The Steel Index (TSI) North American Steel Market

November 11, 2014

Introduction

TSI operates from offices in London,

Singapore, Shanghai and Pittsburgh

Impartial organization focused on compiling prices for ferrous metal

products

Data-driven methodology

Founded in in 2006 as subsidiary of the Steel Business Briefing (SBB)

Group

Acquired by Platts in July 2011

Continues to operate under

TSI brand as a separate unit within Platts, part of McGraw-Hill Financial

TSI is a specialist price information service

Steel

Hot rolled coil*

Cold rolled coil

HDG coil

Plate

Rebar

Stainless

Regions covered

Northern Europe*

Southern Europe*

Asia*

USA*

Turkey

India

Iron Ore

62% Fe Fines*

58% Fe Fines*

63/63.5% Fe Fines*

62% Fe (2% Al) Fines*

65% Fe Fines*

Scrap

HMS #1&2 (80:20)*

Shredded

A3

P&S

Regions covered

Chinese imports*

Regions covered

Turkish imports*

USA

Indian imports

Taiwanese imports

* Daily Indices

Settlement basis for futures and/or cleared derivatives contracts

Coking Coal

Premium Hard*

Hard*

Regions covered

Australian exports*

Chinese imports*

Coverage

/4

To maximise industry participation and the accuracy of data

submitted

To minimise opportunities for manipulation or subjectivity in the

compilation of each index

To apply a consistent approach: TSI uses the same approach for

compiling all its iron ore, steel, scrap and coking coal reference

prices worldwide:

– legal agreements with relevant Data Providers active in the

physical market

– secure confidential on-line data collection of actual transactions

– prices normalised to reference product specifications

– data ‘cleaned’ with outliers excluded

– volume-weighted averages calculated and published

Key Principles

Methodology

Data-driven methodology using transaction data to calculate

volume-weighted price indices

TSI “Data Providers” submit spot

transaction data to TSI under confidentiality agreement

Physical market participants only (over 550 registered today)

Representatives from all relevant

points of the supply chain, buy

and sell sides

Submission direct to TSI database through secure on-line channel

Data normalised and “cleaned” before volume-weighted

averages calculated for the day

or week

Around the world with TSI

TSI Index Location Current Price Frequency

US HRC FOB Midwest $ 640/ short ton Daily

US Shredded Scrap

Delivered mill $ 330 / long ton Weekly

Turkish Scrap CFR Turkey $ 311 /m tonne Daily

Iron Ore 62% Fe China $75.5/dmt Daily

Coking Coal PHCC FOB Australia

$113.5/tonne Daily

ASEAN HRC CFR Port $ 499/ tonne Daily

US Midwest (FOB Mill) HR coil Spot Prices (US$/short ton)

- Aside from a dip in spot prices earlier this year, domestic HR coil prices have been

surprisingly resilient since June 2013

550

580

610

640

670

700

730Jan-1

3

Feb-1

3

Ma

r-1

3

Apr-

13

May-1

3

Jun-1

3

Jul-13

Aug-1

3

Sep-1

3

Oct-

13

Nov-1

3

Dec-1

3

Jan-1

4

Feb-1

4

Mar-

14

Apr-

14

May-1

4

Ju

n-1

4

Jul-14

Aug-1

4

Sep-1

4

Market Overview: Pricing

Source: TSI

HR Coil Spread: US Midwest (FOB Mill) vs Chinese Exports (FOB Port) (US$/tonne)

- Leading to a widening spread between US and international coil prices and

consequently, steady growth in flat steel imports.

-50

0

50

100

150

200

250

300

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000Ja

n-1

0

Ma

r-10

Ma

y-1

0

Ju

l-1

0

Sep

-10

No

v-1

0

Ja

n-1

1

Ma

r-11

Ma

y-1

1

Ju

l-1

1

Sep

-11

No

v-1

1

Ja

n-1

2

Ma

r-12

Ma

y-1

2

Ju

l-1

2

Sep

-12

No

v-1

2

Ja

n-1

3

Ma

r-13

Ma

y-1

3

Ju

l-1

3

Sep

-13

No

v-1

3

Ja

n-1

4

Ma

r-14

Ma

y-1

4

Jul-14

Sep

-14

Flat Carbon Steel Imports Price Spread (RHS)

Market Overview: Pricing

Source: TSI

US Steel vs ArcelorMittal Share Price

- North American steel mill valuations have also decoupled from the rest of the world in

Q3

Market Overview

US Steel ArcelorMittal

US

Ste

el sh

are

price

A

rcelo

rMitta

l share

pric

e

Source: Credit Suisse

62% Fe Iron Ore Import Prices (US$/dmt, CFR Tianjin, China)

- But not entirely unexpected given a 40% decline in spot iron ore prices over the past

12 months

0

50

100

150

200

250Ju

n-0

9

Sep

-09

Dec-0

9

Ma

r-10

Ju

n-1

0

Sep

-10

Dec-1

0

Ma

r-11

Ju

n-1

1

Sep

-11

Dec-1

1

Ma

r-12

Ju

n-1

2

Sep

-12

Dec-1

2

Ma

r-13

Ju

n-1

3

Sep

-13

Dec-1

3

Ma

r-14

Ju

n-1

4

Sep

-14

Market Overview: Pricing

Source: TSI

• Decline in Chinese growth rates and

subsequent impact

• Strength of the US Dollar around the globe

• M & A activity in the US steel industry

• Pricing stability in the US market. Change in

the winds

• Raw Materials – Transportation

• Availability of Risk Management Tools

Current State

#ChicagoTSI

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