Prices are set to firm in early Q2, but demand and prices likely to weaken before holiday periods

Prices are set to firm in early Q2, but demand and prices likely to weaken before holiday periods The Eurozone crisis has eased slightly, though concerns could re emerge at any time and any unforeseen event could act as a trigger. This possibility continues to affect business confidence throughout Europe and is likely to do so for months. However, the euro has strengthened against the dollar since early in the new year. This has already increasing the level of imports into Europe and is a trend that is likely to continue for the next six months, as prices are currently attractive. The economic picture elsewhere around the world has improved. In North America, economic data and indicators have been more positive since late last year. Being an election year, which is usually good news for the US economy, is also helping and some sectors such as automotive and energy are doing especially well. Economic growth in Asia is steady and steel demand since Chinese New Year has improved slightly. While this should continue during Q2, sentiment is still generally cautious. The Chinese economy continues to grow, at a slightly more modest rate than in recent years, but steel demand and output are only slowly returning to levels seen a year ago. Some sectors, especially construction, are being constrained while the central government appears reluctant to loosen its purse strings. Global Overview Coil Regional Review Long Product Review Plate Review Pg 4 Pg 5 Pg 7 Pg 7 However, apparent consumption globally is now closer to real demand and stock levels are back at realistic levels as buyers were more cautious than when they over stocked in 2011. Drawdown of Chinese inventories has not been as quick as at this time last year. Production levels have increased sharply in February compared with December, as did January s output after some significant revision of Chinese and Korean production. In US, flat products prices appear likely to rebound upwards after another round of increases by Con nued on Page 2 Scrap Review Pg 8 Global Overview of Production Pg 9 The key question is for how long producers can maintain slightly higher price levels during Q2 before the seeminglyinevitable drop in actual demand in the summer. STEADY DEMAND FOR FLATS IN US MEANS SLOWLY RISING PRICES EARLY IN Q2, WHILE EUROPEAN PRICES SHOULD ALSO RISE AS SUPPLY DEMAND BALANCE IMPROVES, COIL PRICES IN ASIA SHOULD IMPROVE SLOWLY. LONG PRODUCTS PRICES ARE LIKELY TO FIRM IN Q2 IN EUROPE AND US, UNLESS SCRAP PRICING DROPS AND AFFECTS SENTIMENT. ASIAN LONGS LEVELS SHOULD ALSO GAIN AND SCRAP PRICES ARE LESS LIKELY TO FALL. Market Sen ment Survey GMO Video Steel Price Outlook Expectations in March (For Next 3 Months) 38% North America Decrease 24% Europe 25% Asia & Middle East 39% No Change 46% 25% 23% Increase 30% 50% JSW Group s Seshagiri Rao Available soon! view! Watch GMO Editor Mark Wiggett expand on this month s forecast. Visit sbb.com/media/ to view all the video reports 0% 10% 20% 30% 40% 50% 60% Source: The Steel Index % of Respondents For more details visit www.sbb.com or call +44 20 7176 3800 Page 1

producers arrested the decline in March. In Europe, spot flats prices could keep rising during early Q2, though mills need to ensure real demand is matched by actual output levels throughout Q2. Long products pricing in mature markets should continue to be firm unless demand falls or weakening scrap levels push prices down. Asian prices should be firm or rising in a traditionally strong quarter, while Chinese levels will also gain, as demand increases and stock levels are drawn down. The Middle East markets for long products are slightly firmer which encouraged exporters in Turkey to push for higher prices, though these were only achieved in a few markets. Export prices for CIS products, both flat and long, have also strengthened after early March weakness, as demand improved in key export markets. Scrap prices gained during March except in USA where they remained stable. Prices usually drop at the start of Q2 as better weather leads to higher collection, but international demand in Turkey, India and Asia is keeping export levels firm. Iron ore prices slowly but steadily increased in March although Chinese buyers have been cautious in their return to the market. Ore price levels are likely to continue to increase slowly in the next few months so long as Chinese steel production remains at current rates. In Europe, spot flats prices could keep rising during early Q2, though mills need to ensure real demand is matched by actual output levels throughout Q2 The likely scenarios for the next three months are: US flats spot prices are likely to rise slightly but will not be sustained throughout Q2 and could weaken by the end of the quarter. Real demand is likely to be firm due to the general economic improvement, but increasing production levels and imports could lead to market weakness. Northern European coil spot prices are likely to rise during April and early May, but cautious buyers destocking ahead of the summer shutdowns and growing imports will make further increases more difficult. Output levels have increased after being cut back at the end of last year and, if this continues during Q2, prices will fall as output exceeds actual demand. Southern European flat products prices remained steady during March, but higher production levels have run ahead of demand preventing the small increases seen in the north. Demand should continue to be fair during early Q2 but, if mills increase output and import levels keep rising, producers may struggle to achieve any significant gains. Prices of coils into Asia have risen slowly but consistently since January. Sentiment has been weak but improving, and demand should be strong during Q2. Prices are likely to increase further in the second quarter, and should then remain stronger for longer than in other regions. Domestic Chinese flats pricing has been firming during late Q1, and demand is expected US flats spot prices are likely to rise slightly but will not be sustained throughout Q2 and could weaken by the end of the quarter. Real demand is likely to be firm due to the general economic improvement Page 2

to improve further having grown so far this year above end 2011 s poor levels. However, output too appears to have rebounded upwards during Q1, though stock levels are reasonable, and prices should increase. Long products pricing should be firm in Europe and US during April and May, after recent slight weakness. Demand may not rise as high as is typical for the coming construction season, and possibly falling scrap prices could have a depressing effect on pricing. Prices in Asia have risen slightly, in line with billet and scrap levels, and are likely to continue to increase into Q2. The spot market for 63% iron ore should continue to rise slightly after the steady upwards move during March, with prices finishing the month at US$ 148 150/dmt. Prices are likely to firm further as more Chinese buyers restock. Shipping and weather problems for suppliers should improve, but Indian availability will fall as the monsoon will begin to affect deliveries later in Q2. Iron ore quarterly contract costs for Q1, January to March, have risen slightly from Q4 levels but are now well below spot market levels. Customers continue to move to currentquarter, current month or spot pricing which more closely match the free market. Scrap prices could fall during April in most markets as collection rates rise as the weather improves. However, export demand has been strong and could rise further, so prices may remain steady. European domestic levels strengthened during March and prices could remain firm if mill demand increases while exports are strong. Asian mills scrap demand is likely to increase over the next few months, if steel demand rises, which should keep prices firm and absorb any excess material in Europe and North America. Spot coking coal prices continued to weaken during March, sending contract levels lower. However, prices are starting to turn upwards due to strikes and bad weather in Australia. Any increase in demand in the next few quarters could drive prices upwards. Looking ahead to the third quarter of 2012, producers in US and Europe will be hoping to keep prices stable despite the anticipated fall in demand around the summer slowdowns. In Asia, producers will try to consolidate any price rises achieved during Q2, as offtake does not usually fall significantly and production levels are likely to be in line. WSA figures show that global output fell by 3 million tonnes (m t) in February compared with the revised January figure of 122.2m t, which is up from the previously released 116.7m t as both Chinese and South Korean production have been substantially revised upwards. Daily production rose 4.2% as February is a shorter month. Chinese monthly production was down slightly to 55.9m t, but this was a 5.3% increase in daily rate from January s revised output and the two month total shows a rise of 2.2% from last year s output. South Korean production for January was also revised upwards by 339,000 tonnes. Most regions showed a small increase in daily output, though actual EU 27 production rose. Actual monthly production fell in Turkey, CIS, India and North America, while other Asian countries and South America maintained their output levels. The growth in global production so far in 2012 is 0.6% above 2011, and the year to date total is 241.4 million tonnes. Prices in Asia have risen slightly, in line with billet and scrap levels, and are likely to con nue to increase into Q2 Prices are star ng to turn upwards due to strikes and bad weather in Australia. Any increase in demand in the next few quarters could drive prices upwards Most regions showed a small increase in daily output, though actual EU 27 produc on rose Page 3

GLOBAL OVERVIEW US flats spot prices moved downwards during March but another US$ 30/st announced increase in mid March held prices steady. However, the actual price increases were not accepted by buyers, but transaction levels will move up slightly from the start of April. Stockholder demand will only be for replacement or actual demand as restocking appears complete. End user offtake should improve at the start of the second quarter. In Europe, prices have risen strongly since January, but the increases stalled in March and producers now have to Graph 1 push again to secure higher levels for April and May. Offtake is still fair in Asia and flats and longs prices have both moved slightly upwards during March. Sentiment is slightly better, but there is still an air of caution for most buyers. Domestic China demand for flats has been firmer during March, but rising output has kept prices steady and inventories have not been drawn down as quickly as this time last year. Long products consumption is not as strong as would be expected for the season, but prices have risen steadily during March. Chinese export prices have risen slightly following regional markets levels, but attempts to secure higher levels were initially unsuccessful. In US, prices for coil products fell during March but another producer increase appeared to stop the spot market dropping, though prices had not begun to increase by the end of the month. Production levels remained high in February, and seem likely to continue to rise in March. Plate prices rose but then weakened again, while rebar producers kept prices steady after accepting the decrease at the start of March as the scrap pricing mechanism dropped. Prices for flat steel products in European markets rose slowly during March. European producers have achieved their Q1 price increases, but apparent demand is likely to slow down. Stockholders are not likely to re stock, and there may even be some de stocking activity before the end of Q2. Further European Coil Euro/t Ex-works smaller increases appear likely for April and maybe May bookings. Production levels have rebuilt sharply in February, but the stronger currency and better price levels are likely to have attracted more import material for arrival now and in the near future. Graph 2 HR Coil US$/t Prices for HR coil in Asia increased slightly, and CR and HDGalvanised coil prices also rose by similar amounts during March. They are all expected to rise further as offtake should improve during Q2. Flat products prices in China have increased slightly thanks to stronger demand, but some mills have announced unchanged list prices for April and May, which may put a cap on the spot market. Export prices for flat Stockholder demand will only be for replacement or actual demand as restocking appears complete. End user o ake should improve at the start of the second quarter Produc on levels have rebuilt sharply in February, but the stronger currency and be er price levels are likely to have a racted more import material for arrival now and in the near future Mills were unable to increase levels further in March, but they could now rise again in April if Asian markets improve Page 4

products from China increased slightly during March and remain competitive in regional markets. Mills were unable to increase levels further in March, but they could now rise again in April if Asian markets improve. Long products demand has remained better than usual during Q1 in the mature economies of Europe and US, helped by mild weather, but prices have been under pressure. Prices in Europe have dropped during March, but could rebound upwards in April unless any scrap weakness is too severe. Rebar producers in US reduced prices at the start of March based on the scrap pricing mechanism, but then held prices unchanged for the rest of the month. However, prices will be held unchanged at the start of April, even though the scrap mechanism would reduce levels. Supply still appears to match demand but offtake may not rise as much as usual in Q2. Wire rod prices also fell in Europe during March, and could be under further pressure in the next few months unless end user demand improves. Prices for H Beams, medium and heavy sections have been slightly firmer globally, with European and Asian levels moving upwards. US WF Beams transaction prices have also increased. However, European prices are likely to weaken in Q2. Long products demand has remained be er than usual during Q1 but prices have been under pressure. In US, wire rod producers saw their prices slip during March, as lower scrap prices and rising imports took effect, and are likely to see lower levels in April. Merchant bar prices in US were slightly lower during March, but should hold steady in April. Billet prices in South East Asia were firmer during March and could move further upwards in April as prices of export material from Turkey and CIS rebound as demand improves in other export markets. Rebar $/t Imported prices of most finished long products into SE Asia were slightly stronger during March, and may rise further in April if demand improves as usual in the second quarter. Rebar, wire rods and merchant bar prices all increased slightly during March. Domestic prices for all long products in China rose steadily during March despite offtake not increasing as activity outside the social housing programme remained lacklustre. The longer term outlook is for fair demand, so prices would only improve if supply does not exceed demand. Flat products spot prices in the US slipped downwards at the start of March but an increase appeared to prevent further falls Scrap prices remained steady in US and Asia during March, despite firmer markets elsewhere, as good collection rates due to mild weather were offset Graph 3 by strong domestic and export demand. Import prices into Turkey fell in late February but then rebounded in March. Prices in Europe could strengthen further in April if export demand remains strong, though collection rates should increase. Prices for imported scrap into Asia were more stable but could rise again if demand improves as usual in the second quarter. COIL REGIONAL REVIEW Flat products spot prices in US slipped downwards at the start of March, but an announced US$ 30/short ton increase appeared to prevent further falls and prices held steady, although achieving actual gains is proving more difficult. Buyers were resistant to further rises as they remain uncertain about future supply levels, though most are more optimistic about demand in the second quarter. Flats prices moved slightly higher in northern Europe Page 5

early in the month, but buyers balked at the Q2 increases and there was even some weakness towards the end of March. Levels in southern Europe finished the month unchanged but there were small gains and declines during March as market sentiment fluctuated. Real demand has been better in all regions, but European buyers are less sure of future demand prospects in Q2 than their American counterparts. Prices in Asia rose during March, as sentiment has gradually improved since the new year. HR Coil prices in US fell US$ 20/st to US$ 680 690/st (US$ 750 761/t) at the start of March, and these levels held during the month after the mills attempted price rise. Prices are likely to be stable or slightly firmer in April if the producers can generate more upwards momentum. CR coil prices also slipped by US$ 20/st, ending March at US$ 780 800/st (US$ 860 882/t), but improving real demand may push prices higher. HD Galvanised coil was unchanged at US$ 840 850/st (US$ 926 937/t), and strong automotive sector performance may give these prices further support. Import levels for most products have begun to rise as expected, as bookings were made when earlier price levels were more attractive. Mill production rates continued at high levels during February, and there are no signs of any slowdown in output in March and April despite prices falling from the February peaks.. Flat products producers in northern Europe have seen spot levels move slightly upwards at the start of March, but then remain mainly stable. The slight weakness towards the end of the month, as buyers rejected any significant increases, had been reclaimed by early April. Daily production rose significantly in February and is likely to have continued to rise in March. Prices are likely to rise slowly at the start of Q2 as actual demand should initially improve, but this is unlikely to last until June. Destocking may then begin ahead of the summer shutdowns. In northern Europe, HR Coils prices rose slightly to Eur 540 550/t (US$ 710 723/t), while CR Coils also increased to Eur 620 640/t (US$ 815 842/t). HD Galvanised base prices gained more to Eur 610 640/t (US$ 802 842/t), and there may be more strength in CR and HDGalvanised coil prices in the next two months. Southern European coil prices had jumped sharply upwards in January, but have now been generally stable during February and March at lower levels than in the north. Demand has improved slightly from the low levels at the end of last year, but is less strong than during the restocking period, and production is being reinstated. There is no sign of a real end user offtake improvement, even for the next two months before the summer slowdowns. HR Coil prices are still at Eur 520 530/t (US$ 684 697/t) and these prices may firm slightly in April, though rising imports could also be a problem. Prices for CR Coil were steady at Eur 590 620/t (US$ 776 815/t) while HDGalvanised coil base price was slightly lower at Eur 590 620/t (US$ 776 815/t). HRC $/t South East Asian HR coil prices moved higher in the first half of March to US$ 655 670/t cfr, and they may firm slightly during April if demand and supply continue to be in balance. Latest Chinese export prices for HR coil have also risen to US$ 640 645/t fob, which followed the SE Asian market levels upwards, but sales dropped off when mills tried to push prices higher. CR coil and HD Galvanised prices in SE Asia both rose US$ 20/t during March to US$ 730 780/t and US$ 790 840/t cfr, and they are likely to gain slightly in April. Coil Price Outlook Products (HRC) Mar Apr* Brazil dom. Del. BRL/t 1963-2020 1960-2024 China dom. Shanghai RMB/t 4250-4300 4290-4310 China export FOB $/t 640-645 640-645 E. Asia import CFR $/t 650-690 655-670 Eur import CIF S.Eur pt /t 530-555 540-555 Jap dom FOT /kg 58-58 60-60 Middle East imp CFR $/t 650-720 700-750 N.America dom FOB $/s.ton 680-700 680-690 N.Euro dom Ex-Works /t 535-560 540-555 Rus Blk Sea export FOB $/t 630-660 640-650 S.Euro dom Ex-Works /t 520-530 520-530 Ukr Blk Sea export FOB $/t 600-620 600-620 Products (CRC) Mar Apr* Brazil dom. Del. BRL/t 2554-2677 2560-2560 China dom. Shanghai RMB/t 4950-5080 4980-5080 China export FOB $/t 715-720 715-720 E. Asia import CFR $/t 730-780 740-780 Eur import CIF S.Eur pt /t 580-605 585-605 N.America dom FOB $/s.ton 780-810 780-800 N.Euro dom Ex-Works /t 615-640 615-640 Rus Blk Sea export FOB $/t 770-800 770-790 S.Euro dom Ex-Works /t 590-620 590-620 Ukr Blk Sea export FOB $/t 700-720 700-720 Products (HDG) Mar Apr* China dom. Shanghai RMB/t 4950-5000 4950-5000 China export FOB $/t 720-730 720-730 E. Asia import CFR $/t 790-840 790-840 Eur import CIF S.Eur pt /t 590-610 590-610 Mid E. import CFR $/t 800-900 820-900 N.America dom FOB $/s.ton 840-850 840-850 N.Europe dom Ex-Works /t 600-640 610-640 S.Europe dom Ex-Works /t 590-620 590-620 *Prices listed are SBB forecasts Graph 4 Page 6

LONG PRODUCTS REGIONAL REVIEW Rebar prices in Asia moved slightly higher in March, and were steady during the month in US after dropping sharply at the start of March in line with lower scrap pricing. Rebar prices in Europe also fell during March. Construction industry activity should improve slightly, but probably less than usual at this time of year, though production is likely to continue to be well matched to actual demand in the mature markets. European prices for merchant bar were slightly lower in March, but are likely to be stable or rise during April. In Asia, H Beam, merchant bar and wire rods price levels were slightly stronger in March, and should be firmer during April. Medium and heavy sections prices in Europe increased during March, with prices up to Eur 640 660/t (US$ 842 868/t), but levels are expected to weaken in April. SE Asian H Beam price levels continued their steady rise since January up to US$ 820 840/t cfr. Prices of WF Beams in US also increased slightly to US$ 790 820/st (US$ 871 904/t) at the end of March, but prices will be under pressure from imports during Q2. Wire rod pricing in US slipped in March to US$ 775 795/st (US$ 855 877/t) as scrap prices fell, but imports may push pricing lower during Q2. Rebar prices in US were steady after the initial fall to US$ 730 750/st (US$ 805 827/t) early in March, and mills were aiming to keep levels stable in April despite another scrap price decrease. Wire Rod $/t Rebar prices in Europe fell back more sharply during March and finished at Eur 540 560/t (US$ 710 736/t), but could increase slightly in April provided scrap does not fall too far. Wire rod prices slipped slightly during March to Eur 540 560/t (US$ 710 736/t), but may only remain stable at best as end user demand remains uncertain. Rebar prices in SE Asia ended the month US$ 10/t higher at US$ 650 660/ t cfr. Import price levels for merchant bars increased by US$ 20/t to US$ 780 800/t cfr. Imported wire rod prices into SE Asia were just higher at US$ 655 670/t cfr, and are likely to increase further in April. Longs Price Outlook Products (Debar/Rebar) Mar Apr* Turkey export FOB $/t 660-690 660-680 Blk sea export FOB $/t 640-660 650-660 E. Asia import CFR $/t 640-660 650-660 China dom. Shanghai RMB/t 4000-4110 4120-4130 Eur dom del /t 540-580 545-570 Eur import CIF S.Eur pt /t 510-530 510-520 Jap dom FOT /kg 53-53 55-55 Mid E. import CFR $/t 680-710 675-685 N.America dom FOB $/s.ton 730-760 730-750 Products (Beams /Sections) Mar Apr* E Asia import CFR $/t 820-840 830-840 Eur dom del /t 630-660 610-640 Jap dom FOT /kg 71-71 73-73 N.America dom FOB $/s.ton 790-820 790-820 Products (Merchant Bar) Mar Apr* China dom. Shanghai RMB/t 4220-4230 4300-4300 E Asia import CFR $/t 780-800 780-800 Eur dom del /t 580-640 580-620 N.America dom FOB $/s.ton 890-920 890-920 Products (Wire Rod) Mar Apr* Blk sea export FOB $/t 660-690 680-700 China dom. Shanghai RMB/t 4070-4100 4180-4190 E Asia import CFR $/t 655-670 660-680 Eur dom del /t 540-575 540-560 Eur import CIF S.Eur pt /t 520-540 530-540 Jap dom FOT /kg 775-795 760-780 N.America dom FOB $/s.ton 720-740 760-780 *Prices listed are SBB forecasts Graph 5 Billet prices continued to increase from the end of February and rose US$ 10/t in March in SE Asia, and finished the month at US$ 650 660/t cfr. Export prices for CIS and Turkish material had risen more sharply in early March once the US$ 600/t fob level had been reached, finishing at US$ 600 615/t fob at the end of the month. CIS billet producers will try to push prices further upwards if Asian demand remains firm, but there is increasing buyer resistance and fewer buyers in other regions are competing for this material. COMMODITY PLATE REVIEW Plate prices rose slightly in northern and southern Europe during March, and increased more strongly in Asia. Prices wavered in US but finished the month at a lower level. Chinese export prices have also risen slightly as Asian market levels firmed, and prices are expected to increase further in April. Plate prices increased slightly in northern Europe by Eur 5/t and transaction prices are in the range Eur 620 650/t (US$ 815 855/t), and they could rise further in April. Stockists Page 7

inventories are reported to be back to normal levels, and end user demand should improve during the second quarter, so prices ought to rise if output is in balance with actual demand. Southern European commodity plate producers also saw spot price levels gain by Eur 10/t during March, despite poor demand in the major markets of Italy and Spain. Current levels are at Eur 600 610/t (US$ 789 802/t), and these may rise further in the next Plate $/t two months as some production is being exported to northern Europe. In USA, commodity plate prices initially increased at the start of March, as demand improved slightly. However, the level of imports has been rising from previously low levels. Inventory levels appear to be normal, but increasing end user demand may not be sufficient to absorb production levels. Prices fell back by US$ 20/st and were at US$ 920 930/st (US$ 1014 1025/t) at the end of March, but should increase slightly at the start of Q2. In SE Asia, prices for commodity plate rose to US$ 650 670/t cfr, and are Graph 6 expected to increase further in April if demand continues to improve. Export prices of Chinese material have also risen by US$ 10/t to US$ 640 655/t fob, which remains competitive in the Asian region. Plate Price Outlook Products Mar Apr* China dom. Shanghai RMB/t 4420-4450 4420-4450 CIS export FOB $/t 650-700 660-695 N.Europe dom Ex Works /t 615-650 630-660 S.Europe dom Ex Works /t 595-620 600-620 Eur import CIF S.Eur pt /t 560-600 555-600 E. Asia import CFR $/t 650-670 660-680 N.America dom FOB $/s.ton 920-960 930-940 China export FOB $/t 640-655 640-655 *Prices listed are SBB forecasts SCRAP AND RAW MATERIALS REVIEW Scrap prices have been firmer in most regions during March except North America, where prices remained fairly stable. Higher than usual availability, due to the mild winter in both Europe and North America, was matched by steady demand in these regions, while export demand and prices remained strong. From stable month end levels, US domestic prices are expected to drop in early April for some grades. US export prices also held steady due to the import demand from Turkey and Asia; these prices are less likely to be under pressure and may also support domestic levels. Collection rates should rise as the weather continues to improve. Northern European scrap price levels in euros rose during March, which meant an even larger increase in dollar terms. Scrap prices in southern Europe increased more sharply, taking them slightly above levels in the north. Price levels in SE Asia were steady during March, and are likely to continue to be stable or slightly firmer in April as demand rises from importers. Domestic scrap prices in US for No 1 Bundles and Bushelling were steady in March at US$ 460 465/lt, after falling US$ 10/lt from February s levels. Shredded scrap was also unchanged during March at US$ 440 445/lt, after gaining US$ 5/lt since February. In northern Europe, shredded scrap prices moved up by Eur 10/t from February s levels and finished March at Eur 320 340/t (US$ 421 447/t), while prices in southern Europe rose more strongly to Eur 330 350/t (US$ 434 460/t). Export prices of shredded scrap from Europe increased by US$ 2.50/t to US$ 415 420/t fob after slipping in the middle of the month, but may rise further in April if overseas demand continues to be firm. Scrap prices in Asia remained steady during March at US$ 465 470/t cfr for HMS 1/2, but prices could become firmer if demand improves. US export prices also held steady due to the import demand from Turkey and Asia; these prices are less likely to be under pressure and may also support domes c levels Scrap prices in southern Europe increased more sharply, taking them slightly above levels in the north Page 8

Graph 7 Graph 8 Scrap US$/t Raw Materials US$/mt GLOBAL OVERVIEW OF PRODUCTION Spot iron ore prices rose slowly but steadily during March, though the total gain during the month was just US$ 6/ dmt as not many buyers returned to the market. Prices may continue to move higher in April if more Chinese mills come back into the market to restock and their output continues to return to similar levels as in last year. Indian supply offers will soon drop in quantity as the monsoon approaches, though bad weather should cease affecting shipments from Australia and Brazil in the near future. More miners and customers in China are agreeing current quarter, current month or weekly pricing periods which closely follow the spot market. For March, spot prices finished above the past quarter s contract level and the monthly average, and this situation will continue if prices keep firming. The spot market for Indian origin material 63% Fe iron ore rose during March, starting at US$ 142 144/dmt and rising US$ 6/dmt to US$ 148 150/ dmt cfr. Coking coal contract prices for the new quarter have slipped again, as spot prices have dropped further to US$ 209 220/t fob Australia at the end of March. A strike and bad weather have recently affected East coast Australian operations, so spot prices are likely to firm slightly in the short term. Any increase in demand could mean that the price rise becomes more permanent later in the second quarter. The monthly production figures from WSA show that February s global production was 3 million tonnes less than in January, after a significant revision to China and South Korea s January output raised that monthly total by 5.6 million tonnes. February is a shorter month, so its actual tonnage calculates to a 4.2% increase in daily output rate compared with January. The monthly output was almost 2% higher than February 2011. World monthly production in February was 119.2 million tonnes, which means that the two month global output total is 241.4 million tonnes, 0.6% above 2011 s level. European actual production rose slightly month on month by 1% despite the shorter month, while total Asian output decreased by more than 1.7 million tonnes, compared to the revised January figure. Most other regions showed steady daily output, but production fell in Turkey and India. EU27 output of 14.1 million tonnes in February was 120,000 tonnes higher than in January. There were sharp increases in output in Germany and Italy, despite the shorter month, while Spain s production was almost constant. Spot iron ore prices rose slowly but steadily during March, though the total gain during the month was just US$ 6/dmt as not many buyers returned to the market For March, spot prices finished above the pastquarter s contract level and the monthly average, and this situa on will con nue if prices keep firming The monthly produc on figures from WSA show that February s global produc on was 3 million tonnes less than in January, a er a significant revision to China and South Korea s January output raised that monthly total by 5.6 million tonnes Page 9

In Other Europe, Turkey s monthly output fell sharply to 2.8 million tonnes, a fall of nearly 12% from January. The total CIS output was 6.6% lower than in January, with Russia and Ukraine maintaining unchanged daily production levels. Crude Steel Output (thousand tonnes) Dec11 Jan 2012 Feb 2012 Europe 25,204 26,713 25,835 - EU 27 12,541 13,947 14,069 - Other Europe 3,345 3,362 2,986 - CIS 9,318 9,404 8,780 N America 10,134 10,547* 9,945 - USA 7,334 7,707* 7,260 S America 3,795 3,828 3,828 Africa 1,202 1,080 1,172 Middle East 1,718 464 435 US output was 7.3 million tonnes in February, which was 5.8% lower than January s revised figure. South American output was unchanged from January s level at 3.8 million tonnes, a 6.5% increase in the daily rate. Brazilian production was 1% lower at 2.8 million tonnes, and Argentinian production increased sharply. Asia 74,581 79,137* 77,420 China s monthly output of 55.9 million - China 52,164 56,733* 55,883 tonnes was 1.5% Oceania World Total 424 117,058 458 122,226* 548 119,183 lower than January s revised figure, which is restated as 56.7 million tonnes, up Source: WSA * significantly revised from the original 52.1 million tonnes. February s production is an increase of 3.3% on February 2011 s output. India s monthly production was estimated as 0.6% lower at 5.7 million tonnes. Japan s output was almost unchanged from January s level, and South Korea s production was around 6% lower compared to the restated previous month at 5.4 million tonnes. Taiwan s estimated production fell by 6.5% to 1.78 million tonnes. Their combined total output is around 15.8 million tonnes, which is a 3% decrease from the joint monthly production level achieved in January. The Asian countries total production of 77.4 million tonnes was an increase of 2.3% from February 2011. This region accounted for 65% of global production in February, slightly higher than normal figures for most months. World output excluding China was 63.3 million tonnes in February. World output excluding China for the two months to date is 128.8 million tonnes, compared to 129.8 million tonnes in 2011, a decrease of 0.8%. Enquiries Call: UK: +44 (0)20 7176 3800 USA: +1 (412) 431 4370 Brazil: +55 (0)11 3371 5755 Dubai: +971 4 454 8700 Singapore: +65 6227 7811 Email: General: info.metals@platts.com Marketing: marketing@sbb.com Editorial: editorial@sbb.com Page 10