Steel Market Environment November 16, 2012
Michael N. Meyers General Manager-Sales
© 2012 United States Steel Corporation
Disclaimer
These slides may contain historical statistics and projections related to the steel industry and certain steel consuming industry segments generally. No specific information is provided concerning the business of any particular company. Furthermore, no non-public information about U. S. Steel or any other company is contained herein. These slides cannot and should not be used to predict the performance of any individual company. Nothing contained in these slides constitutes investment advice or an invitation to invest in the securities of U. S. Steel Corporation or any other company. These slides are primarily for internal use within U. S. Steel Corporation. Commercial and other authorized representatives may provide hard copies of these slides to customers and other interested persons on a limited basis for discussion of general steel industry statistics and projections. Except for limited use by commercial and other authorized representatives, the distribution and copying of information on these slides is restricted. U. S. Steel employees are only permitted to make a single copy for internal use within the corporation. Further reproduction and distribution by U. S. Steel employees, as well as reproduction by persons outside U. S. Steel, without the express written consent of U. S. Steel Corporation is prohibited under copyright law. No representation is made as to the accuracy of the statistics and projections contained on these slides. The information contained herein is subject to revision at any time without notice. Questions concerning the information on these slides or reproduction and distribution of information contained herein should be directed to Edward Denton, U. S. Steel Corporation, at 412-433-3662.
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Global Development Trends Sources: Focus Economics, UN DESA
Gross Domestic Product
Global Population Development
(y-o-y % change; lighter shades are forecasts)
Billions (1950 – 2050) 10.0
10 8
7.5
6 5.0
4 2.5
2 0.0
0
'10
'11
'12F '13F '14F '15F '16F G7
BRIC
'50 '60 '70 '80 '90 '00 '10 '20 '30 '40 '50 Developed Economies
Emerging Economies
800 million new souls between 2010 – 2020 United States Steel Corporation
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Rapidly Expanding Global Middle Class Source: OECD 2010
Projections of Middle Class Population Growth by Region (Millions) Global middle class to grow by 1.4 billion by 2020; 3.0 billion by 2030
107
234
322
680 57 165
32 105
333
313 338
703
525 1,740 251 664
3,228
181
2009
2020
2030
World = 1,845
World = 3,249
World = 4,884 United States Steel Corporation
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Long Term Trends in Global Steel Demand Source: worldsteel
Metric Tons, Millions Consumption - Developed Countries
World Crude Steel Production 500 400
1,700
300
1,500
200 100
1,300
0 '07
'08
'09
'10
'11 12F 13F
Developed Countries ASU NAFTA & EU27 ASU
1,100 900
Consumption - Developing Countries
1000 800 600 400 200 0
700 500 300 '80
'85
'90
'95
'00
'05
'10
Total Production of Crude Steel
'07
'08
'09
'10
'11
12F 13F
Developing Countries ASU BRIC Countries ASU
Apparent consumption of Finished Steel (2011 thru 2013 Apparent consumption forecast based on ECON Oct ‘12 SRO)
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Current Status of Key Economies Sources: JPMorgan, FocusEconomics, Blue Chip, Markit, ISM
Annualized GDP Growth Rates and Manufacturing PMI
U.S. GDP and PMI
Eurozone GDP and PMI
GDP %
China GDP and PMI
GDP %
3.5
70
3.0
60
2.5
50
2.0
40
1.5
30
GDP %
4.0
70
3.0
60
60
10.0
50
2.0
40
50
8.0
40 6.0
1.0
20
0.5
10
-1.0
0
-2.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '11 '11 '11 '11 '12 '12 '12 '12 '13
US GDP - m-o-m % change (saar) PMI (RHS)
4.0
0.0
1.0
0.0
30
30
20
20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '11 '11 '11 '11 '12 '12 '12 '12 '13
Eurozone GDP - m-o-m % change (saar) PMI (RHS)
2.0
10 0
0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 '11 '11 '11 '11 '12 '12 '12 '12 '13
China GDP - m-o-m % change (saar) China - PMI (RHS)
Lighter shades are forecasted.
United States Steel Corporation
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China – Apparent Steel Use & Modeled Use Source: worldsteel
Finished Apparent Steel Use 2001 – 2013F (MT, Millions) ‘12 and ‘13 worldsteel projections exclude effects of recently announced stimulus 700
600
500
400
300
200
100 '01
'02
'03
'04
'05
Projected ASU
'06
'07
'08
Actual ASU
'09
'10
'11
'12F
'13F
Modelled ASU
United States Steel Corporation
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Enduring Patterns of Steel Use Sources: worldsteel, AISI
Metric Tons, Millions United States: Annual Steel Consumption 150
100
50
0 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
NAFTA: Apparent Steel Use 175 150 125 100 75 50 25
Europe: Apparent Steel Use 200 175 150 125 100 75 50
Apparent Steel Use World Steel Association Forecast of Apparent Steel Use Average Annual Apparent Steel Use (‘97 – ’’07)
‘
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U.S. Steel Industry Recovery Path Sources: AISI, MSCI
Monthly Sheet Steel Shipments: From Mills and Service Centers NT (Millions)
6.0 Mill Pre-crisis (1998 – 2007) Average: 4.62
5.0
4.0
3.0
MSCI Pre-crisis (1998 – 2007) Average: 2.50
2.0
1.0
0.0 '06
'07
'08
'09
AISI Domestic Net Sheet Shipments
'10
'11
'12
MSCI Flat Rolled
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U.S. Economy – Real Consumer Spending Source: BEA
Chained 2005 Dollars Quarterly (SAAR), $ Trillions
10.0
+3.4%
9.5
9.0
8.5
8.0
7.5
7.0
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
United States Steel Corporation
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U.S. Construction Spending & Housing Builds Sources: Census Bureau, Goldman Sachs
Residential Has Biggest Impact on Recovery in Construction
6.0%
2,300 2,100
5.0% 4.0%
1,900 1,700 ('95-'11) Non-Residential Avg: 3.5%
Demographic demand ~ 1.2 million
1,500 3.0%
('95 - '11) Residential Avg: 3.2%
300K Demolition Rate
1,300 1,100
2.0%
900 700
1.0%
500
900K Household Formation
300
0.0%
'00 Residential Spending % of GDP Non-Residential Spending % of GDP
'02
'04
'06
'08
'10
'12
Housing Starts Housing Permits Completions
United States Steel Corporation
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U.S. Light Vehicle Sales Sources: Ward’s Auto; IHS Global Insight
Million Units Annually and Quarterly (saar)
20 16.9
17.3 17.1 16.8 16.6 16.9 17.0 16.5
16.1 14.3
15 13.2
14.8 15.1 15.2 14.2 14.1 14.5 14.4 14.5
14.9
12.7 11.6 10.4
10
5
0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
//
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012
2013 Lighter shades are forecasted.
United States Steel Corporation
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North American Shale Plays – Game Changer Source: EIA; EIA – 2012 Annual Energy Outlook
Natural Gas Production by Source, 1990 – 2035
U.S. Monthly Net Electric Power Generation
(trillion cubic feet)
(Million Megawatthours) 200 180 160 140 120 100 80 60 40 20 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Coal Hydro
Natural Gas Petroleum
Nuclear
• Regain energy independence – Shale gas production non-existent in 2000 to 25 percent of natural gas produced today. • By 2035, shale gas share of natural gas production is expected to be up by 50 percent
• Natural gas is on track to match and possibly exceed coal usage in domestic electric power generation
United States Steel Corporation
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Recovery Progression in Selected U.S. Market Sectors Sources: Various
Performance in Selected Sectors of US Economy – 2011 Assessed Versus Pre-Crisis Level & Current Direction of Growth
Exports Energy (Goods)
Same or better than pre-crisis level
Exports (Services)
Non-Residential Construction
Worse than pre-crisis level
Consumer Sentiment
Construction & Equipment Farm Machinery & Software & Heavy Trucks
Imports
Auto Sector Appliances
Housing Sector Residential Construction
Worsening
About the same
Improving
Momentum United States Steel Corporation
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Recovery Progression in Selected U.S. Market Sectors Sources: Various
Performance in Selected Sectors of US Economy – 2012 Assessed Versus Pre-Crisis Level & Current Direction of Growth
Exports Energy (Goods) Equipment Exports & Software (Services) Construction & Farm Machinery & Heavy Trucks Auto Military Sector Non-Residential / Defense Construction Consumer
Same or better than pre-crisis level
Imports
Worse than pre-crisis level
Sentiment
Appliances Housing Sector Residential Construction
Worsening
About the same
Improving
Momentum United States Steel Corporation
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Steel Market Environment November 16, 2012
Michael N. Meyer General Manager, Sales
© 2012 United States Steel Corporation
