Steel Market Intelligence

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1 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Million Tonnes (MT) Million Tonnes (MT) Steel Market Intelligence (847) Steel Market Intelligence June Chinese Steel Exports Hit Two-Year High Summary. Breaking a two year record, June net Chinese steel exports jumped 5.4% to 4.09 million tonnes (mt) from 3.88 mt in May. The combination of near-record production in the face of waning steel demand is leading to post-recession record export levels and unlike mid-2010 when Chinese exports were hitting similar high levels, the rest of the world economies are already struggling with weaker steel demand. Newly released CISA estimates that came out today indicate that June production dropped a nominal 0.46% from 1.98 million tonnes per day (mtpd) in May, however, CISA estimates have generally been too low, so we suspect we'll see "flat" Chinese steel production in June. Beijing Backfiring. While Beijing's multiple stimulus-attempts are good news longer-term for steel in China, in the short term, we believe that stimulus announcements are backfiring, keeping production too high, as steelmakers wait for promised new orders to come in. Pricing in China has deteriorated dramatically, with benchmark HRC down some 7% since recent peak in April, and down 15% from the post-recession high in August Outlook. We expect to see Chinese exports continue to rise in coming months on continued overproduction. 4.5 Figure 1. China vs. Global Steel Production, January Current Figure 2. Chinese Net Exports, August Current World Production Chinese Production Please see the disclosures and disclaimers at the end of this report.

2 Figure 5. Chinese Finished Steel Imports, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % Figure 6. Chinese Finished Steel Exports, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % Steel Market Intelligence 2

3 Figure 7. Chinese Finished Steel Net Exports, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril , Ma y , , June , JunQ , July , Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r , De cq , Full Ye a r % % % % % % % % % Figure 8. Chinese Semi-Finished Steel Imports, 2002-Current Ja nua ry % % % % % % % % % % February , March , Ma rq , Ap ril , Ma y , June , JunQ , July , Aug ust , Se p te mb e r , Se p Q , Octo b e r , No ve mb e r , De ce mb e r De cq Full Ye a r % % % % % % % % Steel Market Intelligence 3

4 Figure 9. Chinese Semi-Finished Steel Exports, 2002-Current January % % % % % % % 0.01 NM 0.00 NM 0.00 NM February NM 0.00 NM 0.00 NM March , NM 0.00 NM 0.00 NM MarQ NM 0.00 NM 0.00 NM April NM 0.00 NM 0.00 NM May NM 0.00 NM 0.00 NM June NM 0.00 NM JunQ NM 0.00 NM July NM 0.00 NM August NM 0.00 NM September NM 0.00 NM SepQ NM 0.00 NM October , NM 0.00 NM November , NM 0.00 NM December , NM 0.00 NM DecQ , NM Full Year % % % % % % % % 0.00 NM Figure 10. Chinese Semi-Finished Steel Net Exports, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry , , Ma rch , Ma rq , Ap ril , , Ma y NA , June NA JunQ , NM July Aug ust , Se p te mb e r , , Se p Q Octo b e r , No ve mb e r , , De ce mb e r , De cq , , Full Ye a r % % % % % % % % % Steel Market Intelligence 4

5 Figure 11. Chinese Total Steel Imports, 2002-Current % ch ch ch ch ch ch ch ch ch ch ch. Ja nua ry % % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % % Figure 12. Chinese Total Steel Exports, 2002-Current % % % ch ch ch ch ch ch ch ch ch ch ch ch ch. Ja nua ry % % % % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % % % % Steel Market Intelligence 5

6 Figure 13. Chinese Total Steel Net Exports, 2002-Current % ch ch ch ch ch ch ch ch ch ch ch. Ja nua ry % % % % % % % % % % % Fe b rua ry Ma rch , Ma rq Ap ril Ma y June , JunQ , July , Aug ust Se p te mb e r , Se p Q , Octo b e r No ve mb e r , De ce mb e r De cq , Full Ye a r % % % % % % % % % % Figure 14. Chinese Apparent Steel Consumption, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % Steel Market Intelligence 6

7 Figure 15. Chinese Average Daily Apparent Steel Consumption, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r % % % % % % % % % Figure 16. Chinese Steel Production, 2002-Current Ja nua ry % % % % % % % % % % Fe b rua ry Ma rch Ma rq Ap ril Ma y June JunQ July Aug ust Se p te mb e r Se p Q Octo b e r No ve mb e r De ce mb e r De cq Full Ye a r Source: National Bureau of Statistics of China, World Steel Association and Steel Market Intelligence Steel Market Intelligence 7

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