THE AUTOMOTIVE STEEL BUSINESS: MARKET POTENTIAL AND CHALLENGES Michel BABBIT ARCELORMITTAL

THE AUTOMOTIVE STEEL BUSINESS: MARKET POTENTIAL AND CHALLENGES Michel BABBIT ARCELORMITTAL

2011 Steel demand forecast 2011 STEEL DEMAND FORECAST IN BILLION TONNES 1.28 1.34 1.11-8.6% +15.3% +4.69% 2009 2010 F - 2011 Steel demand in Million Tonnes 2008 2009 2010 2011 2009 /2008 2010 /2009 2011 /2010 China 461 550 580 600 19% 5% 3% EU 206 143 168 179-31% 17% 6.5% NAFTA 129 83 109 118-36% 31% 8% Japan 76 53 67 70-30% 26% 4.5% India 51 56 70 73 10% 25% 4% CIS 49 34 45 50-31% 32% 11% C&S America 44 33 44 48-25% 33% 9% Middle East 43 39 46 48-9% 18% 4.5% Africa 26 26 28 30 0% 8% 7% ROW 122 87 115 124-29% 32% 8% WORLD 1207 1104 1272 1340-8.5% 15.2% 5.3% 2010 increase was higher than expected (15%) Continued Recovery in World Steel demand is expected in 2011. World Steel Association forecast an increase in 2011 demand of 5.3%, more or less in line with consensus of most economists Global steel demand higher than pre-crisis level China growth expected to moderate, but representing 45% of global demand World Steel consumption continues to grow dominated by emerging markets *Source WSA, WSD & ArcelorMittal

Global Steel Market Outlook CRUDE STEEL PRODUCTION IN MILLION TONNES CRUDE STEEL PRODUCTION IN MILLION TONNES 2 000 1 800 1 600 700 600 China 1 400 1 200 1 000 800 600 400 200 0 1980 1990 2000 2005 2006 2007 2008 2009 2010 F - 2011 F - 2015 500 400 300 200 100 0 1980 1990 2000 2005 2006 2007 2008 2009 2010 Europe Japan CIS USA Brazil 2010 crude steel production expected at 1395 MT 2011 Production forecast at 1470 MT (+5.5%) 2015: 1780 Mt Worldwide crude steel production increase between 2010 and 2015 at +28% (+385 MT) China production forecast 2015 at 945 MT equivalent to 53% of the global production compared to an estimated 45% in 2010 World Steel Production is expected to grow 28% in the 5 coming years *Source WSA & ArcelorMittal

2011: a turning point for the auto industry how will the auto industry react to society changes? changing mobility concepts Different human relation to the object car (no more status symbol in Western Europe?) CO 2 legislations, taxation & insurance impact consumer behavior Remaining industry concerns in Europe: overcapacity, market saturation, new market entrants, The Body in White design & required materials will depend on what combination of vehicle type & power train concept will prevail

And how does the auto industry respond? Commercial Consolidation (Alliances) to cut development costs Redefinition of Premium (low emission hype car) vs. low cost cars Production Mega-Platforms to improve cost Reduce capex & risk exposure: outsourcing of stamping New power train concepts Globalization Growth will come from Asia Moving production to Eastern Europe

Automotive market drivers impacting the Steel Industry Safety performances Environment challenges Reduction of CO 2 emissions Threat of alternative materials Recycling & Life Cycle Assessment Penalties (EU) New powertrains Globalization New geographical markets New segments Consolidation to cut costs Mega platforms to reduce development costs Need for specific answers from the steel industry

The CO 2 challenge for the auto industry Reduction of CO 2 emission is a major challenge for OEM Source: World Auto Steel

The impact on steel from the CO 2 challenge Consequences on car design: In the next 20 years, cars will have to lose several hundreds kilograms Impact on steel: OEM willing to pay today in the vehicle concept as much as 10 /kg saved in the BIW versus 2 /kg one year ago

From CO 2 emissions to CO 2 footprint. Future regulations - Importance of Life Cycle Assessment Pushing to take into account total environmental footprint of car and not CO 2 emission as sole factor (alu is CO 2 intensive in production) AHSS Aluminium Magnesium Carbon FRP 2.3 2.7 13.9 15.5 18 24.8 21 23 From CO 2 emissions to CO 2 complete footprint for all materials LCA is needed to move regulations on complete vehicle life ( well to wheel approach) GreenHouse Gases from Production (in kg CO 2 eq/kg of material) Courtesy Worldautosteel 16/09/2011 Confidential 8

Transform a threat into an opportunity Take up the auto challenges The products The steel solutions A new business model

At the heart of any approach: the product 2005 2008 2013 2020 % of Advanced High Strength Steels in car structure 6% 9% 14% 32% 16/09/2011 Confidential 10

ArcelorMittal The broadest AHSS offer in the world 16/09/2011 Confidential 11

The differentiating solution: Usibor Coated boron steel for hot stamping 10% cost saving Extreme high strength 1500 MPa 30% weight saving potential No spring back

TEl% Differentiate through Innovation : Breakthrough developments for cold-stamping 50 Commercialized Under development 40 Under development (Breakthrough) 30 20 10 5 500 800 1000 1500 UTS (MPa) High Modulus Steel : 1st feasibility industrial trial in 2011 HSHF 3rd generation : Selection of best candidates end 2011

Differentiate through innovation S-in motion project: Lightweight steel design Significant weight saving proposals

S-in motion: an ambitious weight reduction vehicle project S-in motion project aims to provide all new steel solutions for the Body In White, the closures and the chassis that address vehicle mass and cost performance ratios while maintaining vehicle safety. Based on a 2008-2009 vehicle reference, it incorporates a catalogue of material options, new forming & joining technologies with an ambitious weight reduction of 20% with our advanced steels (flat products, tubes, long products).

S-in motion project objectives Demonstrate up to 20% weight reduction is possible with currently-available AHSS grades Relative to a modern, AHSS-intensive reference BIW (35% AHSS) Target Perimeter = BiW, Closures, and Chassis 20% weight reduction in C-class vehicle BIW Steel grades available in 2010 Build a catalogue of worldwide solutions per sub module EU Version NA Version adapted to meet 2010 US crash requirements Comprehends world-wide crash and performance requirements At the lowest possible cost

S-in motion Project

Hot stamped parts on the lightest BiW For the lightest BiW concept, 29 parts (~69 kg) are made with press hardened steel: Ductibor 500P Usibor 1500P LWB Ductibor 500P / Usibor 1500P LWB Usibor 1500P / Usibor 1500P Press hardened steels offer high mechanical resistance for complex geometries without spring back effect

Laser Welded Blanks on the lightest BiW For the lightest BiW concept, 16 parts are made with laser welded blanks Tensile strength values Laser welded blanks offer an effective way to optimise the part thickness while maintaining performances

S-in motion lightest vehicle

kg CO2 eq LCA analysis Costs results Reduction in greenhouse gas emissions during the use phase of the whole vehicle 6.23 g CO 2 / km 14000 12000 1749 120% Weight saving is achieved at neutral cost on lightest solution Tooling amortization Assembly Process Material 10000 100% 2% 3% 8000 80% 32% 34% 6000 11916 10303 Ecobenefit Use Phase Production + End of life 60% 15% 18% 4000 40% 2000 20% 51% 45% 0 904 768 Base line S-in motion 0% Baseline WP4

ArcelorMittal All rights reserved for all countries Cannot be disclosed, used, or reproduced without prior written specific authorization of ArcelorMittal CONFIDENTIAL Privileged Information - ArcelorMittal proprietary information Conclusions 19% weight savings on the studied perimeter (16% of whole vehicle weight) at neutral or lower cost 57 kg weight savings for BiW and closures 17 kg weight savings for chassis components More than 6.2 g/km CO 2 reduction in greenhouse gas (GHG) emissions during the vehicle use phase (14% total life cycle reduction) Catalogue of solutions for worldwide requirements ( EU+ NA) More than 70 solutions for single parts More than 18 solutions for the 4 sub-modules 29 kg additional weight savings for BiW, bumpers, closures with breakthrough products (lower density, higher elastic modulus, higher strength)

Winning the automotive future: New Business Model Innovation Applications solutions Flexible Value Pricing proposition Redefining the marketplace Sustainable development Partnership development Patent Protection

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