Steel Trends in a Turbulent Market(responses from our SMU Market Survey Feb 22, 2010)

UBS Conference Call (Postponed) – February 26, 2010 John Packard, Publisher

John Packard – Steel Market Update

• 31 years actively selling flat rolled steel

• Newsletter developed for active buyers & sellers of flat rolled steel

• Prices – Momentum –Trends – Analysis

• SMU now in 2nd Year

February 2010 Forecast had 29.7% forecasting growth

End of Feb. ‘10 many companies failing to meet forecast – 43.5%

Failure to meet forecast comparison January ‘10 to February ‘10

• Fail to meet forecast in January – 38.7%

• Fail to meet forecast in February – 43.5% - with one week to go

73.1% of Mfg & SC are forecasting some growth for March 2010

Mfg inventories appear balanced

Mfg moving away from building inventory(reversal began in early February 2010 and continues)

Jan ‘10Feb ‘10

Service Center Inventories “balanced” (week of February 22, 2010)

Comparison of SC inventory build vs. reduction January to late February

January 2010 S.C. survey February 22, 2010 responses

Only 23.7% plan on increasing purchases over next 3 months

29% of companies surveyed reported they are buying foreign steel (mfg & sc combined)

More Mfg & SC plan on buying steel over the next few months

Buyers seeing foreign as an option

End of December 2009 – 21% End of February 2010 – 35%

SMU Buyers Sentiment continues pessimistic trend at -30% (as of 2/22/2010)

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Steel Buyers Sentiment

Updated: 2/3/2010

SMU Buyers Sentiment with arrows indicating when price cycle changed

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Steel Buyers Sentiment

Updated: 2/3/2010

Pricing Momentum Continues to Point to Higher Prices

•scrap

•Iron oreWhy? Cost

Increases

•weather

•Production problems

•Demand growth?

Why? Issues

While we worry about

supply growth

SMU Indexes 4 Products: HR, CR, Galvanized and Galvalume

0100200300400500600700800900

1000

Steel Market Update2009 Monthly Pricing Average

HRC

CRC

HDG

GLM

SMU Hot Roll IndexHigh, Low & Average (as of early February 2010)

300

350

400

450

500

550

600

650

7/1/2009 8/1/2009 9/1/2009 10/1/2009 11/1/2009 12/1/2009 1/1/2010 2/1/2010

Steel Market Update HRC July 2009 to Current

Low

High

Avg

$620$600$580

SMU Hot Roll Index tends to Lead CRU and other indexes

The UBS Conference call has been moved to Friday March 5, 2010

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