Amy Ebben

ArcelorMittal USA

November 30, 2018

U.S. Steel Market Outlook

Agenda

• ArcelorMittal introduction

• U.S. steel industry performance and trade

• Global steel industry

• Review of steel markets

1

About ArcelorMittal

2

• An industrial presence in 19 countries exposes

the company to all major markets, from

emerging to mature

• Values geographical breadth, product diversity

and raw material security

25%

12%

47%

16%NAFTA

Brazil

Europe

ACIS

2017 Crude Steel

Production

• World's leading steel and mining company with about 199,000 employees in 60 countries

• Recognized leader in all major global steel markets, including automotive, construction,

household appliances and packaging, with leading R&D and technology, as well as sizeable

captive supplies of raw materials and outstanding distribution networks

ArcelorMittal has facilities, offices and joint venture partnerships in 14

states and the District of Columbia

ArcelorMittal in the United States

Steel demand in the U.S. continues to improve

but remains below pre-recession levels

4

70

80

100

130

140

60

120

110

90

0100 12080798 99 1602 03 1004 05 06 09 11 13 14 15 17 18E

M tons

-11%

Steel Consumption

1998-2007 Avg

U.S. Apparent Steel Consumption: 1998-2018

Source: AISI, AMUSA Marketing; 18E based on YTD September annualized

Varying levels of demand performance among the

major steel products has led to prolonged recovery

5

65

35

40

50

45

55

60

70

75

80

85

03 06 09 12 15 18E

-6%

Flat

2003-2007 Avg

12

9

5

6

7

8

10

11

13

1203 06 09 15 18E

+11%

2003-2007 Avg

P&T

32

30

34

18

26

24

20

22

28

36

38

40

18E03 06 09 12 15

-18%

Long

2003-2007 Avg

Flat Roll Products Long Products Pipe & Tube

63% 11%26%

Source: AISI, Images from WorldSteel, AMUSA Marketing, 2018E based on YTD Sep annualized; % represents percentage of 2017 US steel consumption

All Charts in M tons

Section 232 steel tariffs

• April 19, 2017: Commerce initiates 232 investigation

• Jan 11, 2018: Report given to President affirming that

steel is important to national security and hurt by imports

• March 8, 2018: Presidential Proclamation of 25% tariff on

all imports effective March 23

– Canada, Mexico, EU to be exempt temporarily while

negotiations continue

6

• Country-level exemptions: Korea, Argentina and Brazil agree to quotas in place of tariffs;

Australia given full exemption with no quota

• Product exemptions: process put in place for U.S. manufacturers to apply for one year waiver

• June 1, 2018: 25% tariff put in place for Canada, Mexico, and EU

– Retaliatory tariffs announced on domestic steel exports and other goods

• August 10, 2018: President announces Turkey’s tariff rate will be doubled to 50%

Sources: Dept of Commerce, Customs & Border Protection, AMUSA Marketing

The “Why” Behind Section 232

7

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

11100705 06 08 09 12 13 14 15 16 17

U.S. Monthly Raw Steel Capacity

Utilization

Jan 2005-Mar 2017

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

25%

26%

0.4

0.5

0.6

1.1

1.0

0.7

0.8

0.9

1.2

1.3

1.4

1.5

1.6

1.7

11 12 13 14 15 16 17

M tons

Import Share (RHS)

Imports

U.S. Quarterly Flat Roll Imports &

Market Share

Jan 2011-Mar 2017

Source: AISI, AMUSA Marketing

25% Tariff

25% Tariff

25% Tariff

50% Tariff

Absolute Quota: 70% of 2015-2017 Avg

Full Exemption

Absolute Quota: Avg 2015-2017 imports

of 70% for finished and 100% for semi’s

Absolute Quota: 135% of 2015-2017 Avg

25% Tariff

Section 232 Scope

Source: CBP, AISI, AMUSA Marketing

Others

Brazil

Mexico

South Korea

Canada

Argentina

EU

Australia

3.2

0.9

1.3

0.3

1.1

0.4

Turkey

0.0

3.5

0.8

2017 Carbon Flat Roll Imports (M tons) Section 232 Current Status

Industry utilization approaches 80%; Flat

Roll mills at higher utilization

9

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

1205 11080706 1009 13 14 15 16 17 18

U.S. Monthly Raw Steel Capacity Utilization

Jan 2005-Sep 2018

Source: AISI

Imports have been volatile since S232

investigation was announced

10

8%

9%

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

25%

26%

0.9

0.4

0.6

0.5

1.1

1.0

0.7

1.4

0.8

1.2

1.3

1.5

1.6

1.7

M tons

1411 1612 13 15 17 18

Imports

Import Share (RHS)

U.S. Quarterly Flat Roll Imports & Market Share

Jan 2011-Sep 2018

Source: AISI, AMUSA Marketing

Exports are cooling on high domestic prices

and retaliatory tariffs

11

0.30

13 14 15 16 17 18

0.20

0.25

0.35

0.40

0.45

0.50

M tons

Carbon Flat Roll Exports

Jan 2013-Sep 2018 48% Canada

7%

45%Mexico

Others

Other Impacts:

• Steel prices

increased

significantly post-232

but have weakened

since Summer.

• Idled domestic

capacity has been

restarted.

• Domestic mills have

announced new

investments to

increase future

capacity.

2018

Source: AISI, AMUSA Marketing

The Global Steel Industry is Performing

Well in 2018

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Jan MayFeb JunMar Apr Jul Aug Sep YTD

World

U.S.

China

EU

Source: World Steel Association

2018 Crude Steel Production by Month: Y/Y % Change

All major steel producing regions have increased production YTD 2018. Global

steel production is up 5% y/y. 12

What does 5% growth look like?

13Source: World Steel Association, AMUSA Marketing

0

10

20

30

40

50

60

70

80

90

USA China

Annual 5% Change in Raw Steel Production

M metric tons

0

10

20

30

40

50

60

70

80

90

USA 2018E

Just 5% growth

in China is

equivalent to

adding ½ of the

entire U.S.

industry

The impact of China on the global industry

14

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

200

0

100

300

500

400

700

600

800

900

USA

M metric tons

China

Crude Steel Production: 2000-2017

Source: World Steel Association

15

49%

6%6%

5%

4%

4%

18%

Russia

China

USA

South Korea

Japan

2%

India

3%Germany

All Others

Turkey 2%

Brazil

15%

13%

12%

7%5%5%

35%

USA

China

2%

South Korea

Japan

3% India

RussiaGermany

Turkey

3%

Brazil

All Others

2000 Crude Steel Production 2017 Crude Steel Production

Source: World Steel Association

US industry’s position among world’s top

steel-producing countries has declined

Global steel demand accelerated in 2017-2018

following slowdown in 2014-2016

16Source: World Steel Association, Oct 2018 Short Range Outlook

2000-2019 Apparent Steel Consumption (Finished Steel)

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

6%

10%

-8%

0%

2%

-4%

-2%

12%

14%

-6%

4%

8%

-6%

1604

Y/Y % Chg ASC (M mt)

00 01 02 03 05 06 07

4%

1708 09

0%

10 14 15 18F 19F

14%

2%

7%

12

7%8%

7%

-3%

0%

8%8%

2%1%

9%

1%

13

10%

11

7%

5%

y/y changeASC

17

Review of steel markets

18

Steel Consuming Markets

19

43%

27%

10%

7%

5%

Construction

Energy

Automotive

Appliance

Machinery

Defense

3% 3%

Containers

2%

All Other

Source: AISI Profile 2018, AMUSA Marketing

Estimated 2017 Steel Consumption by End-use Market

Construction and Automotive industries are the top consumers of steel in the US.

About 35% of purchase flow through distribution before reaching final customer.

20

Construction Spending

Billion $, SAAR

$800

$200

$300

$400

$600

$500

$700

2018

2008

2006

2007

2009

2010

20

11

2014

2012

2013

2015

2016

2017

-18%

+7%

Nonresidential

Pre-Recession Peak - Res.Residential

Pre-Recession Peak - Nonres.

14 15

$70

16 17 18

$80

$90

$100

$110

Highway & Street Spending

Billion $, SAAR

Dodge index points to drop by end 2019

Source: FRED, Dodge, AMUSA Marketing

Construction likely near peak; Infrastructure

spending could help future steel demand

Auto demand remains at strong levels

21

30

40

50

60

70

80

90

100

110

120

130

140

150

11 1210 1309 1614 1508 1906 1704 1805 07

U.S. Motor Vehicle- Industrial Production Index

Jan 2004-Oct 2018 Things to Watch

USMCA – changes to

domestic content requirements

232 report due in February

Fuel economy standards

Source: FRED, AMUSA Marketing

Recovery in machinery demand has boosted

Plate and Hot Roll shipments

22

35

40

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

1614 15 17 18

Agricultural

Construction

Mining & Oil/Gas

-10%

-2%

1% 1%

-15%

-19%

13%

0%

18 YTD1715 16

Hot Roll

Plate

US Machinery - Industrial Production Index

Jan 2014- Oct 2018

Source: FRED, AISI, AMUSA Marketing

Y/Y % Change in Apparent

Steel Consumption

Energy pipe & tube demand grows with pipeline

investment; US pipe mills looking to gain share

23

16

4.0

14 18E*

2.5

15 17

2.3 2.2

1.41.1

2.2

3.4

2.1

3.1

LP OCTG

Reduction in import share would

have big impact for domestic pipe &

tube producers

39% of imports from S. Korea

in 2014 vs 25% in 2018

30

40

50

60

70

80

90

100

110

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

14 17 1815 16 19 20

WTI price ($/bbl) Rig Count

Series

WTI Crude

Oil & Gas Rig Count

U.S. Oil & Gas Rig Count and Oil Price Forecast

Jan 2014-Dec 2019

U.S. Energy Pipe & Tube Imports(Millions of Tons)

Source: Baker Hughes, EIA Short Term Outlook (Nov’18), AISI, AMUSA Marketing

*18E = Jan-Sep annualized

Positive manufacturing sentiment providing

healthy backdrop for distribution demand

24

100

101

102

103

104

105

106

107

108

109

1514 1716

2.00

2.10

18

2.40

2.30

2.05

2.15

2.20

2.25

2.35

IP In

de

x

Se

rvic

e C

en

ter, M

ton

s

IP Durable Manuf

Service Center Flat Roll Ship (SA)

Steel Service Center Shipments vs. IP Durable Manufacturing

Jan 2014- Oct 2018

Service Center shipments up

5% YTD 2018

0.39

2014 2018

YTD

20172015 2016

-0.77

1.21

-0.82

0.10

Annual Change in Service

Center Flat Roll Inventories(Millions of Tons)

Source: FRED, MSCI, AMUSA Marketing

2019 Outlook

25

60

80

100

120

140

01 19F98 10

M tons

04 07 13 16

Steel Consumption

1998-2007 Avg

U.S. Apparent Steel Consumption: 1998-2019F

• Although not approved by Congress, USMCA brings more certainty to North America

economies, particularly as related to automotive production. Steel tariffs imposed by Section

232 remain in effect for Canada and Mexico but could be eliminated or replaced by quotas in

the short term.

• Steel imports have trended lower following Section 232 tariffs but remain above historical

market share levels. Imports will evolve based on trade remedies and global pricing dynamics.

Global steel demand is expected to increase in 2019.

• Supply by US steel mills is increasing with restart of idled capacity and new investments.

Source: AISI, World Steel Association, AMUSA Marketing

• U.S. steel demand anticipated to post growth of

1-2% in 2018 and 2019. Underpinning growth in

steel consumption is the healthy US economy

which should continue to expand in 2019.

– Trade tensions, inflation and rising interest rates top

downside risks for the year given potential impact

on manufacturing output and consumer demand

• Most major steel markets are projecting flat or

higher growth in 2019. Construction, the biggest

market for steel, is likely nearing its cyclical peak

26

Thank you

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