Global Outlook for Pipes from a Steel Maker’s Perspective

1. Global Outlook for Pipes from a Steel Maker’s Perspective National Association of Steel Pipe Distributors New York September 15, 2006

2. More than 20 yrs in the industry, in several countries Introduction Sanjiv Goel General Manager Pipes & Tubes Mittal Steel Holdings B.V. Hofplein 20 3032 AC Rotterdam The Netherlands T: + 31 10 217 96 37 E: sanjiv.goel@mittalsteel.com www.mittalsteel.com I am based in Holland How you can reach me

3. Agenda • Arcelor Mittal • Mittal Steel Pipes & Tubes • Global outlook for Pipes & Tubes • Challenges ahead for steel makers

4. Arcelor Mittal

5. Mittal Steel and Arcelor together have created the global leader in steel #1 steel producerOver 20 acquisitions during the past 5 years #2 steel producerNumerous acquisitions over the past 5 years Creating a sustainable future for the steel industry through consolidation

6. The merger creates the undisputed leader… Combined Entity Production vs. Competitors (2004 pro forma – mt) Combined Entity EBIT vs. Competitors (2004 pro forma – US$bn)

7. The merger creates a powerful combination… • Leadership position in high-end segments in North America, with strong R&D capabilities • Operations in high-growth economies with low-cost, profitable assets and local operating expertise in numerous emerging markets • Access to raw materials and upstream integration • Entrepreneurial culture • Leadership position in high-end segments in Western Europe, with strong R&D capabilities • Low-cost slab manufacturing in Brazil which can be expanded for export to Europe and North America • Successful distribution business in Europe

8. Forces driving consolidation in the steel industry Increasing Concentration Among Suppliers Globalisation & Consolidation of Customers • Service global customer base increasingly seeking global procurement • Critical mass in R&D • New product development Steel Industry Consolidation • Disproportionate negotiating power due to raw materials supplier consolidation Capture Growth Opportunities in New Markets Increasing need for Sustainability • Reduce earnings volatility • Better capacity management • Improved returns on capital Economies of Scale • Slow growth in mature markets • Growth driven by emerging markets • Plant specialisation, manufacturing excellence, and greater ability to sustain R&D investments

9. Consolidation process is moving to the next phase 2002-2004 Regional Consolidation 2004-2005 Increasing Cross-Border Consolidation 2006- Formation of Global Steel Companies • Industry remains fragmented and largely regional • Medium-scale producers • Large transformational combinations will be faster, more capital efficient and carry less risk than a series of acquisitions • Good quality assets becoming increasingly scarce • Fierce competitive bidding • Continuous need for integration • First mover advantage will be critical in global steel industry consolidation • Industry leaders of the future will be global producers with annual capacity of 150-200m tonnes

10. Mittal Steel Pipes & Tubes

11. Our profile… • Over 2,000,000 MT/yr of production capacity • 50/50 seamless-welded (excl. Valin JV in China) • On four continents • And growing ….

12. Our production capacity… Aktau (Greenfield Project) ??? Krakow Iasi Roman Vereeniging Contrecoeur Ostrava Karvina Annaba Galati Temirtau

13. Our recent history… • Early 2005 Mittal’s tube plants were still a conglomerate of independent units. • Late last year a comprehensive Pipe & Tube strategy became operational. • Today Mittal Steel owns a highly profitable tube producing “division” – ranking # 6 in the world. • Focus on sales & marketing: new offices in Houston and Dubai September 2006 : Formation of a separate strategic division

14. Our sales offices and production units…

15. Our segmentation… Mittal Steel’s Pipe & Tube activities are approaching customers by application-segment: • Energy • Construction • Engineering & Automotive Thus combining seamless and welded products, services and projects as required by our customers

16. Global Outlook for Pipes & Tubes

17. 57.0 Market environment: consumption of 85 million tons, dominated by China 84.9 1.0 1.8 3.2 Apparent consumption 2005, mln tons Welded 23.8 Seamless 27.9 CIS China Europe North America Developed Asia Emerging Asia Latin America Middle East Africa Australia Total Percentage of total 28% 20% 13% 12% 10% 5% 5% 4% 2% 1% Absolute growth 2000-2005 146% 12% 3% -6% 31% 30% 17% 49% 21% 69% Absolute growth ’05-’10 (projected) 48% 12% 10% -4% 21% 25% 11% 27% 17% 9% Source: IISI; ISSB; JFK; McKinsey 2006

18. 0.1 -0.7% 1.7% 4.1% 84.9 103.6 2.3% 2.0% 2.6% 5.3% 8.2% 4.8% 5.6% 5.5% 3.9% 3.0% 2.3% 2.4% 7.7% 3.2% 4.9% 2.2% 4.5% 3.8% Market environment: expected growth of 4.1% per annum to 104 million tons Real GDP CAGR CAGR ’05-’10 Total 2005 Projection 2010 Welded Seamless Total 2005 China 23.8 35.2 11.2 Europe 17.2 19.3 4.9 North America 11.0 12.1 3.2 1.1 Developed Asia 10.3 9.9 CIS 8.2 9.8 3.4 Emerging Asia 4.2 5.3 0.6 Latin America 4.2 4.7 1.6 Middle East 3.2 4.1 1.3 1.8 Africa 2.1 0.5 1.0 Australia 1.1 0.1 Total Source: Global Insight; McKinsey analysis

19. 89% Market environment: capacity concentrated in seamless, fragmented in welded Seamless capacity, 2005 100% = 39 mln tons • Large share of capacity controlled by few players • Global players: Tenaris (10%), Vallourec (7%), and Sumitomo (5%) • Local champions: TMK (9%), Interpipe (5%), Tianjin (4%), Bao Steel (3%) Seamless capacity concentrated to small set of: • Global players • Local champions in CIS and China • In the next 5 years time we expect new capacity of 2.5 mi tons • Welded capacity is very fragmented • Small and medium diameter dominated by local players • Large diameters is a global market driven by investment and know-how • In the next 5 years time we expect new capacity of nearly 1.5 mi tons • Still further options for consolidation out Global players* 21% 58% Other 21% • Very fragmented market • Over 1,000 companies Characteristics differs by products • Small diameter pipes (<6.3’’) • 67% of welded market • Highly fragmented local/regional market driven by efficiency • Medium pipes (6.3’’< D < 16’’) • 16% of welded market • Regional/global market driven by efficiency • Large diameter pipes (>16’) • 17% of welded market • Global market driven by investments and know-how Local champions** Welded capacity, 2005 100% = 109 mln tons Global players* Local champions** 9% 4% • 89% * Tenaris, Vallourec Mannesmann, Sumitomo ** TMK, OMK, Interpipe, Tianjin, Bao Steel Other Source: JFK; China steel yearbook; Company publications; Analyst reports; company websites; McKinsey

20. Market environment: summary of global perspective • The overall tube market shows attractive growth from 85 million tons in 2005 to104 million tons in 2010 • Some selected segments are of major interest due to high share of growth, financial attractivity, or stable (less cyclical) demand, e.g. OCTG, line transportation, automotive or specific parts of industrial. • Regions to focus upon include: • China, • OCTG in North America, • line transportation in CIS and Middle East. • In the tube market polarization is occurring around “solutions in specialties” and “standard products” with different success factors for customer value creation and supplier value capture, with the specialty market being more protected against competition.

21. Challenges Ahead for Steel Makers

22. World energy demand.. ever growing …

23. Oil prices continue going up… 2007 -2010

24. Landscape… • High oil prices are there to stay: > US$ 70 per barrel and expected to rise further during the next 10 years • Allowing for economic exploration for deep reservoir both land and marine under difficult climatologically conditions and for energy source of lower quality (for example high sulfur) Lead to following challenges…

25. Challenges… • More higher steel grades required => X70 – X120; Q125; specialty grades and beyond • Gas discoveries lead to large diameter pipes => plates

26. Challenges… • Sour service requirements everywhere • Drilling in difficult areas leads to the need for alloyed / high strength material

27. Will lead to an attractive and sustainable industry in the 21st century What producers need to do to face the challenges... • Embrace growth geographies – these are a major driver of the future • Market better – to open up latent demand • Manage better – for value, rather than volume • Price better – microeconomics based; minimize volatility • Continue consolidation trend

28. Which trends will influence the pipes industry? • The upstream steel industry is consolidating • The pipe & tube industry will also consolidate- Has already partially taken place in seamless- Mittal Steel will grow its participation in tubes: • Direct producer of pipes & tubes • Key supplier of inputs for pipe & tube-making • Access to inputs and raw materials will be paramount

29. Some less obvious medium term trends … • Within 5 years the growth rate for natural gas will be twice as high as for crude oil (fueling demand for large diameter pipes…) • Within 7 years premium connections will have some sort of universal standard rather than the multiple proprietary types (is API strong enough to drive this process?)

30. Summary… • Further consolidation in Pipe Industry as already seen in Steel. Recent mergers Tenaris/Maverik & Ipsco/NS group. • Pipe industry shall need dedicated steel sources. • Steel and Pipe Industry to work together in R&D efforts to meet new challenges.

31. THANK YOU! Any questions?