Confidential 0

Steel Industry OutlookFederal Reserve Bank of ChicagoNovember 30, 2007

Robert J. DiCianniArcelorMittal USA

1

2008 Steel Industry Outlook

• General Economic Indicators• Some Key Steel Consuming Markets• Overall USA Steel Demand Forecast• Global Steel Demand, Input Costs and other Steel Industry

Factors

2

Industrial ProductionManufacturing Only

105.0107.0109.0111.0113.0115.0117.0119.0121.0123.0

'99 '00 '01 '02 '03 '04 '05

Prod

uctio

n In

dex

71

73

75

77

79

81

83

% U

tiliz

atio

n

Index Utilization

Manufacturing Production Index and Capacity Utilization

3

Industrial ProductionManufacturing Only

99.0101.0103.0105.0107.0109.0111.0113.0115.0117.0

'03 '04 '05 '06 '07

Prod

uctio

n In

dex

71

73

75

77

79

81

83

% U

tiliz

atio

n

Index Utilization

Manufacturing Production Index and Capacity Utilization

Note that on November 7, 2005 the Federal Reserve changed the base year to 2002

4

USA GDP Growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08

Growth will slow as housing furtherdeteriorates in 2008 and impacts other parts

of the economy. Growth projections are backloaded in 2nd Half of 2008.

Advanced Estimate

5

ISM Manufacturing Index

47%

49%

51%

53%

55%

57%

59%

J-06 J-07

Manufacturing growth slowed in 3Qand into 4Q. Value at risk of falling below 50% over the next few months.

6

Some Key Steel Consuming Markets

7

Residential Housing Building PermitsSAAR

1,200

1,400

1,600

1,800

2,000

2,200

J-06

F-06

M-06

A-06

M-06

J-06

J-06

A-06

S-06

O-06

N-06

D-06

J-07

F-07

M-07

A-07

M-07

J-07

J-07

A-07

S-07

Building permits continue to slide and economists think the bottom may be about 20% below the current rate. 2008 housing start forecast has been reduced to 1.02M.

8

Investment - USA FixedNon-Residential and Residential (% change in $)

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Non-Residential Residential

Forecast

Global Insight: Sept 2007

Residential investment (housing, remodeling, etc) will have another very tough year in 2008, while non-residential investment (plants, equipments, etc) will see continued growth in 2008. Non-residential growth potential has been

reduced due to the impact of the residential market.

9

Highways and Bridges% change y-o-y in value of construction work

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

'00 '01 '02 '03 '04 '05 '06 '07(f) '08 (f)

Highway and bridge construction is expected to grow partially in response to increased funding under the Federal transportation bill (SAFETEA-LU). This

bill provides a 38% increase in funding over a 6 year period.

AISI Commercial Research Consensus Forecast

10

Office Furniture Consumption

$0

$2

$4

$6

$8

$10

$12

$14

$16

Bill

ions

of D

olla

rs

'94 '96 '98 '00 '02 '04 '06 '08(f)

Office Furniture Consumption

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

'94 '96 '98 '00 '02 '04 '06 '08(f)

Change in Consumption

BIFMA History and Forecast

Although slight, growth in consumption of office furniture is anticipated in 2008.

11

U.S. Railcar ProductionFreight Car Deliveries

55.8

34.3

17.7

32.2

46.3

68.674.9

62.0 63.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Thousands of Units

Rail freight car demand has softened since late last year with reduced carload volumes being recorded in 2007. The forecast calls for the building of new rail cars to stabilize during the next 4-5 years unlike the wide swings experienced recently.

The current backlog is 72K units with ethanol tank cars leading in backlog. The forecast is constrained by facility capabilities (type of car produced).

AISI Commercial Research Consensus Forecast

12

Energy: Pipeline Demand

• 72% of global pipeline projects are related to natural gas.

• U.S. is 2nd largest builder of pipelines in the world; #1 is the Far East.

• 16,750 miles of pipeline projects are planned or under construction in the U.S. (18.4% of global total).

• Soaring energy prices have made more projects feasible due to high costs, i.e. Canada’s oil sands

+30%91,10069,850

Miles of pipeline projects planned

or under construction

∆20072006

Global Pipeline Projects

Source: Bruce Beaubouef, Pipeline and Gas Technology; AMM 9/12/07

13

North American Pipeline Forecasts

0

1,000

2,000

3,000

4,000

5,000

6,000

20072008

20092010

20112012

20132014

2015

Mile

s

Replacement New Alaska

U.S. LNG Imports

0

1000

2000

3000

4000

5000

6000

7000

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Year

Ann

ual B

cf

Source: Energy and Environmental Analysis, Inc.

Miles of Pipeline Additions in North America

Sources of N.A. Natural Gas

05000

100001500020000250003000035000

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Year

Annu

al B

cf

Traditional Rockies GOM Slope E.Canada Alaska Makenzie

Increased demand and new sources of natural gas supply are driving NG

pipeline growth

14

USA Energy Market Steel Demandmillion of tons

0

1

2

3

4

5

6

line pipe OCTG

200620072008

Source: Preston Pipe & Tube Report; Oct 2007

OCTG forecast assumes $70/barrel oil for 2008

15

Wind PowerU.S. Installed Capacity

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

2000

2001

2002

2003

2004

2005

2006

2007

2008(f)

MegawattsSource: AWEA

Plate consumption of 125 tons per wind turbine or over

375,000T in 2007

16

Major* Appliance Annual ShipmentsHistory and Forecast

20

25

30

35

40

45

50

Mill

ions

of U

nits

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07(f)'08 '09

* Washers, Dryers, Dish Washers, Refrigerators, Freezers, Free-Standing Ranges, Built-in Ranges

2007 YTD appliance

shipments are down 7% vs

2006. Recovery

expected in 08

17

Automotive Production

• Market has underperformed for seven straight years.

• Imports continued to rise; from 3.2 million in 2002 to 4.2 million in 2005, 4.5 million in 2006, and 4.6 million in 2007.

• NAFTA Production recovery starts after 2008.

• Big 3 become more competitive • Economy recovers from housing

slump. Gas prices stabilize.• No major shock from CAFÉ• New capacity; Toyota –Indiana,

Woodstock, San Antonio, & Midwest; Honda -Greensburg 13.5

14

14.5

15

15.5

16

16.5

17

17.5

2000 2003 2005 2007

NA production(millions of units)

Source: JDPower & Associates

18

Service Center InventoryMonths on Hand

2.0

2.5

3.0

3.5

4.0

4.5

5.0

J-05 J-06 J-07

Source: MSCI

19

Service Center Inventory

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

J-05

M-05

M-05

J-05

S-05

N-05

J-06

M-06

M-06

J-06

S-06

N-06

J-07

M-07

M-07

J-07

S-07

6,5007,0007,5008,0008,5009,0009,50010,00010,50011,000Monthly Shipments

Month End Inventory

Monthly shipments, 000 tons Ending inventory, 000 tons

20

Apparent Steel Consumption: USA & NAFTA

100

105

110

115

120

125

130

135

'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07(f) '08(f)Apparent consumption = AISI shipments + finished imports – exports – non raw steel producers

U.S. inventories were drawn down in 2005 and then replenished during 2006. After

inventories peaked in October 2006, stock levels continue to be reduced in 2007. 2007

apparent steel consumption in the USA is 6% less than 2006 due to the inventory correction

and weaker demand. 2008 is expected to bring a small increase to steel demand and

inventories at stable levels.

(Millions of Tons) – TOTAL STEEL: USA

Source: AISI, IISI, with ArcelorMittal forecast3.2%-4.9%11.6%168.5163.3171.6NAFTA

5.3%4.0%11.4%21.720.619.8Mexico

2.8%-5.8%6.9%18.518.019.1Canada

2.9%-6.1%12.3%128.3124.7132.8USA

2007-2008

2006-2007

2005-2006200820072006

Change % per YearMillion Tons Finished Steel

21

Weekly US Raw Steel Production Capacity Utilization

68%

72%

76%

80%

84%

88%

92%

N-06

D-06

J-07

F-07

M-07

A-07

M-07

J-07

J-07

A-07

S-07

O-07

N-07

Source: AISI

22

Monthly Imports: flat rolled steel

600700800900

1,0001,1001,2001,3001,4001,5001,600

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

200520062007

000s/MT

23

Higher steel prices in other markets will depress USA imports for the rest of this year

0100200300400500600700800900

1000

USA EU CIS Far East

HRCRHDG

US$/s ton

Source: CRU November Steel Monitor

24

Baltic Dry Index

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

8/26/2

0032/2

6/2004

8/26/2

0042/2

6/2005

8/26/2

0052/2

6/2006

8/26/2

0062/2

6/2007

8/26/2

007

The Baltic Dry Index represents a daily index of the price of ocean shipment of bulk raw materials. The cost of shipping iron ore has risen by 300% since 2003.

Ocean Freight Costs

Ocean freight for iron ore has doubled since beginning of year

25

Euros to 1 USD2002 – May 2007

0.73

0.83

0.93

1.03

1.13

1.23

J'02

J'03

J'04

'05

2006

2007

103

113

123

133

143

J'02

J'03

J'04

'05

2006

2007

1

1.2

1.4

1.6

1.8

2

J'02

J'03

J'04

'05

2006

2007

Canadian Dollar to 1 USD2002 – May 2007

The weakening of the U.S. dollar has increased the cost of imports into the USA from most countries. This includes automobiles & steel. The dollar is expected to weaken an additional 5% vs. the USA’s major trading partners in 2008. Due to political pressure, the Chinese Yuan is also expected to finally strengthen.

Japanese Yen to 1 USD2002 – May 2007

Currency

26

Global Demand, Input Costs and other Steel Industry Factors

11/30/2007 27

WORLD ECONOMIC PROSPECTSReal GDP Growth %: 2007-2008

Source: ArcelorMittal Commercial Coordination

Total Asia

Strong growth across all regions in 2008.Persistant high growth in Asia as China & India continue to grow rapidly.Middle East growth in 2008.Robust growth in Europe, particularly eastern Europe.

1.9

2.4

8.2

5.35.0

6.1

2.9

4.85.2

5.55.8

2.4

4.7

11.5 2.27.4

2008 3.6

11.0 2.0

2007 3.6

28

Global Apparent Steel Consumption

*IISI with ArcelorMittal Forecast

4.2%5.5%8.3%917.0880.1834.4W/O China10.7%11.9%9.0%486.1439.3392.6China6.3%7.5%8.5%1,403.11,319.31,227.1World-2.1%9.9%27.2%15.515.914.4Rest of World8.4%9.7%6.3%780.0719.8655.9Asia8.5%9.2%10.2%48.144.340.6Middle East8.2%7.9%9.6%27.825.723.8Africa5.3%10.3%11.5%46.143.839.7

Central & South America

8.5%24.0%12.8%71.866.153.4CIS6.4%6.8%18.4%27.425.824.1Turkey1.5%5.5%9.0%217.9214.7203.6EU 273.2%-4.9%11.7%168.5163.3171.6NAFTA

2007-2008

2006-2007

2005-2006200820072006

Change % per YearMillion Tons Finished Steel

29

Iron Ore Spot PricesBrazilian

$20$30$40$50$60$70$80$90

$100$110$120

2003

2004

2005

2006

2007

Global iron ore prices

have doubled since early 2006. Iron ore spot

prices are currently 40%

above contract prices.

Strong global demand for steel has pushed up spot prices. Negotiations for 2008 fiscal contracts will begin soon.

Source: CRU

30

China Export, Coke 10.5-12.5% ash $/t FOB (SBB Steel Prices, 2007)

245% Increase

China is the largest exporter of coke. China is considering imposing an export tax on coke in order to keep more supply inside the country. If this tax is imposed, coke prices would rise worldwide.

31

Silico-manganese US Free Market Pittsburgh $/lb(Copyright Metal Bulletin Pricing, 1993-2007)

271% increase

32

Zinc: LME AM 3 mo price & Stocks

Zinc prices have been extremely volatile for the last two years. For many years it had traded in a relatively tight range of $900-$1000 per mt. It is now about 4x that level as global demand outgrew supply. Supply is slowly increasing, but stocks remain very low. We expect continued significant volatility for zinc prices through 2008.

$1,800

$2,300

$2,800

$3,300

$3,800

$4,300

$4,800

1/3/

06

1/20

/06

2/8/

06

2/27

/06

3/16

/06

4/4/

06

4/25

/06

5/15

/06

6/2/

06

6/21

/06

7/10

/06

7/27

/06

8/15

/06

9/4/

06

9/21

/06

10/1

0/06

10/2

7/06

11/1

5/06

12/4

/06

12/2

1/06

1/12

/07

1/31

/07

2/19

/07

3/8/

073/

27/0

7

4/17

/07

5/4/

07

5/24

/07

6/13

/07

7/2/

07

7/19

/07

8/7/

07

8/24

/07

9/13

/07

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

3 mo ask price ($/mt)Stocks (mt)

Jan 2007 – Sept 2007 (-27%)

Jan 2006 – Sept 2007 (+59%)

33

Ferro-molybdenum 65/70% Pittsburgh $/lb(Copyright Metal Bulletin Pricing, 1992-2007)

1,145% increase

34

Nickel: LME spot ask priceUS$/metric ton

0

10

20

30

40

50

60

J M S J M S J M S

2005 2006 2007

000s/ton

35

Scrap: #1 Busheling – ChicagoUS$ per ton

$220$235

$265

$305

$370

$340

$285$300 $300

$310

$332$322

$300

$200$220$240$260$280$300$320$340$360$380

N-06

D-06

J-07

F-07

M-07

A-07

M-07

J-07

J-07

A-07

S-07

O-07

N-07

2007 Scrap are down $22 in Nov

36

Brazil Export, CVRD blast furnace pellet –Europe $ cent/t FOB Tubarao(SBB Steel Prices, 2007)

117.96112.05112.05112.05112.05112.05115.51115.51115.51115.5161.88

Q2, 2007Q1, 2007Q4, 2006Q3, 2006Q2, 2006Q1, 2006Q4, 2005Q3, 2005Q2, 2005Q1, 2005Q4, 2004

61.8861.8861.885252525247.3647.3647.3647.36

Q3, 2004Q2, 2004Q1, 2004Q4, 2003Q3, 2003Q2, 2003Q1, 2003Q4, 2002Q3, 2002Q2, 2002Q1, 2002

+145%

37

Summary

• Slower than expected GDP growth throughout 2007.• Significantly high inventories at the start of the year.• Low imports through 2007• 2008 will start with low inventory levels• 2008 imports expected to be low• Economic growth expected to improve in the second half of

2008 but overall yearly growth will be below trend.• Industrial markets and export markets will remain strong• Steel manufacturing cost inputs remain higher than historic

levels.