Steel Market Outlook

AM/NS Calvert

Agenda

Economic indicators

Key steel consuming markets and forecasted demand

Steel consumptions trends

Global steel markets and raw materials

Comments on trade

1

2

U.S. Gross Domestic Product (GDP) From 2016 Real GDP Growth vs. Prior Years 2000-2015, Forecast 2016-2017 Source: U.S. Department of Commerce; IHS November 2016

4.1%

1.0%

1.8%

2.8%

3.8% 3.3%

2.7%

1.8%

-0.3%

-2.8%

2.5%

1.6% 2.2%

1.7%

2.4% 2.4%

1.5%

2.2%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017%

Ann

ual G

DP

Gro

wth

3

Gross Domestic Product (GDP) Sources: U.S. Department of Commerce; Oxford Economics Oct 2017

4.1%

1.0%

1.8%

2.8%

3.8% 3.3%

2.7%

1.8%

-0.3%

-2.8%

2.5%

1.6% 2.2%

1.7%

2.6% 2.6%

1.6%

2.3% 2.6%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

% A

nnua

l GD

P G

row

th

- The economy is improving in 2017 and 2018 after a weak 2016. - Primary drivers of growth will be improvement in consumer spending and business spending as business confidence has improved significantly in 2017. - Improving markets in the EU and Asia will also help USA growth.

4

Industrial Production Index (IP) from 2016 Percent Change in Index vs. Prior Years 2000-2015, Forecast 2016-2017 Source: U.S. Federal Reserve Board; base year for index 2012: November IHS forecasts.

4.0%

-3.3%

0.2% 1.3%

2.3% 3.2%

2.2% 2.7%

-3.5%

-11.4%

5.7%

3.0% 2.8% 1.9%

3.7%

1.3%

-1.1%

1.1%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

% A

nnua

l Gro

wth

5

Industrial Production Index (IP) Sources: U.S. Federal Reserve Board; Oxford Economics Oct 2017 forecast

4.0%

-3.3%

0.2% 1.3%

2.3% 3.2%

2.2% 2.7%

-3.5%

-11.5%

5.5%

3.1% 2.9% 2.0%

3.1%

-0.7%

-1.2%

1.7% 2.9%

-12.0%-10.0%

-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018%

Ann

ual G

row

th

Business spending is increasing, supported by: - Improvements in business confidence - Improvements in US exports - Increased spending for labor productivity as the labor market tightens

The ArcelorM

ittal Orbit

Steel Consuming Markets

Auto

7

16.1

13.2

10.4 11.6

12.7 14.4

15.6 16.4 17.4 17.5 17.0 17.1 17.0 17.2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US Auto Sales (millions of units)

15

12.6

8.5

11.8 13.1

15.4 16.1 16.9 17.5

17.9 17.2 17.5 17.4 17.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

North American Auto Production (millions of units)

Auto sales are soft because all pent up demand from the recession has been used up, both on the retail side and the fleet side of the market, interest rates are increasing, a large number of good used vehicles are coming off lease, the OEMs are less aggressive with incentives than expected, and there is a lack of new launches compared to previous years.

The major drivers for sales now are replacement and an expanding economy. Fortunately the fleet in very old with the average vehicle on the street just over 11.5 years old. Therefore a lot of replacement is needed.

Low gasoline prices continue to increase demand for trucks to an extent that is surprising analysts. Truck market share finished 2016 at 62% and through June 2017 it has increased even more to 63%. Recovery in the housing market is also contributing to the strong market for trucks.

8 8

Residential construction spending increased 5% in 2016, slower than in each of the previous four years. FMI expects growth to proceed at a similar pace in 2017 and 2018.

Nonresidential building construction spending increased 6% in 2016, also slower than in recent years, and is projected by FMI to post similar-sized gains during the forecast horizon.

Nonbuilding construction is seen averaging 5% growth in 2017 and 2018.

Construction Put-in-Place Source: FMI Construction Outlook

0.0

9.0

19.0

14.0

17.0

5.0 6.0

4.0

-4

-2

0

2

4

6

8

10

12

14

16

18

20

22

200

250

300

350

400

450

500

550

2011 2012 2013 2014 2015 2016 2017 2018

billion dollars (left)

% change (right)

Residential buildings

-3.0

5.0 2.0

9.0 13.0

6.0 7.0 5.0

-5

0

5

10

15

200

300

400

500

2011 2012 2013 2014 2015 2016 2017 2018

Nonresidential buildings

-5.0

10.0

-1.0

10.0

-5.0

0.0

4.0 6.0

-6-4-2024681012

160

185

210

235

260

2011 2012 2013 2014 2015 2016 2017 2018

Nonbuilding structures

USA Energy Market Steel Demand (millions of tons)

3.6

4.9 5.1

2.3

3.2

3.9

4.8

4.3 4.2

4.6

2.9

3.9 [VALUE].0

0

1

2

3

4

5

6line pipe

4.9 4.6

5.2

3.2

4.7

5.9 6.2

5.9

8.1

3.9

2.3

[VALUE].0 [VALUE].0

0

1

2

3

4

5

6

7

8

9OCTG

Totals: 2014 - 12.3 2015 - 8.5 2016 - 5.2 2017 - 9.9 2018 - 10.0

Source: Preston Pipe and Tube Report, November 2017

Preston optimistic case for 2017 was 8.2m tons

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

6,200

6,400

2014 2015 2013 2012 2016 2017

Inventory Shipments Service Center Monthly Shipments and Inventory

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

2.1

2017 2016 2015 2012 2014 2013

Months on Hand

U.S. Service Center Data: Carbon Flat Roll Shipments, Inventory, and Months-on-Hand

Shipments Inventory

MOH LT Average

Steel markets direction in 2017 & 2018

Auto

Residential Construction

Non-residential Construction

Machinery

Appliance

Infrastructure

Energy

Steel Inventories

Source: AMUSA analysis

Auto growth is in Mexico in 2018.

USA market is flat.

Non-res construction will add about 500k in 2018.

After being negative in 2015 and 2016 energy activity will see positive demand in 2017 & 2018.

Steel inventories started 2017 at low levels, are rebuilding this year, and will continue to rebuild in 2018.

USA apparent steel consumption

Short tons (in millions)

% change

2013 106 1%

2014 118 12%*

2015 106 -11%

2016 101 -5%

2017 106 5%

2018 109 3%

*About 3 million tons of the 2014 increase was an inventory overbuild due to a late year surge in imports.

Steel consumption trends

AM/NS Calvert

Weekly US raw steel production Capacity utilization

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

2015 2014 2013 2012 2011 2010 Weekly Utilization

Source: American Iron & Steel Institute

As of 11/11/17 74.6%

2016 2017

Average Daily Shipment Rate: Y/Y % Change

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Jan 2017

Jul Jan 2014

Oct Jul Apr Jan 2016

Oct Jul Jan 2015

Apr Apr Oct Apr Oct Jul Apr Jan 2013

Oct Jan 2012

Jul Apr Jul

Plate Flat Roll Pipe & Tube

Shipments Flat Roll Plate Pipe & Tube Jan-Sep 2016 19,530 2,494 1,781 Jan-Sep 2017 19,896 2,632 1,687

Diff: Tons 366 137 -94 Diff: % 2% 6% -5%

U.S. Flat Roll Imports and Import % of ASC (Carbon Only)

2,000

1,800

2,200

1,600

1,400

5% 800

400

600

25%

1,000

30%

20%

15%

10%

0%

1,200 20

15 J

an

Dec

N

ov

Jul

Oct

A

ug

Sep

May

Feb

Apr

Impo

rt %

of A

SC

Nov

Jun

Sep

Dec

May

Ju

l

Oct

Mar

Aug

Feb

Apr

Apr

Sep

Tot

al M

onth

ly Im

ports

(100

0s o

f s.to

ns)

Mar

Fe

b 20

17 J

an

May

Aug

Ju

l Ju

n

Jun

Apr

Fe

b 20

13 J

an

Mar

Oct

S

ep

Aug

Ju

n Ju

l M

ay

Apr

M

ar

Nov

20

16 J

an

Dec

May

Ju

l

Feb

Dec

N

ov

Mar

Aug

2014

Jan

Oct

S

ep

Jun

Annual Average (Import % of ASC) Import Share of ASC Imports (short tons)

Year 2013 2014 2015 2016 2017 YTD (Sept) Average Import % of ASC 14% 21% 21% 18% 18%

Steel Production and Apparent Demand Source: AISI, U.S. Department of Commerce

17

24.9 25.3

24.1

22.0 22.0 22.2

20.4

21.5

22.7 21.8

20.7

22.6 22.8 23.0

-20%

-10%

0%

10%

20%

30%

40%

50%

18

19

20

21

22

23

24

25

26

2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd

2014 2015 2016 2017

Q/Q

% in

crea

se

Mill

ion

Net

Ton

s

Domestic Shipments

8.4 8.7 9.3 9.7

8.2 7.3 6.3 6.4

6.4 7.0 6.5 6.9

8.1 7.9

-20%

-10%

0%

10%

20%

30%

40%

50%

- 1 2 3 4 5 6 7 8 9

10 11 12

2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd

2014 2015 2016 2017

Q/Q

% in

crea

se

Mill

ion

Net

Ton

s

Finished Imports

3.2 3.1 2.9 2.7

2.6 2.5 2.2 2.3 2.4 2.3 2.2

2.6 2.8 2.6

-20%-10%0%10%20%30%40%50%

0.00.51.01.52.02.53.03.54.0

2nd3rd4th 1st2nd3rd4th 1st2nd3rd4th 1st2nd3rd

2014 2015 2016 2017

Q/Q

% in

crea

se

Mill

ion

Net

Ton

s

Exports 29.7 30.5 30.1 28.4 27.1 26.5

23.9 25.0 26.1 25.7

24.5 26.4 27.6 27.7

-20%

-10%

0%

10%

20%

30%

40%

50%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2nd3rd4th1st2nd3rd4th1st2nd3rd4th1st2nd3rd

2014 2015 2016 2017

Q/Q

% in

crea

se

Mill

ion

Net

Ton

s

Apparent Consumption (ASU)

USA Apparent Steel Consumption million of short tons

0

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1953 22% 1957 22% 1973 23% 1981 27% 2009 41%

Drop in ASC in select recessions

Source: AISI, AM Marketing

Chart1

13220002000

116.620012001

11820022002

11120032003

12920042004

115.920052005

131.520062006

119.120072007

108.220082008

65.120092009

87.820102010

9820112011

105.920122012

10620132013

11820142014

10620152015

10120162016

10620172017

10920182018

Column1

Column2

Column3

Sheet1

Column1Column2Column3

2000132

2001116.6

2002118

2003111

2004129

2005115.9

2006131.5

2007119.1

2008108.2

200965.1

201087.8

201198

2012105.9

2013106

2014118

2015106

2016101

2017106

2018109

19

Manufacturing and Indirect Steel Trade Deficits Sources: U.S. Census (manufacturing trade deficit in $ billions); AISI (indirect steel trade deficit in net tons)

The U.S. manufacturing trade deficit is projected at $868 billion in 2017 (based on 7 months of data annualized), a increase of $2 billion from 2016.

The U.S. indirect steel trade deficit posted another sizable increase in 2016, climbing to 23.9 million net tons from 21.4 million net tons in 2015.

In 2016, China accounted for well over one-third (35.6%) of the total U.S. indirect steel trade deficit.

2010 2011 2012 2013 2014 2015 2016 2017ROW (300) (348) (337) (339) (389) (446) (476) (511)China (298) (325) (349) (341) (374) (387) (392) (377)

50% 48% 51% 50% 49% 46% 45% 43%

-$1,000

-$900

-$800

-$700

-$600

-$500

-$400

-$300

-$200

-$100

$0

$ Bi

llion

N

et A

nnua

l Tra

de

U.S. Manufacturing Trade Deficit Source: U.S. Census

*2017 annualized based on data through July

2010 2011 2012 2013 2014 2015 2016ROW -6.2 -7.1 (8.0) -8.2 -10.6 -13.2 -15.4China -5.7 -6.3 -7.0 -7.2 -7.7 -8.2 -8.5

53% 47% 47% 47% 42% 38% 36%

-30

-25

-20

-15

-10

-5

0

Indi

rect

Ste

el D

efic

it

Mill

ion

Net

Ton

s

U.S. Indirect Steel Trade Deficit Source: AISI

Global Market Outlook & Raw Materials

AM/NS Calvert

Global Steel Demand

Source: World Steel Association Short Range Outlook (Oct 2017)

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2017

f 1,

622

ASC % Change Y/Y 1,

308

13.7

%

2009

1,

151

-6.1

%

2008

1,

226

0.7%

2007

1,

218

2006

1,

139

9.2%

7.0

%

2016

f 1,

516

1.1%

2015

1,

500

-2.6

%

2014

1,

540

0.7%

2013

1,

528

6.2%

2012

1,

439

1.9%

2011

1,

412

7.9%

2010

1,64

8 20

18f

1.6%

ASC % Change Y/Y

WSA - Global Apparent Steel Consumption million metric tons

WSA - Global ASC Growth Forecast by Region % Change Y/Y

4.9% NAFTA

2.5% EU28

3.6% CIS

2.5% C&S America*

12.4% China

7.0% Global

2017f

1.2%

1.4%

3.8%

1.6%

0.0%

4.7%

2018f

* Central and South America

22

Steelmaking Raw Material Input Costs 2014-2016 Averages and 2017 YTD All charts in $ per metric ton except for Scrap

$333$350

$236$239

$395O

ct1

7

2017

YTD

2016

2015

2014

#1 Busheling Midwest Scrap ($/GT) Iron Ore 62% Delivered to China Premium Hard Coking Coal FOB DBCT*

$62$71$58$56

$97

Oct

17

2017

YTD

2016

2015

2014

$184$182

$141

$90$117

Oct

17

2017

YTD

2016

2015

2014

Source: MBR

23 Source: MBR

Coking Coal MBR Jan 2014 2017 YTD

203

145

258

155161

186

262

301

234

194

11696919193

797476

197

165

$350

$200

$300

$250

$50

$150

$100

Jul-17

May-17

Aug-17

Jan-17

Sep-17

Feb-17

Mar-17

Jun-17

Apr-17

175

Dec-16

Mar-16

May-16

Jun-16

Jul-16

Sep-16

Nov-16

Aug-16

Apr-16

Oct-16

Feb-16

Jan-16

Coking Coal Price Premium Hard Coking Coal

$/tonne FOB DBCT

HCC 2017 Average

Summary

In 2017 and 2018 steel markets will expand after 2 years of contracting

Energy is a major contributor of the improvement

Consumer confidence and business confidence are surging since the election

Markets are anticipating the administrations policies will continue support a strong revival of industrial markets

2016 decisions on trade will continue to limit the impact of imports....but

Raw materials will remain volatile for the next several years

Unlike the last few years the risk is more to the upside than the down side

24

Trade

232

TPP

NAFTA

25

Slide Number 1AgendaU.S. Gross Domestic Product (GDP) From 2016Real GDP Growth vs. Prior Years 2000-2015, Forecast 2016-2017Source: U.S. Department of Commerce; IHS November 2016Gross Domestic Product (GDP)Sources: U.S. Department of Commerce; Oxford Economics Oct 2017Industrial Production Index (IP) from 2016Percent Change in Index vs. Prior Years 2000-2015, Forecast 2016-2017Source: U.S. Federal Reserve Board; base year for index 2012: November IHS forecasts.Industrial Production Index (IP)Sources: U.S. Federal Reserve Board; Oxford Economics Oct 2017 forecastSlide Number 7AutoConstruction Put-in-PlaceSource: FMI Construction OutlookUSA Energy Market Steel Demand (millions of tons)Slide Number 11Steel markets direction in 2017 & 2018USA apparent steel consumptionSlide Number 14Weekly US raw steel production Capacity utilizationAverage Daily Shipment Rate: Y/Y % ChangeU.S. Flat Roll Imports and Import % of ASC (Carbon Only)Steel Production and Apparent DemandSource: AISI, U.S. Department of CommerceUSA Apparent Steel Consumptionmillion of short tonsManufacturing and Indirect Steel Trade DeficitsSources: U.S. Census (manufacturing trade deficit in $ billions); AISI (indirect steel trade deficit in net tons)Slide Number 21Global Steel DemandSteelmaking Raw Material Input Costs2014-2016 Averages and 2017 YTDSlide Number 24Summary Trade