Demand & supply study on SS long products in China

Demand & supply study on SS long products in China Lawrence Liu / 刘刚 Tsingshan Holding Group Co.,Ltd. International Trade Dept I General Manager 青山控股集团有限公司国贸一部总经理

Content 1. China Macro-economy situation 2. SS raw material analysis 3. China SS long products market review and study 4. China SS long products import and export split 5. Brief introduction of Tsingshan 6. Outlook of SS long product market future development in China ( Conclusion)

China Macro-economy situation 1978 ~ 2015 China GDP growth ratio 38 years high growth China becoming the 2 nd large economy Government announces 6.5~7.0% in 2016. 2016 Q1 6.7%

China Macro-economy situation 2016 China Stainless steel output will recover 2015 China produced 21.53m tons stainless steel, decreased 1.3% Y-O-Y. Shared 52% of world output. 2016 forecast will increase 1.5% to 21.85m Data Source:Antaike

SS raw material analysis SS raw material- Nickel 2015 China primary nickel output 630k tons, decreased 10%, among total NPI attributed 385K tons 2016 China primary nickel output will be 560K tons, NPI will be 330K tons. Even though China Nickel supply decreased world wide nickel still slightly over supply due to the new project of big companies and Indonesia World Nickel demand and supply Nickel ( K tons ) World supply World demand China produce World Balance Price usd/mt 2012 2013 2014 2015 2016F 1760 1960 1990 1970 1970 1670 1780 1870 1890 1930 559 700 700 630 560 +97 +180 +120 +80 +40 17530 15083 16956 11865 9000

SS raw material analysis SS raw material- Ferro chrome South Africa, China and Kazakhstan are major ferro Chrome producer in the world, Share 79% of the total production China produced 3.75m tons in 2015, which is 5% down y-o-y, 2016 forecast will be 3.90m Global chrome ore resources, especially South Africa resources mainly concentrated in the hands of several big giant, although ferrochrome production capacity in China is big however no pricing power

China SS long products market review and study 2016 SS Round Bar Production Forecast Mill Round Bar 300 Series 400Series total Dongte/ 东特 18,000 36,000 54,000 Xining/ 西宁 40,000 40,000 Tisco/ 太钢 36,000 24,000 60,000 Greatwall/ 长城 12,000 60,000 72,000 Baosteel/ 宝钢 24,000 24,000 48,000 Yongxing/ 永兴 96,000 0 96,000 Wuhang/ 吴航 0 24,000 24,000 Tsingshan/ 青山 700,000 0 700,000 Huaxin/ 烟台华新 72,000 12,000 84,000 Wenzhou/ 温州地区 120,000 12,000 132,000 Dainan/ 戴南地区 180,000 12,000 192,000 Others/ 其它 200,000 200,000 Tot al 1,258,000 444,000 1,702,000

China SS long products market review and study 2016 SS Round Bar Production Forecast 2016 SS Round Bar Production Forecast 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Round Bar 300 Series Round Bar 400Series

China SS long products market review and study HR SS round bar specification classification Grade Q'ty Proporti on 300 1,258,000 74% 400 444,000 26% Total 1,702,000 100% 400 系 26% SPEC & PROPORTION 300 系 74% HR SS round bar application classification Application Proportion Tube billet 70% Machinery 10% Forging 20% Total 100% Machinery 10% Forging 20% APPLICATION Tube billet 70%

China SS long products market review and study 2016 China SS Wire rod production forecast Plant Wire Rod 200Series 300Series 400Series Duplex totlal Dongte/ 东特 72,000 36,000 0 108,000 Tisco/ 太钢 0 18,000 48,000 8,400 74,400 Greatwall/ 长城 0 0 18,000 0 18,000 Baosteel/ 宝钢 0 36,000 9,600 3,600 49,200 Yongxing/ 永兴 46,200 60,000 0 1,800 108,000 Wuhang/ 吴航 68,800 1,200 50,000 0 120,000 Tsingshan/ 青山 276,000 324,000 0 600 600,600 XingTai/ 邢台 0 0 45,600 0 45,600 Dainan/ 戴南地区 204,000 60,000 12,000 0 276,000 Total 595,000 571,200 219,200 14,400 1,399,800

China SS long products market review and study 2016 China SS Wire rod production forecast 700000 2016 SS Wire Rod Production Forecast 600000 500000 400000 300000 200000 100000 0 盘条 200 系盘条 300 系盘条 400 系盘条双相钢

China SS long products market review and study HR SS wire rod grade classification Grade Q t y Proportion 200 595,000 42.5% 300 571,200 40.8% 400 219,200 15.7% Duplex 14,400 1.0% Total 1,399,800 HR SS wire rod application classification Application Proportion Cold heading 60% Wire 37% Welding wire 3% Wire 37% 300 系 41% WIRE ROD GRADE 400 系 16% 双相钢 1% APPLICATION Welding wire 3% 200 系 42% Cold heading 60%

China SS long products market review and study China major SS wire rod manufacturers and size range Wire Rod 5.0~20.0mm Bar in coil 14.0~38mm Mills 产能, 吨 / 年 工厂 产能 东北特钢 /Dongbei 200,000 宝钢特钢 /Baosteel 200,000 宝钢特钢 10,000 永兴特钢 /Yongxing 100,000 青山钢铁 /Tsingshan 600,000 青山钢铁 100,000 太钢不锈 /TISCO 100,000 戴南地区 /Dainan 350,000 邢钢 /Xintai 100,000 Total 1,650,000 110,000

China SS long products market review and study HR SS Wire Rod Historical Price(S30400) 30000 Wire Rod Price 25000 20000 15000 10000 5000 0 2010-10-6 2011-10-6 2012-10-6 2013-10-6 2014-10-6 2015-10-6 304 price reached peak in Aug 2014 the hit the bottomrmb10900 in Feb 2016. rebound in March, mills order were fully book till July,Current price is RMB11900, Market inventory at very low level, nickel and commodity price rebound, end-user build up the inventory, caused mills production recover, supply side very tight, most of mills running fully.

10.04.10 10.05.18 10.09.04 10.11.08 10.12.17 11.02.15 11.03.04 11.04.02 11.05.09 11.06.20 11.09.23 12.01.13 12.03.28 12.09.11 12.12.11 13.03.28 13.06.03 13.08.02 13.11.13 14.04.12 14.05.27 14.07.22 14.09.22 14.11.21 14.12.29 15.03.02 15.05.07 15.08.03 15.10.08 15.11.10 15.12.12 16.01.09 16.02.18 16.03.07 16.04.05 16.05.06 16.05.18 China SS long products market review and study HR SS round bar historical price 30000 Chart Title 25000 20000 15000 10000 5000 0 Bars price trend is same as wire rod, long products profit is much better than flat.

China SS long products import and export split China SS Round Bar/Profile and Wire Rod Import record Year Bar/Profle import (Tons) Wire Rod Import (Tons) 2009 7,174 52,357 2010 10,431 49,501 2011 10,005 42,530 2012 11,495 40,712 2013 15,697 47,601 2014 19,401 43,022 2015 17,422 41,349 60,000 50,000 40,000 30,000 20,000 Bar/profiles and Wire Rod Import Record 10,000 0 2009 2010 2011 2012 2013 2014 2015 Bar Imported (Tons) Wire Rod Imported (Tons)

China SS long products import and export split China SS Round Bar/Profile and Wire Rod export record Bar/Profile and Wire Rod Export Record Year Bar/Profile Export (Tons) Wire Rod Export (Tons) 2009 4,815 7,410 2010 10,428 49,870 2011 15,733 90,723 2012 11,784 72,501 2013 12,036 84,927 2014 14,586 129,860 2015 13,243 95,953 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2009 2010 2011 2012 2013 2014 2015 Bar Exported (Tons) Wire Rod Exported (Tons)

China SS long products import and export split 2015 China Wire Rod Export Record ( Top 20 countries) 30,000 25,000 25,373 20,000 15,000 15,487 12,219 11,396 10,000 8,694 7,352 5,000 0 2,752 2,161 1,972 1,884 1,300 1,005 978 652 643 598 396 370 204

China SS long products import and export split 2015 China Wire Rod Import Record ( Top 11 countries) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Japan Taiwan Italy S/Korea China Sweden India British France Germany Malaysia

China SS long products import and export split 2015 China SS Round Bar/Profile Export Record (top 20 countries) 2015 Bar and Profile export (top 20 countries) UAE Safrica Tajikistan Brunei Germany Japan Turkey Pakistan Senegal Hongkong USA Singapore Brazil Vietnam Malaysia Indonesia Phillipines Thailand S/Korea 0 2000 4000 6000 8000 10000 12000

China SS long products import and export split 2015 China SS round bar/profile export record (top 17 countries) Hongkong Tailand Danmark Austia China S.Korea India Britain Span Sweden USA France Italy Japan Germany Taiwan 0 2000 4000 6000 8000 10000 12000

Snapshot of Tsingshan Iron and Steel 青山钢铁简介 -2015 annual result 据 Brief introduction of Tsingshan The largest Private Owned Stainless Steel Manufacturer in China : 中国最大的民营不锈钢制造企业 基于 2015 年数据 Setup : 1988 成立日 :1988 年 SS production: 5.38 million tons + 18.8% 产量 :538 万吨 + 18.8% 基于 2015 年数 Sales Revenue: 13.2 billion USD + 26% 销售收入 :132 亿美元 +26% Ranked as No. 200 of TOP 500 ENTERPRISES OF CHINA IN YEAR 2015 2015 年, 位列中国企业 500 强第 200 位

Brief introduction of Tsingshan Production Bases of Tsingshan in China 青山在中国的生产基地 Shanghai 上海 Headquarter 总部 Decent Group 鼎信集团 SS value-added products 不锈钢高附加值产品 Zhejiang 浙江 Tsingshan Holding/Ruipu/Stellar 青山控股 / 瑞浦 / 泰朗 450KMT SS melting capacity 45 万吨炼钢 FuJian 福建 Tsingtuo Group 青拓集团 3600KMT SS melting capacity 360 万吨炼钢 Guangdong 广东 J eray Group 吉瑞集团 2300KMT SS melting capacity 230 万吨炼钢

Brief introduction of Tsingshan Tsingshan Snapshot-SS Product Portfolio 青山不锈钢产品介绍 SS HR COILS 不锈钢热轧 Capacity: 3 million tons 1219mm~1600mm width and 2.3mm~16mm thickness 1 million tons 450mm~850mm width 2.3~4.5mm thickness Black/White Coils Capacity: 700K tons SS Bar/Rod Capacity: 600K tons SS wires SS PRODCUT PORTFOLIO SS CR COILS 不锈钢冷轧 Capacity: 300KMT 485~730mm CR coil. 0.6mm~1.4 mm thickness. Seamless Pipe: 25K tons Welding Pipe:10K tons SS RODS/ BARS/WIRES 棒线材 Pipe Fittings 2K tons SS PIPES/PIPE FITTINGS 管材

Brief introduction of Tsingshan Tsingshan s Projects in Indonesia 青山在印尼的项目 Phase I: 2*65MW Power plant +300KT NPI 一期 :2*65 兆瓦电厂 +30 万吨镍生铁 Phase II: 2*150MW Power plant+600ktnpi+1000kmt Stainless 二期 :2*150 兆瓦电厂 +60 万吨镍生铁 +100 万吨不锈钢 Phase III: 2*350MW Power plant+800ktnpi+1000kmt Stainless 三期 :2*350 兆瓦电厂 +80 万吨镍生铁 +100 万吨不锈钢

The largest SS long products manufacturer : 中国不锈钢长材制造企业 Setup : 2004 成立日 :2004 年 Brief introduction of Tsingshan-Ruipu Technology Snapshot of Ruipu Technology Group Co.,Ltd. 瑞浦科技集团简介 SS Melting Capacity: 450,000MT 不锈钢炼钢产能 :45 万吨 SS Round Bar Capacity: 700,000MT 不锈钢热轧圆棒生产能力 :70 万吨 Size:20~150MM x 2000~7000MM SS Wire Rod Capacity: 600,000MT 不锈钢热轧圆棒生产能力 :60 万吨 Size:5.0~38.0MM Sales Revenue: 1.5 billion USD 销售收入 :15 亿美元

Brief introduction of Tsingshan- Ruipu Technology Strength of Ruipu Technology Group *Equipment : Equipped with medium frequency furnace, electro furnace, AOD,LF, applying continuous casting technology, can meet wide variety of steel grades Imported Danieli Hot rolling line,can produce 5.0mm ~38.0mm SS wire rod and bar in coils Imported Taiwan Solution Annealing line. *Technology: Set up Ruipu Special Steel Research Institute, hire experts from Chinese academy of sciences and overseas, remain Regular technical exchanges with universities and research institutions. One doctor degree and eight master degrees technicians *Grade: Can produce more than 100 grade products, meet customers request *Cost: Lowest raw material buying price, lowest cost among SS steel mills

Brief introduction of Tsingshan- Ruipu Technology

Brief introduction of Tsingshan- Ruipu Technology

Brief introduction of Tsingshan- Ruipu Technology Tsingshan SS Long Products Structure HR SS round bar 机加工 ( 光亮棒 ) 8% 锻打用 6% 圆棒 Application Q ty Proportion Pipe Billet 600,000 85.7% Machinery 60,000 8.6% Forging 40,000 5.7% 700,000 100% 比例 管坯 86% HR SS wire rod 拉丝 40% Q ty Application Proportion Cold Heading 360,000 60.0% Wire 240,000 40.0% 冷礅用 60%

Outlook of SS long product market future development in China ( Conclusion) Global Nickel supply almost balanced,price will not fluctuate sharply in this year Global Fe-Cr supply is tightening in short-term, Q2 price sharply increase, will stabilize in Q3 and Q4 SS long product price will fluctuate slightly, but the range will not be huge State owned companies will gradually reduce production for 300 series, turning to 400 series New capacity of long product concentrated on Tsingshan, Yongxing and other private companies Tsingshan:capacity-SS wire rod 300K tons, size 5.5~20.0mm,expected to start by end of 2016 Yongxing:capacity-SS wire rod 300k tons, size5.5~36.0mm,expected to start in 2017 Increasing industrial consolidation and concentration, mills product differentiation, and market segmentation. Low-end capacity will be replaced due to the increasing competitive capacity, quality will be improved continuously.

Thank You! Lawrence Liu / 刘刚 Tsingshan Holding Group Co.,Ltd. International Trade Dept I General Manager 青山控股集团有限公司国贸一部总经理 Email: LG@tsingshanmetals.com Mobile: +86-185-1612-3356