Steel tariffs and downstream impacts Tampa Steel Conference

Steel tariffs and downstream impacts Tampa Steel Conference Tampa, Florida Blake Hurtik, Editor, Argus Metal Prices 7 February 2020 Market Reporting Consulting Events

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6 Steel tariffs and trade war impacts A fundamental view Market Reporting Consulting Events

7 Hot-rolled coil prices, $/st 950 400 US premium averaged $292/st in 2018 $154/st in 2019 850 750 300 250 650 200 150 550 100 450 50 fob China Tianjin cfr Vietnam 0 -2 19 ex-works NW Europe ян в к- 19 де я- 9 но т-1 19 ок н- 9 се г-1 ав 19 л- 19 ию н- 19 ию й- 19 ex-works Turkey ма р- 9 19 ап р- ма -1 9 фе в -1 18 ян в к- 18 де я- 8 но т-1 18 н- се US ex-works Midwest ок 8 г-1 18 ав л- 18 н- ию 18 ию й- 18 ма р- 18 ап р- -1 -1 ма фе в ян в 8 0 8 350 US premium, right axis Copyright © 2020 Argus Media group. All rights reserved.

8 Steelmakers maintain margins, $/st 800 410 HRC ex-works Midwest #1 busheling delivered Midwest mill Scrap spread, right 390 700 370 600 350 500 330 400 310 300 290 200 100 янв-19 270 фев-19 мар-19 апр-19 май-19 июн-19 июл-19 авг-19 сен-19 окт-19 ноя-19 дек-19 янв-20 250 Copyright © 2020 Argus Media group. All rights reserved.

9 Carbon steel imports feel 232 pinch Product (in short tons) 2017 2018 2019 Y-o-y (from‘ 18) Y-o-y (from ’ 17) TOTAL 27, 000 23, 300, 000 18, 700, 000 -20% -31% Blooms, billets, slabs 6, 000 5, 400, 000 3, 900, 000 -28% -35% Sheets/strip galvanized 2, 700, 000 2, 200, 000 1, 800, 000 -21% -33% Hot-rolled sheet 1, 700, 000 2, 100, 000 1, 500, 000 -28% -13% OCTG 2, 000 1, 500, 000 1, 400, 000 -5% -31% Cold-rolled sheet 2, 000 1, 400, 000 1, 100, 000 -23% -44% Rebar 1, 300, 000 1, 050, 000 999, 600 -5% -26% Wire rods 1, 200, 000 850, 000 700, 000 -18% -42% Coated sheets/strip 1, 000 847, 000 630, 000 -26% -41% Standard pipe 1, 000 780, 000 610, 000 -21% -40% Source: US Department of Commerce Copyright © 2020 Argus Media group. All rights reserved.

10 The post-232, scrap-based future Company Location Type Product Capacity (st/yr) Start-up Nucor Sedalia, Missouri Greenfield Rebar 450, 000 Now! Nucor Frostproof, Florida Greenfield Rebar 450, 000 1 H 2020 US Steel Fairfield, Alabama Brownfield Tubular 1. 6 million 2 H 2020 SDI Sinton, Texas Greenfield Sheet 3 million Mid-2021 Big River Steel Osceola, Arkansas Brownfield Sheet 1. 6 million 1 H 2021 Nucor Gallatin, Kentucky Brownfield Sheet 1. 4 million 2021 Nucor Brandenburg, Kentucky Greenfield Plate 1. 2 million 2022 North Star Blue. Scope Delta, Ohio Brownfield Sheet 850, 000 2022 OTHER POTENTIALS JSW Baytown, Texas Brownfield Plate Big River Steel Brownsville, Texas Greenfield Sheet Source: Company filings, Argus Copyright © 2020 Argus Media group. All rights reserved.

11 Case study: SDI’s Texas import (and integrated) killer • 3 mn t/yr capacity flat -rolled mill • Galvanizing, painting capability. • Near Corpus Christi port (Voestalpine HBI), Mexican prime scrap sources • Varied end markets Copyright © 2020 Argus Media group. All rights reserved.

12 Changing landscape of US steel US Steel idles Great Lakes furnaces CMC idles rebar melt shop Arcelor. Mittal idles Indiana Harbor furnace US Steel buys 49. 9% of Big River Steel Gerdau idles Michigan bar mill melt, rolling ops Cliffs to buy AK Steel, create new integrated Bayou Steel files for bankruptcy, Liberty Group to buy Copyright © 2020 Argus Media group. All rights reserved.

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14 Blake Hurtik Editor, Argus Metal Prices blake. hurtik@argusmedia. com +1 (713) 360 -7590 Houston www. argusmedia. com