United States Steel Corporation KeyBanc Basic Materials & Packaging Conference
September 10, 2014
© 2014 United States Steel Corporation
Forward-looking Statements
This presentation contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Factors that could affect market conditions, costs, shipments and prices for both North American and European operations include: (a) foreign currency fluctuations and related activities; (b) global product demand, prices and mix; (c) global and company steel production levels; (d) plant operating performance; (e) natural gas, electricity, raw materials and transportation prices, usage and availability; (f) international trade developments, including court decisions, legislation and agency decisions on petitions and sunset reviews; (g) the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; (h) changes in environmental, tax, pension and other laws; (i) the terms of collective bargaining agreements; (j) employee strikes or other labor issues; and (k) U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies, including those related to CO2 emissions, climate change and shale gas development. Economic conditions and political factors in Europe and Canada that may affect U. S. Steel Europe’s and U. S. Steel Canada’s results include, but are not limited to: (l) taxation; (m) nationalization; (n) inflation; (o) fiscal instability; (p) political issues; (q) regulatory actions; and (r) quotas, tariffs, and other protectionist measures. We present adjusted net income (loss) and adjusted net income (loss) per diluted share, which are non-GAAP measures, as an additional measurement to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in U. S. Steel’s Annual Report on Form 10-K for the year ended December 31, 2013, and in subsequent filings for U. S. Steel. United States Steel Corporation
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Overview
World Steel Market
Flat-rolled Segment
Tubular Segment
Europe Segment
Research and Development
The Carnegie Way
United States Steel Corporation
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Global Leader in a Growing Industry
• • • •
13th largest in global steel production in 2013
2nd largest North American flat-rolled producer Largest integrated North American energy tubular producer 2nd largest Central European flat-rolled producer
World Apparent Steel Use (finished steel)
190 155
202 142
184 130
117 84
156 122
139 132
139 129
143 134
148 139
641
660
700
721
741
588
513
529
548
147 111
168 152 124
378
418
447
551
317
420
459
461
389
460
486
501
2000
2006
2007
2008
2009
2010
2011
2012
Rest of World
China
NAFTA
2013 2014E 2015E EU-28
Source: worldsteel association
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North America Flat-rolled Segment Strong Market Share in Value-Added Products
Market Position
Automotive Major supplier to all North American producers Appliances Major supplier to all North American producers Tin mill products Largest tin mill products producer Value-added construction Strong position
Significance
Metallurgically demanding applications with specialized customer service and technical support Just-in-time inventory requirements favor domestic suppliers
Production costs globally competitive Strong diversification through leading positions in key end markets Mini-mills typically do not make these value-added products
United States Steel Corporation
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North America Flat-rolled Segment Future Materials for Future Vehicles Automotive Industry Key Strategic Goals Mass Reduction / Energy Absorption / Occupant Safety Automotive joint venture coating company with Kobe Steel
Future Steel Grades Required
Continuous Annealing Line Project Up to 500,000 tons/year of Cold Rolled Advanced High Strength Steels (AHSS) Designed to produce Cold Rolled AHSS grades required to produce lighter vehicles to meet higher fuel efficiency requirements, while meeting higher safety requirements.
Ongoing R&D on multiple paths and options for Third Generation AHSS Optimum automotive designs will require a suite of 3rd Gen AHSS
United States Steel Corporation
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North America Flat-rolled Segment Automotive Steel Industry Outlook 2012 Total Light Vehicle 2022 Total Light Vehicle 1%
11%
17% 27%
48% 4% 58% 34%
2017 Total Light Vehicle 6%
BH / HSLA
32%
40%
Mild Gen-1 AHSS Gen-3 AHSS, PHS Source: USS estimates
22%
United States Steel Corporation
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U. S. Steel Tubular Segment
Raw Tube Capacity – 2.4 mmnt Seamless Facilities: Fairfield Tubular Lorain Tubular
Calgary Sales Office
Tubular Production Facilities Tubular Finishing Facilities
Minnesota Ore Operations
Tubular Sales/Marketing USS Facilities
Hamilton Works
Lake Erie Works Great Lakes Works
Welded Facilities: Lone Star Tubular Well Positioned to Support the North American Energy Market Products & Services Aligned with Market Needs
Lorain Tubular
Gary Works
U. S. Steel Tubular Products HQ Mon Valley Works
Denver Sales Office
Granite City Works
Wheeling Machine Products Wheeling Machine Products Fairfield Works Fairfield Tubular Patriot Premium Threading Services Midland Sales Office
Lone Star Tubular Dallas Sales Office Houston Sales Office Offshore Operations Houston Tubular Processing Houston Operations
United States Steel Corporation
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U. S. Steel Tubular Segment Providing Solutions to the Energy Industry for over a Century
Largest Integrated North American Tubular Producer – Substantial raw material self-sufficiency – 2.4 million net tons of raw tube capacity
Domestic Capabilities – Seamless Products • 1.9” to 26” Outside Diameter and 0.140” to 2.312” wall thickness – Welded Products • 2.375” to 16” Outside Diameter and 0.154” to 0.670” wall thickness
Products & Services Aligned with Market Needs – – – – –
Oil Country Tubular Goods (OCTG) and Standard & Line Pipe Proprietary premium and semi-premium connections Rig Site Services Coupling production and threading Threading, inspection, and accessories
United States Steel Corporation
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U. S. Steel Tubular Segment Market Fundamentals Rigs (Bars)
U.S. Rig Count & Wells per Rig Oil
Gas
Wells/Rig (Line)
Rig count continues to be focused upon oil and liquid rich areas
Drilling efficiencies support more wells drilled per rig
U.S. Apparent Demand
1H 2013
1H 2014
Demand for premium OCTG remains strong
Continued pressure from imports for OCTG, Standard pipe and Line pipe Sources: Baker Hughes, Preston Pipe and Tube
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U. S. Steel Europe Segment
Integrated steel plant in Slovakia
COKE
Annual raw steel production capability – 5.0 mmnt
U. S. Steel Košice Slovak Republic Capacity: 5.0 MNT
Key industries: automotive, construction, service center, packaging and conversion Automotive/appliance galvanizing line Historically favorable growth rates and infrastructure investment in primary geographic market – V4*
2013 Shipments
Significant coke making and power generating capability
14%
V4
Rest of Europe 35%
* Visegrad Group – Czech Republic, Hungary, Poland and Slovakia
51%
Rest of World
United States Steel Corporation
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Research and Development Locations COKE
• Research & Technology Center – Munhall, PA Main Research facilities
• Automotive Center – Troy, MI Automotive customer interface Computer Aided Engineering (CAE) laboratory Mechanical & Material testing laboratory Metallography laboratory
• Tubular Technical Center – Houston, TX • USSE Research & Development – Kosice, Slovakia Pilot operations Simulators Various laboratories
United States Steel Corporation
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The Carnegie Way
United States Steel Corporation
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