Bethlehem Joint Labor-Mgmt Comm United Mine Workers
Inland Steel Joint Labor-Mgmt Comm Algoma Steel
Northwestern Steel and Wire North American Refractories
United Steelworkers NY State Ownership Transition Services
Boilermakers UNITE/HERE
American Federation of Musicians AFL-CIO George Meany Center
USS/KOBE Watermill Ventures
Sysco Food Services of San Francisco Wheeling-Pittsburgh Steel
International Brotherhood of Teamsters Canadian Steel Trade & Employment Congress
Development Bank of South Africa Minn Gov's Task Force on Mining
J&L Structural Steel Special Metals

RECENT PROJECTS
• Business Plan for High-Tech Startup (2009-present): drafted detailed business plan to raise
capital and promote a new hydrogen battery technology
• IBT-Supervalu (2010): assist union and management to identify major operational problems
impacting warehouse performance and provide recommendations for joint improvement
• Institute of Scrap Recycling Industries (2010): presented a status report on the U.S. steel
market before the Institute of Scrap Recycling Industries Commodities roundtable
• Save the World Air-Marketing (2009-present): developed a marketing plan to help drive sales
of a green technology product, ELEKTRA, an electronic fuel device for trucks that increases fuel
economy (mpg's), reduces exhaust emissions and improves engine performance