www.outokumpu.com

Stainless Steel Market OutlookSTI/SPFA Winter 2010 meeting

2 | January 26, 2010

Where Stainless fits

Stainless steel as a material

Market Outlook

Key Data & Raw Materials

Outokumpu in brief

3 | January 26, 2010

Not all steel is stainless – but it is growing the fastest of all metals

0

50

100

150

200

250

300

350

400

80 85 90 95 00 05

Stainless Aluminium CopperCarbon Steel OECD IP Nickel

INDEXSTAINLESS STEEL PRODUCTION~27 MTPA ABOUT 2% OF ALL STEEL

CARBON STEEL PRODUCTION~1 347 MTPA

4 | January 26, 2010

Where Stainless fits

Stainless steel as a material

Market Outlook

Key Data & Raw Materials

Outokumpu in brief

5 | January 26, 2010

Stainless steel – unique properties• Corrosion-resistant• High-strength• Hygienic • Aesthetic• Fully recyclable and the most

recycled material in the world• Maintenance free: low life-cycle

costs

6 | January 26, 2010

Stainless steel is one of the key building blocks of sustainable future

• Sustainability• Stainless steel is durable and

recyclable• Less resources needed

• High strength requires less material • Excellent enabler for

• Clean technologies• Better hygiene and health• Development of renewable energy

sources• Supply of water for a growing

population• Improved safety

7 | January 26, 2010

Stainless steel for various industries • Architectural, building and construction• Chemical and petrochemical industries

such as oil and gas, pharmaceuticals and energy sector

• Process industries and resources such as water treatment and desalination, pulp and paper and engineering

• Transportation• Catering and appliances

• Future applications• Safe and clean transports• Green energy• Clean water• Clean air

TOTAL STAINLESS STEEL USE 2007

8 | January 26, 2010

Variety of stainless steels• Stainless steel is made of iron by

adding chromium; also nickel and other alloying elements can be used

• All grades of stainless steel contain a minimum of 10.5% of chromium

• Stainless steel grades have different chemical compositions and properties

• Corrosion resistance• Strength• Weldability• Formability

• Desired look and characteristics by different surface finishes

AusteniticAustenitic(Nickel-containing)

Duplex(Low-nickel)

Ferritic(Non-nickel)

9 | January 26, 2010

Where Stainless fits

Stainless steel as a material

Market Outlook

Key Data & Raw Materials

Outokumpu in brief

US Stainless market update; February 2010

• Projects are slowly being released• Special Grades demand still weak• A significant portion of the US manufacturing sector has

been stagnant or in a recession for twenty eight months. A small bounce has begun.

• Distributors are only buying what they need to sell this month – few orders / small item quantities

• MSCI order activity; December ytd down 25%• MCSI Inventory Reports; 2.5 months supply; tons are

very low

US Stainless market update; February 2010

• Stainless Apparent Domestic Consumption – Oct YTD• Sheet & Strip

• down 33%; Forecast ’09 below 1 mil tons; lowest since 1991• Imports at 22% (from 35% in ’08 and high 20’s in ’06 & ’07)• Forecast 2010 +20%

• Plate• down 29%; Forecast ’09 below 200kt; lowest since 1992• Imports at 25% (from mid 30’s last 4 years)• Forecast 2010 +30%

• Bar• down 39%; Forecast ’09 below 150kt; lowest since 1990• Imports at 50% (typical level)• Forecast 2010 + 5%

Market Outlook 2010

• US 2010F GDP +2.6% • Business Fixed Investment +1.2%• Industrial Production +4.1%• Capacity Utilization up to 69%• Consumer Price Index + 1.4%• Farm sector weakening• Power Gen – continued delays• Chem-Petro Chem and Oil & Gas will be M&R driven

13 | January 26, 2010

Where Stainless fits

Stainless steel as a material

Market Outlook

Key Data & Raw Materials

Outokumpu in brief

Global manufacturing PMI: Decrease to 53.6

25

30

35

40

45

50

55

60

65

98 99 00 01 02 03 04 05 06 07 08 09

Index

OutputNew Orders

Global PMI

Source: JP Morgan. Index above 50 indicates that global manufacturing sector is expanding; below 50 indicates that it is contracting

Text source: JPMorgan14 BI FLASH update

• The global manufacturing PMI declined to 53.6 in November, down from 54.4 in October.

• Despite the headline PMI falling back slightly in November, the global new orders and production indexes remained at elevated levels.

• Manufacturing employment declined for the twentieth month in a row in November. Moreover, the rate of job losses accelerated slightly for the first time since hitting a survey record in February. Lower employment was recorded across the majority of the Western manufacturing sectors, whereas staffing levels rose in emerging markets.

US Manufacturing PMI Decline in November to 53.6

Text source: JPMorgan15 BI FLASH update

• After popping 3.1 points in October, the US manufacturing PMI gave back part of its gains in November, moving down 2.1 points to 53.6. The production index fell 3.4 points to a still very healthy 59.9 and employment decreased 2.3 points to 50.8.

• Focusing on the forward looking components of the survey, the internal dynamics were positive, with the new orders index rising from 58.5 to 60.3 and inventories dropping 5.6 points to 41.3, a 3-month low.

United States Manfacturing sector PMI and Production

United States, ISM Manufacturing, PMI [lag 4] United States, Production, Manufacturing [c.o.p 12 months]

Source: Reuters EcoWin

90 92 94 96 98 00 02 04 06 08 10

Per

cent

-16.0

-12.0

-8.0

-4.0

0.0

4.0

8.0

12.0

Inde

x

30

35

40

45

50

55

60

65

Note PMI lagged by 4 months

LME nickel prices and stocksPrices range $7.00 – 8.50/#, stocks up to 143kt

16 BI FLASH update

0

10,000

20,000

30,000

40,000

50,000

60,000

2001 2002 2003 2004 2005 2006 2007 2008 20090

20,000

40,000

60,000

80,000

100,000

120,000

140,000

LME-stocks (RHS)

Nickel LME cash (LHS)

LME Nickel Daily Cash Prices and Stocks 2001- 2009USD/t Tonnes

Data up to Dec 08Source: LME

Alloying material prices (up to Dec 8, 2009)Nickel declined in December then rose in January

Ferrochrome

0

0.5

1

1.5

2

2005 2006 2007 2008 2009

US

D/lb

Molybdenum

6

10

14

18

22

26

30

34

38

42

2005 2006 2007 2008 2009

US

D/lb

Steel scrap

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009

US

D/t

Quarterly Contract price, Metal Bulletin

Mo oxideEurope, Metal Bulletin, daily

HMS 1&2 fob Rotterdam, Metal Bulletin, daily

Nickel

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

2005 2006 2007 2008 2009

US

D/t

LME cash, daily

17 BI FLASH update

Global CR304 pricesEuropean price premium remains wide

18 BI FLASH update

1000

2000

3000

4000

5000

6000

7000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

G erm anyUS AHong K ongC hina2

C R 304 tansaction price s

China = US$ pr ic es (s heet bas is ) ex c lud ing V A T (17% ) and impor t duty (10% ).

Data up to Dec 09 (Nov ac tua l, Dec f orec as t)

USD/t

Source: CRU

SS 304 & 430 Stainless steel transaction prices vs competing materialsCR copper sheet up, CR carbon sheet down in November

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2002 2003 2004 2005 2006 2007 2008 2009

EUR/tSS 304

SS 430

CR Coppersheet

CRAluminiumsheetCarbon/CRsheet

Carbon/galvsheet

Sources:SS & carbon = CRU German pricesCR Al sheet: CRUCR Cu sheet: MB

Prices up to Nov 2009

19 BI FLASH update

Available Stainless inventories in Service Centers

250

325

400

475

550

625

700

775

850

2001 2002 2003 2004 2005 2006 2007 2008 20092

2.5

3

3.5

4

4.5

5

Inventory (EOM)Months supply (SA)

Service Centre InventoryStainless - all shapes & sizes

USA Service Centre Stock Development

Source: MSCI

Inventory Months supply

Volumes are in thousand short ton's

21 | January 26, 2010

Where Stainless fits

Stainless steel as a material

Market Outlook

Key Data & Raw Materials

Outokumpu in brief

22 | January 26, 2010

Outokumpu is one of the leaders in stainless

• Outokumpu’s melting capacity totals 2.55 million tons and the finished product’s capacity 1.9 million tons

• Outokumpu market shares• Stainless steel coil

• 18% in Europe• 6% worldwide

• Quarto plate over 20% globally• Duplex grades over 50% globally• 7% in North America – all products

• Outokumpu’s main markets are• Europe 78%• North and South America 11% • Asia 8%

Thyssen-

0 1 2 3 4

Outokumpu

POSCO

TISCO

Acerinox

ArcelorMittal

TOP 6 GLOBAL STAINLESS STEEL PRODUCERS IN 2008SLAB CAPACITY, MILLION TONS

ThyssenKrupp

Outokumpu – full stainless steel offering

All products• Coil, sheet and plate• Quarto plate• Thin strip• Tubular products• Long products

All grades• Austenites (Nickel containing),

incl. High alloyed specials• Duplex (Low nickel)• Ferritics (No nickel)

All end use industries• Industry specific offerings• Tailored solutions

23 | January 26, 2010 | SVP – Long Products, Tommy Grahn

Business operations• North American Production

• PMP• Round Bar• Welded Pipe

• Import from Europe• Cold Rolled Sheet & Coil• CMP

• What’s our ‘sweet spot’?• Special Grades• Projects • Taylor made solutions• Market Development

25 | January 26, 2010

Outokumpu’s key strengths• Fully integrated and globally cost

competitive production site in Tornio• Leading position in specialty

products• Strong customer orientation• Highly recognized product and

process development• Focus on continuous improvement

and excellence

Corporate History & Ownership

Avesta AB

Consolidation of Swedish Special Steels industry -1980’s

British SteelStainless

Nationalisation (1960’s)

Merger 1992, BS plc own 40%, gradually increased to 51%

Finnish mining/base metals company, green-field investment in stainless steel production 1975 (Kemi chrome mine).

Merger 2001, initial exchange ratio ASAB shareholders 45%, Outokumpu 55%.

Outokumpu group acquire 100% in 2002.