1 Building A Successful Business Partnership - PowerPoint Presentation

1. 1Building A Successful Business Partnership

2. Contents2Introduction to EsmarkDemandSupplyChinaForums / PoliticsSteel Service Center ShipmentsPricingMarket VariablesScrapFuture

3. Esmark Steel Group 3

4. Esmark Steel GroupJames P. Bouchard brought the Esmark name and brand back to life in 2003Esmark, Inc. formed in 2003 and rapidly acquired 10 service center companies through 2006 2003 - Electric Coating Technologies – East Chicago2004 - Sun Steel2005 - Century Steel, Great Western Steel, Electric Coating Technologies – Bridgeview, U.S. Metals, and Miami Valley Steel Service2006 – North American Steel, Premier Resource Group and Independent Steel Esmark acquired iconic Wheeling-Pittsburgh Steel in 2007 and took Esmark public (NASDAQ: ESMK)Sold the service center network as part of $1.35 billion sale of Wheeling-Pittsburgh Corporation in August, 2008Mr. Bouchard diversified Esmark, Inc. 2008 – Present and now has seven (7) operating divisionsEsmark Steel Group, Esmark Industrial Group, Ohio Coatings Company, Esmark Realty, Esmark Aviation, Esmark Energy, and Yorkville Energy Services Terminal4

5. Esmark Steel Group (cont.)Ohio Coatings Company - 50/50 joint venture between Esmark and TCC Steel (fka Dongyang Tinplate of South Korea)Leading independent tin coating line in the USCapacity rated at 300,000 tons per yearESG consists of six steel service centers located in Chicago and Ohio with over 1,000,000 square feet of processing/storage facilities.ESG has 500,000 annual tons of Value-Added, Just-In-Time (JIT) processing capacity All ESG plants are ISO 9001:2008 certifiedIn 2013 ESG proactively implemented a two year – 8 step plan to reduce plant and SGA expenses which resulted in lowering overall operational costs. ESG is a profitable low cost fully integrated steel service centerESG does not have one market segment that accounts for over 5%5

6. Esmark Steel Group Facilities6ESG LocationJoint VentureStrategic Alliance

7. DEMAND7POSITIVE Auto New Housing Interest Rates Gas/oil & energy prices NEGATIVE Agriculture/Heavy Equipment OCTG (Oil Country Tubular Goods) New rigs from 1800 units/ month to 520 units / month Each rig 125-150 tons/ month

8. SUPPLY (FLAT ROLLED)8U S market : 100,000,000 tons /yr ½ flat rolled 50,000,000 tons/yr DOMESTIC STEEL PRODUCERS Capacity Reduced 830,000 t/mo = 10,000,000 t/yr (20% flat rolled market) IMPORTMore than 160 countries export to U.S.2015 - imports were 29% of U.S. market (14,500,000 tons) Resulting in 70% mill utilization 2016 – 40-50% less imports (non NAFTA) 2,800,000 tons /yr outLast summer Congress passed Trade Preference ExtensionFeb passed Trade Facilitation and Trade Enforcement Act Nucor spent $2,710,000.00 Mittal spent $1,710,000.00 USX spent $1,460,000.00

9. SUPPLY (FLAT ROLLED) Cont.9TOTAL NON-NAFTA IMPORTSHR 3,900,000 t 1,100,000 out 28%CR 1,300,000 t 700,000 out 54%CTD 2,300,000 t 1,000,000 out 44%TOTAL 7,500,000 t 2,800,000 out 37% TARRIFFS:HOT ROLLEDAustralia 92%Brazil 21%Japan 30%Korea 85 - 158%Netherlands 55 - 173%Turkey 96 - 200%

10. SUPPLY (FLAT ROLLED) Cont.10COLD ROLLEDBrazil 50%Chin 265%India 42%Japan 82%Korea 50-80%Russia 69-320%UK 47-84%CTDChina 120%India 71%Italy 123%Korea 80%Taiwan 84%

11. SUPPLY (FLAT ROLLED) Cont.11CHINA 40% of all US importsPenalties- Tariffs: CR 265% - CTD 120%LONG TERM OUTLOOK: Demand peaked in 2013. Could fall through 2025 Slowdown in Mfg. and Construction sectorSHORT TERM OUTLOOK: Output at all time high 71,000,000t March (up 13% from Jan or Feb)DEBT LOAD CRITICAL ECONOMY PUSHED TO BRINK AS BANKING SYSTEM GROWSUNSUSTAINABLE DEBT THAT FUELED THEIR RISEFINDING WAY AROUND TARRIFSTHEY BENEFIT FROM SUBSITIESFLOWER SHOW HAVING IMPACTAfter Chinese New Year prices leapt up $150 to $200 ton ($7.50 to $10.00cwt) at the direction of the government.   Shipped 750,000,000 tons at a $50 /ton loss ---loss of $37,000,000,000.00

12. IMPORTED TONS BY COUNTRY (HR)12

13. IMPORTED TONS BY COUNTRY (CR)13

14. IMPORTED TONS BY COUNTRY (CTD)14

15. Forums / Politics15NEED FOR FORUMS FOR CROSS BORDER DIALOGUECurrent system inadequate. U.S.-China Joint Commission on Trade Organization of Economic Cooperation & Development (OECD) North American Steel Trade Committee (NASTC) No TeethAmerican Metal Market polls show that steel industry favors Donald Trump 51% Protectionist (trade policy goals) John Kasich 20.3% Understands economics

16. STEEL SERVICE CENTER SHIPMENTS/INVENTORIES16CARBON FLATROLLED Shipments 2,150,000 tons February Up 4% from January Down .1% from February 2015 ALL CARBON STEEL PRODUCTSShipments3,300,000 tons March Up 4.8% from February Down 9.2% from March 2015  STEEL SERVICE CENTER INVENTORIESJanuary 2.5 monthsFebruary 2.4 months - Down 16.2% from February 2015March 2.3 months (7,680,000 tons) - Down 19.6% from March 2015

17. PRICING (CWT)17  HR CR CTDDEC 15, 2015 $17.70 $24.35 $23.90ARIL 20, 2016 $25.25 $34.30 $33.50Increase $7.55 (30%) $9.95 (29%) $9.60 (29%) CRU Index (backward looking index based on spot purchase only (not contract)) Mill pricing based on:#1 Bushel Scrap + $300 ton = Desired Mini Mill Selling Price  Prices will level off when scrap prices level off (2-3 months??)

18. INDEX18

19. MARKET VARIABLES2015 GDP UP 2%2015 MFG INDEX UP 0.8% Oil prices and iron ore prices stabilized Scrap pricing up SSC inventories down Gun shy Lowering position to position themselves for Q4 opportunities Mill lead times extending Mills capping capacity – especially light gauge USX handing back contract orders - almost no spot AK concentrating on automotive - almost no spot Mittal extended lead times Mini mills (Nucor, SDI) Converting full hard internally to their converters to support their construction lines Mills shipping service centers to minimum of contractual agreements19

20. MARKET VARIABLES (cont.)USX was 19,000,000 ton company - now 11,000,000 tons Automotive is 60% of steel market SSC 18 Increase in bankruptcies and consolidation Financial regulations Less borrowing due to banking system re-evaluating inventories every 3-6 months instead of every 12.20

21. SCRAPExport tags numbers leaving domestic pricing in the dustExport prices for bulk cargo rose $47 in 6 weeksExporters getting $208 ton for 80/20 No.1/No.2 - from $161 Mid-February (up 29.4%) (normally domestic leads foreign) Prices escalating Chinese billet prices exploded after Chinese New Year Nucor announce price increase before settling on April scrap buy Less scrap in yards (no incentive to buy with depleted prices) When will scrap prices level off? When scrap flow improves When Nucor starts using more DRI (substitute) When Chinese pricing levels off (just raised their number $40 per ton 4-19)21

22. SCRAP (cont.)Ferrous scrap has risen: $10 to $15 ton in March $50 ton in April Mark Millett president and CEO of Steel Dynamics (mini mill) quoted as saying that the upward momentum has some legs to it, and scrap tags should soon stabilize.  SDI executives believe the market will remain flat in 2016 – premise based on strong dollar, low iron ore cost and cheap Chinese billet Expects the market to stabilize as the rush to regain mill inventories subsides and obsolete scrap flow improve22

23. FUTURE EVERYONE’S CRYSTAL BALL FUZZYTimna Tanners - Managing Director of Equity Research Metals & Mining – Merrill Lynch“Goldylocks year…Not too hot, not too cold” Seth Rosenfield – Equity Analyst for N. Y. based Jeffries L.L.C.“Near term upside may run out of steam” Increases based on: Seasonal stocking Trade cases Gradual increase in demand “For more substantial long term need pick up in global growth or Chinese stimulus”  M&A on the increase as turnaround Value added processing To gain market share (aerospace, automotive, construction)23

24. Thank You24Together We Can Build A Powerful Business Partnership