BS SteelMng Cement ST Jul06

Emerging Markets
Equity Research
JULY 25, 2006
GEM Steel, Mining & Cement

Monthly Review & Outlook
CVRD, Mittal, PCU, Kazakhmys and Ternium Top Picks
TOP PICKS. Our list (ordered by market cap) includes: CVRD leading global share,
high FCF, earnings visibility, strong volume growth/expansions; Mittal
size/scale/diversification advantages, business momentum, upstream integration,
upside from M&A; PCU robust copper fundamentals, high dividends, scarcity
value, M&A target; Kazakhmys (see below); and Ternium high FCF, low-cost
producer, strong management, limited competition. All are rated Outperform.
SECTOR SPOTLIGHT GLOBAL STEEL/IRON. Global steel output surged in June,
with China up over 18% from a year ago to a new record, and ex-China showing its
highest growth rate since December 2002. Production gains result from increased
capacity (mainly China), solid demand, inventory restocking, and notably the strong
incentive from higher prices. High Chinese output remains a key risk factor for
prices, and we think the discipline of global steel producers may again be challenged.
While price momentum remains very strong in the second and third quarter, it looks
increasingly inevitable that some pricing gains will be given back later in the year.
COMPANY SPOTLIGHT KAZAKHMYS. On July 18, we initiated coverage of
Kazakhmys, the worlds tenth-largest copper producer with an Outperform rating. We
are bullish on tight copper fundamentals (primarily on the supply side) and note the
many company positives, including substantial reserves/growing output, low-cost
production, strong free cash flow, lack of price hedges, scarcity value for pure-play
copper equities, and solid positioning to be a regional consolidator.
VALUATION UPDATE. Steel stocks in our selected universe gained 2% on average in
the 30 days ended July 24; mining rose 8%, and cement/construction was up 4%.
Trading volume fell 26% month on month, but is up 92% year on year. The average
EV/EBITDA was 10 bps lower at 5.0x.
Research Analysts:
Daniel C. Altman, CFA
(212) 272-5929
Marina Rohe
(212) 272-8578
daltman@bear.com
mrohe@bear.com
Paul J. Rosenberg
(212) 272-8347
prosenberg1@bear.com
Bear Stearns does and seeks to do business with companies covered in its research reports. As a result, investors should
be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Customers of Bear
Stearns in the United States can receive independent, third-party research on the company or companies covered in this
report, at no cost to them, where such research is available. Customers can access this independent research at
www.bearstearns.com/independentresearch or can call (800) 517-2327 to request a copy of this research. Investors should
consider this report as only a single factor in making their investment decision.
PLEASE SEE THE ADDENDUM AT THE END OF THIS REPORT FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION.
Table of Contents
Page
Top Picks Update...............................................................................................................................................................3

Sector Spotlight Global Steel/Iron: Rise Cause for Concern? .....................................................................................4
Company Spotlight Kazakhmys: Initiating Coverage with Outperform Rating...........................................................6
Sector Valuation Monthly Highlights...........................................................................................................................9
Sector Liquidity Monthly Highlights..........................................................................................................................10
Stock Performance Monthly Highlights .....................................................................................................................11
Selected Global Steel, Mining & Cement Comparable Sheet .........................................................................................12
Global Steel & Mining Comparables...............................................................................................................................16
Latin/Global Steel Stock Charts ......................................................................................................................................17
Bloomberg Index Charts..................................................................................................................................................19
Latin/Global Mining Stock Charts...................................................................................................................................20
Latin Cement & Construction Stock Charts ....................................................................................................................23
ADR Short Interest ..........................................................................................................................................................24
Stock Performance vs. Domestic Index...........................................................................................................................26
Stock Performance vs. Bloomberg Industry Index ..........................................................................................................29
Stock Performance vs. Domestic Currency .....................................................................................................................32
Stock Performance vs. Underlying Commodity ..............................................................................................................35
Correlation Charts............................................................................................................................................................38
Holding Company Discounts & Spreads. ........................................................................................................................41
Appendix I Monthly Industry Data
Industrial Production, by Country ..................................................................................................................................45
Leading Economic Indicators .........................................................................................................................................46
Global Steel Production...................................................................................................................................................47
U.S. Steel Production & Utilization ................................................................................................................................50
Brazilian Steel Production & Shipments ........................................................................................................................51
Global Steel Sheet Quarterly Production and Consumption...........................................................................................52
Global Steel Sheet Quarterly Net Exports ......................................................................................................................53
China Key Industry Trade Statistics ............................................................................................................................54
China Import/Export Statistics .......................................................................................................................................56
Global/U.S. Steel Pricing................................................................................................................................................57
Latin American Steel Pricing..........................................................................................................................................60
Brazilian Domestic Steel Pricing....................................................................................................................................61
Domestic Chinese Steel Pricing......................................................................................................................................62
Monthly U.S. Steel Imports: Value and Prices by Country and Product........................................................................63
Monthly U.S. Steel Exports: Value and Prices by Product ............................................................................................66
Global Commodity Prices and Exchanges Stocks ..........................................................................................................67
China Raw Material & CVRD Iron Ore Prices ..............................................................................................................70
Natural Gas Prices ..........................................................................................................................................................70
Freight Rates...................................................................................................................................................................71
Chilean Copper and Molybdenum Production ...............................................................................................................72
Alumina Contract and Spot Prices..................................................................................................................................72
Commodity Price Assumptions Table ............................................................................................................................72
Monthly Auto Production & Sales: South Korea/Brazil.................................................................................................73
Global Rig Count............................................................................................................................................................74
Rig Counts vs. WTI Price & Tenaris Top 4 Markets .....................................................................................................74
Selected OCTG Prices ....................................................................................................................................................74
U.S. Construction Spending by Sector/Seasonally Adjusted..........................................................................................75
Appendix II GEM Watch Highlights
Steel & Mining ...............................................................................................................................................................79
All pricing is as of the market close on July 24, 2006, unless otherwise indicated.
Page 2
GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK
Top Picks Update

TOP PICKS: CVRD,
MITTAL, PCU,
KAZAKHMYS,
TERNIUM
We like CVRD, given its leading global market share, high FCF, good earnings
visibility/defensiveness, and strong volume growth/expansions. We see upside in
Mittal due to size/scale/diversification advantages, business momentum,
unparalleled global market reach, strong upstream integration, upside from M&A,
and turnaround potential/underutilized capacity. Despite near-term concerns, we
favor Southern Copper due to strong copper fundamentals, high dividend yield,
scarcity value, and its status as a potential M&A target. We also like Kazakhmys
due to the tight copper market, substantial copper reserves/growing output, low-cost
production, strong free cash flow, lack of price hedges, and solid positioning to be a
regional consolidator. We favor Ternium as well, which offers high FCF, low-cost
production, experienced management, and limited domestic competition.
Exhibit 1. GEM Steel, Mining & Cement Sector: Top Picks (by Market Cap.) Key Investment Positives and Key Risk Factors
Company
Ticker
Rating/Target*
Key Investment Positives
Risks to Our Target Price
CVRD
RIO
Outperform ** Strong Volume Growth/Expansions

$31.50
** High FCF/Margins
** Earnings Visibility/Defensiveness
** Profit Taking for Commodity Equities

** Volume/Pricing Upside Dependent on China
** Acquisitions
Mittal
MT
Outperform ** Size/Scale/Diversification/Market Reach

$45.00
** Momentum in Results
** Upside from M&A, Upstream Integration
** Generous Acquisition Price/Terms for Arcelor

** Integration Issues/Execution Risk
** Steel Prices Look to Have Peaked
S. Copper
PCU
Outperform ** Robust Outlook for Copper Fundamentals

$125.00 ** Stocks Pricing In Lower Than Expected Copper Prices
** 10+% Dividend Yields, Potential M&A target
** Significant Volume Losses Due to Ongoing Strikes

** 2Q Hedge Loss Could Exceed US$250 mn
** Taxation Risk in Peru
Kazakhmys
KAZ
Outperform ** Substantial Reserves/Growing Output

$27.00
** Low-Cost Production/Strong FCF
** Positioned to Be Regional Consolidator
** Kazakhstan Country Risk

** Potential Conflicts of Interest for Management
** Complex and Escalating Tax Program
Ternium
TX
Outperform ** High FCF/Low Cost Production

$33.00
** Experienced, Value-Added Management
** Limited Domestic Competition/High Mexican Prices
** Hugo Chavez Risk in Venezuela

** Low Float/Liquidity
** Significant Non-Ownership of Assets
* Year-End 2006. Valuation methodology based on either P/E or EV/EBITDA and Sum-of-the-Parts.
Source: Bear, Stearns & Co. Inc. estimates. Sector Rating: Market Weight.
We continue to see upside for Usiminas (Outperform; price target: US$43) due to its
high margins, dividends and FCF, its low valuation, and its exposure to the highpriced Brazilian markets. We are positive on Buenaventura (Outperform; price
target: US$35) due to its attractive absolute and relative valuation, our positive
outlook for gold, and the underestimated contribution of the Cerro Verde copper
mine. We continue to like Posco (Outperform; price target: US$78), given its high
FCF, absolute/relative valuation, leading technology, access to the high-end steel
market in China, and size/scale. We also like Bradespar (Outperform; price target:
US$41) due to the expected appreciation of CVRD, an excessive holding company
discount, transparent valuation and low reinvestment risk. Risks to our target prices
include lower commodity prices, weaker global demand, and financial-market
uncertainty.
BEAR, STEARNS & CO. INC.
Page 3
Sector Spotlight Global Steel/Iron: Rise Cause for Concern?

Key Data Highlights from IISI June Report (released July 19):
June growth rate at 13%. Global crude steel production in June rose 13% year over
year, or 11.7 mmt, to 103.8 mmt. The growth rate was the highest since December
2004 and up 250 bps from the revised May level. Output rose 2% on a month-onmonth basis (adjusting for the same number of days).
China still the main growth driver, though less than half. Production (previously
disclosed) rose 18.5% from a year ago, or 5.7 mmt, to 36.6 mmt the fourth straight
month of record production. China was 35% of the global total and was just under
half of the growth for the first time since 2002. On a per-day basis, production grew
5% month on month.
Ex-China output was much higher. Steel output ex-China grew 10% year over
year, or 6 mmt the highest growth rate since December 2002 and the fifth straight
month of rising production (versus the 2% year-over-year decline in second-half
2005 in the face of falling prices). Top gainers included Ukraine (+23%), the U.S.
(+17%), and the U.K. (+15%). Output also grew in the two other major producer
regions, the E.U. (+12%) and Japan (+3%). Russia was up 13% from last year, while
South Korea rose 9%. Low-cost Brazil fell 4% (the 13th consecutive decline),
affected by the CSN outage. Ex-China was flat month on month.
Pig iron growth slightly exceeds steel. May pig iron output grew a stronger 14%
year over year to 73.5 mmt (+1% month on month) as growth is more weighted to
China, which has primarily integrated facilities (the pig iron/steel ratio was slightly
lower month on month, implying a higher minimill proportion). China rose 22% from
a year ago to 35.1 mmt and was 48% of the global total. Ex-China pig iron output
grew 8%, slightly below the rise for steel.
Net exports from China set new record. Separately, preliminary data showed China
as a net exporter of steel/slab in June (3.6 mmt) for the sixth straight month. The
monthly net export figure broke the May record by almost 1 mmt and takes the firsthalf 2006 amount to 10.4 mmt (versus 2.4 mmt in first-half 2005 and net imports in
second-half 2005). We think the growth in net exports is resulting from high
production levels (due to increased prices), export opportunities, and selling ahead of
VAT tax changes.
Apparent Chinese consumption rises less than production. Adjusting for net
exports, apparent consumption of steel in China grew 7% year over year in June
(versus 19% for production) - the data may be distorted by inventory destocking
and/or double counting. For first-half 2006, apparent consumption is up 14% year
over year (versus 18% for production).
Bottom line
Global steel output is surging given increased industry capacity (mainly in China),
solid demand, inventory restocking, and the strong incentive from higher steel prices
(the global average is up ~US$100/mt year to date). High Chinese output is once
again a key risk factor for prices, and we think the discipline of global steel producers
may again be challenged as inventories rebuild and/or growth slows later in the year.
Page 4
While price momentum remains very strong in the second and third quarter, it looks
increasingly inevitable that some pricing gains will be given back later in the year.
This note was originally published in the July 20, 2006 Latin America Watch.
Pricing is as of market close July 19, 2006.
Page 5
Company Spotlight Kazakhmys: Initiating w/Outperform

On July 18, we initiated coverage of Kazakhmys, the worlds tenth-largest copper
producer at roughly 2.4% of global production, with an Outperform rating at the
previous days closing price of GBp1,156, or US$21.02/share.
Investment Positives
Bullish view on copper. Copper is benefiting from a very tight supply/demand
dynamic, which has propelled exchange inventories to minimal levels (roughly three
days of consumption) and prices to historic highs. The most compelling story is on
the supply side, where output growth is being constrained by both structural issues
(declining grades, few new major ore discoveries, labor/equipment shortages,
water/power availability, etc.) as well as the byproduct of high
utilization/profitability (accidents, labor strikes, etc.). Meanwhile, new projects are
increasingly located in areas with higher political risk, much greater capital costs, and
longer buildout periods.
On the demand side, secular trends such as infrastructure development and
urbanization in developing countries underpin strong growth. Barring a major global
slowdown, we expect supply/demand tightness for the remainder of the decade. We
conservatively forecast copper prices to average US$3.00/lb in 2006, US$2.40/lb in
2007, and US$2.00/lb in 2008.
Long reserve life with growing output. Kazakhmys has proven and probable
reserves of 18 mmt of contained copper, placing it among the top ten worldwide. We
look for solid output growth, most notably from a large US$650 million, 160- to 170kmt greenfield project called Aktogay. Aktogay could be approved by September
2006 and begin production in 2009. With an average population density of
approximately 5.6 people per square kilometer, Kazakhstan is one of the most
sparsely populated countries in the world a key positive for mining given its high
environmental impact.
Strong cash flow with acquisition growth opportunities. Kazakmhys is already
sitting on a net cash balance and is forecast to average US$1.2 billion in FCF during
2006E-2008E. As the largest domestic mining company, with an extensive track
record, experienced management, and existing infrastructure, we think it is well
positioned to acquire smaller mining assets in Kazakhstan. With few competitors, we
see a domestic acquisition strategy as likely additive to returns, supportive of
company growth, and providing diversification into other metals.
Low-cost producer. Kazakhmys benefits from low-cost labor in Kazakhstan, selfsufficiency in electricity (it owns its thermal power plants, which use coal extracted
from its own mines at 1 per KWh), and significant zinc, gold, and silver byproduct
revenues (about 20% of mining sales). Kazakhmys had a cash cost of 45/lb in 2005,
likely in the second quartile of the global cost curve (mostly behind producers which
have molybdenum as a byproduct).
Strategic location to supply key consumers. Kazakhmys is located in central Asia
and borders the northwest of China, which is a key copper consumer (about 25% of
world demand and 50% of the companys consolidated revenues). Kazakhmys
Page 6
estimates an average transportation cost of about US$15/mt to the China border,

which compares favorably to about US$50/mt from Chile to China. The company
also has exposure to Germany, the third-largest copper-consuming country, through
its fabricated products subsidiary.
Scarcity value. Kazakhmys is one of the few pure-play copper companies available
to investors this is especially the case if Phelps Dodge diversifies into nickel via
acquisition. Its shares are highly liquid (30-day ADTV of nearly US$70 million) and
are listed on the London Stock Exchange. Although we believe Kazakhmys key
shareholders will pursue a domestic acquisition strategy, we think it could ultimately
become an M&A target for a larger, more diversified company if conditions permit.
Investment Risks
Commodity price/sentiment/forecasting risk. As a commodity producer with
limited diversification, the company remains highly levered to the copper price a
factor over which it has no control. While we think the shares are discounting a much
lower copper price, a major correction in the metal price could be an important
barrier for stock performance. The shares are also susceptible to top-down investor
concerns about global growth, emerging markets, and interest rates. This partly
accounts for the ~20% drop in the shares off their highs. Separately, there is
forecasting risk in our estimates given the short company track record as a U.K.listed company (it began trading in October 2005), the lack of quarterly results, and
no regular conference calls.
Country risk. Although Kazakhstans debt is considered investment grade by the
key rating agencies, the country still experiences a relatively high inflation rate,
which could pressure costs (revenues are U.S. dollar-denominated, while costs are
35% local currency). In addition, several of its exploration regulations and tax laws
are fairly recent and subject to government interpretation. Recent Kazakh
government actions in the energy sector (against foreign operators) have raised some
investor concerns about reprivitization risk. We think Kazakmhys, as a domestic
producer in the mining sector, will most likely be sheltered from this risk.
Potential conflicts of interest. The three key shareholders hold top management
positions in the company (chairman of the board, CEO, and CFO). This could create
a conflict of interest if they decide to purchase mining assets outside the company. In
March 2006, Vladimir Kim (chairman of the board and 40% owner) acquired a 25%
interest in a holding company for the mining business of Eurasia Natural Resources
(EKH). In consideration of the potential conflict of interest, Vladimir Kim offered a
call option to Kazakhmys (at a 10% premium to his offer price). We think
transactions done outside the company by its owners, if repeated, could create a real
or perceived overhang for the shares.
Complex and escalating tax program. In addition to the 30% corporate rate,
Kazakhmys has a complex tax program based primarily on the IRR of the company
(in part using trailing/current copper prices and the profitability of the mine). The
level of taxation reduces the companys earnings visibility and affects the earnings
upside in a high copper price/profit environment. In 2005 the company had an
Page 7
effective tax rate of 35%, expected to rise to around 38% in 2006E the maximum
level of taxation is seen in the low 40s.
Valuation
Upside to the target. Our end-2006 price target is US$27/share (GBp1,550), based
on 10x 2007E EPS (net of interest income) plus ~US$3/share of expected year-end
net cash. We expect cash on hand, after dividend payments, will be used to expand
copper output and make acquisitions, thus we prefer to value it separately.
The target multiple is similar to that used for other copper companies in our coverage
list. We believe strong growth, low-cost assets, high share liquidity, and a good
labor/environmental position offset country/ownership risk. Our target is roughly
13.5x our 2008E earnings, which assume a US$2/lb copper price. We look for a
nearly 4% estimated dividend yield based on the current share price. Key risks
include lower commodity pricing/volumes and financial-market uncertainty.
DCF gives us a similar price target. Our DCF analysis leads us to a similar
valuation, based on a WACC of 11.5% and a 5.0x EV/EBITDA multiple for the
terminal value. We use a long-term copper price of US$1.75/lb, less than half of the
current spot price, to reflect increased future supply. We think this estimate could be
conservative in light of the difficulty and high costs of developing major new
reserves.
Company Description
Kazakhmys is the world tenth-largest copper producer, with annual volumes of about
400 kmt representing 2.4% of the worlds copper production. Kazakhmys also has
lesser interests in zinc, gold, and silver. The company is incorporated in the U.K., but
its mining assets are located in Kazakhstan. In addition, the company has a
fabrication facility in Germany producing wire, tubes, bars, and flat copper products.
Kazakhmyss three top managers hold 67% of the company (Vladmir Kim 40%,
Yong Keu Cha 16%, Oleg Novachuk 11%); the remainder is free float. The shares
trade solely on the London Stock Exchange (FTSE).
This note was originally published in the July 18, 2006 Global Emerging Markets
Watch. Pricing is as of market close July 17, 2006.
Page 8
Sector Valuation Monthly Highlights

VALUATION LEVELS
DOWN
The average price to adjusted earnings for 2007E is 7.9x (flat versus last month),
while the EV/EBITDA multiple is 5.0x (-10 bps). The highest five companies
have an average EV/EBITDA of 6.9x, while for the lowest five, it is only 3.4x.
We look for an average sector dividend yield of 4%, with Southern Copper
leading the way with a potential 14%. The average sector operating FCF yield is
15%, with all but two companies in double digits.
We look for average 2007E revenue and EBITDA growth of 7% and 4%,
respectively, due to higher iron ore and commodity prices and the expansion at
Cerro Verde. Meanwhile, we look for an average EBITDA margin of 39%, with
Cerro Verde (73%) and Antofagasta (71%) achieving the highest levels.
Exhibit 2. GEM Steel, Mining & Cement Sector: Valuation Rankings, 2007E
Revenue Growth '07E
Cerro Verde
Arcelor Brasil
CVRD
Tenaris
CSN
China Steel
ICA
Buenaventura
Ternium
Mittal
Gerdau SA
Cemex
Usiminas
Posco
Grupo Mexico
Southern Copper
Kazakhmys
Antofagasta
Average
EBITDA Growth '07E

92%
11%
11%
9%
8%
8%
7%
6%
6%
5%
4%
2%
1%
0%
-7%
-10%
-14%
-18%
7%
P/Adj. E '07E*
ICA
Tenaris
Cemex
CSN
Antofagasta
China Steel
Kazakhmys
Buenaventura
Arcelor Brasil
CVRD-ON
Gerdau SA
Southern Copper
Posco
CVRD-PN
Usiminas
Mittal
Ternium
Grupo Mexico
Cerro Verde
Average
Cerro Verde
China Steel
Arcelor Brasil
Ternium
Tenaris
ICA
Mittal
CVRD
Gerdau SA
CSN
Cemex
Usiminas
Posco
Buenaventura
Grupo Mexico
Southern Copper
Kazakhmys
Antofagasta
EBITDA Margin '07E

77%
15%
11%
10%
10%
9%
8%
8%
5%
5%
4%
-1%
-5%
-10%
-15%
-17%
-21%
-21%
4%
EV/ EBITDA '07E

15.8
11.0
10.1
9.7
8.8
8.8
8.6
8.3
8.1
7.7
7.2
7.0
6.9
6.7
5.5
5.3
5.2
4.5
4.4
7.9
Cerro Verde
Antofagasta
Southern Copper
Grupo Mexico
CVRD
Kazakhmys
CSN
Tenaris
Ternium
Arcelor Brasil
Usiminas
Buenaventura
China Steel
Posco
Cemex
Gerdau SA
Mittal
ICA
ICA
Tenaris
Cemex
CVRD-ON
Buenaventura
CVRD-PN
China Steel
CSN
Gerdau SA
Arcelor Brasil
Kazakhmys
Southern Copper
Usiminas
Mittal
Antofagasta
Posco
Grupo Mexico
Ternium
Cerro Verde
Net Debt/ EBITDA '07E

73%
71%
61%
57%
48%
48%
46%
37%
35%
33%
33%
32%
30%
26%
23%
21%
20%
14%
5.0
NM
NM
NM
NM
NM
NM
0.1
0.2
0.3
0.4
0.4
0.5
0.5
0.6
0.8
1.2
1.7
2.0
39%
Dividend Yield '07E
7.9
7.0
7.0
6.6
6.1
5.8
5.5
5.1
5.1
5.0
4.7
4.5
4.3
4.2
3.7
3.5
3.4
3.3
2.9
China Steel
Cerro Verde
Kazakhmys
Buenaventura
Antofagasta
Tenaris
Posco
Grupo Mexico
Southern Copper
Ternium
Arcelor Brasil
Gerdau SA
Usiminas
CVRD
Mittal
CSN
ICA
Cemex
Southern Copper
Grupo Mexico
China Steel
Usiminas
Arcelor Brasil
CSN
Ternium
CVRD-PN
Kazakhmys
Antofagasta
CVRD-ON
Gerdau SA
Posco
Mittal
Buenaventura
Cemex
Tenaris
Cerro Verde
ICA
0.7
FCF YLD '07E **
14%
10%
7%
7%
6%
6%
4%
4%
3%
3%
3%
3%
3%
2%
2%
2%
2%
0%
0%
4%
Cerro Verde
Grupo Mexico
ICA
Ternium
Antofagasta
Mittal
Posco
CSN
Usiminas
Arcelor Brasil
Southern Copper
Kazakhmys
CVRD-PN
Cemex
CVRD-ON
Gerdau SA
China Steel
Buenaventura
Tenaris
25%
24%
20%
20%
19%
16%
16%
16%
15%
15%
14%
14%
14%
12%
12%
11%
10%
8%
6%
15%
Source: Bear, Stearns & Co. Inc. estimates. * Removes FX/Monetary Adjustment ** (EBITDA- Net Interest Expense - Working Capital Capex) / Market Capitalization.
Page 9
Sector Liquidity Monthly Highlights

SHARE LIQUIDITY
DOWN
Trading levels for the 30-day period ended July 24 fell 25% month over month,
with only 10% of the stocks in the universe showing increased activity.
Volume was 96% higher than the average of the year-ago 30-day period, and
over six times higher than the average of three years ago. CVRD had the most
liquid shares during the past month, followed by Mittal and Tenaris.
Mittal, China Steel, and Kumba Resources increased the most versus last month.
Norilsk, Ternium and Mittal South Africa were among the top decliners.
Exhibit 3. GEM Steel, Mining & Cement Avg. Daily Trading Volume** (in US$ 000)
(A)
Last 30-Days
CVRD
262,219
Mittal Steel
215,255
Tenaris
184,986
Cemex
146,042
Posco
144,448
Southern Copper
140,669
Kazakhmys
65,769
Antofagasta
41,423
Norilsk
40,626
CSN
39,783
Gerdau
33,371
China Steel
31,852
Usiminas
30,572
Tata Iron & Steel
26,234
Grupo Mexico
18,688
Mechel
14,175
Buenaventura
13,835
Arcelor Brasil
11,872
Bradespar
9,678
ICA
7,057
Kumba Resources
7,020
Mittal South Africa
6,802
Ternium
5,059
Penoles
1,285
Acesita
1,093
Acindar
908
Siderar
851
Cerro Verde
621
Imsa
451
GCC
309
Average
Avg Top-5
Avg Top-10
Avg Bottom-10
(B)
Previous
445,147
112,540
280,379
219,021
176,572
165,272
66,399
61,618
96,562
63,608
56,386
28,448
51,506
27,774
25,928
22,284
25,149
17,885
13,240
9,955
6,788
12,494
9,818
2,359
1,464
1,232
1,274
1,002
666
383
(C)
(D)
1 Year Ago 3 Years Ago
147,484
10,369
38,835
65
55,454
3,079
58,423
18,140
98,336
37,613
41,060
929
NM
NM
29,671
1,245
27,957
4,602
29,532
5,787
17,763
3,249
45,775
73,413
25,394
4,527
10,552
26,537
13,831
361
14,154
NM
6,348
3,953
NM
NM
2,902
494
5,163
396
2,606
2,445
11,609
4,520
NM
NM
240
135
1,913
913
1,729
1,557
1,002
154
286
2
443
48
348
83
--- % change versus --A/B

A/C
-41%
78%
91%
NM
-34%
234%
-33%
150%
-18%
47%
-15%
243%
-1%
NM
-33%
40%
-58%
45%
-37%
35%
-41%
88%
12%
-30%
-41%
20%
-6%
149%
-28%
35%
-36%
0%
-45%
118%
-34%
NM
-27%
234%
-29%
37%
3%
169%
-46%
-41%
-48%
NM
-46%
NM
-25%
-43%
-26%
-47%
-33%
-15%
-38%
117%
-32%
2%
-19%
-11%
A/D
NM
NM
NM
NM
284%
NM
NM
NM
NM
NM
NM
-57%
NM
-1%
NM
NM
250%
NM
NM
NM
187%
50%
NM
NM
20%
-42%
NM
NM
NM
274%
50,098
66,772
25,512
7,870
-25%
96%
537%
190,590
128,122
2,860
246,732
168,712
4,312
79,706
58,528
2,534
13,853
9,092
1,025
-23%
-24%
-34%
139%
119%
13%
NM
NM
179%
Source: Bloomberg. ** Combines all classes of local and ADR shares for each company.
Page 10
Stock Performance Monthly Highlights

STOCK PERFORMANCE
UP
For the 30-day period ended July 24, stocks in our selected global universe rose
5% on average. Steel companies were up 2% during the period, mining gained
8%, and cement/construction rose 4%.
Arcelor (+14%) was the biggest gainer among the steel universe over the past
month. Cerro Verde (+32%) and ICA (+15%) were the best performers in
mining and cement/construction, respectively.
U.S. Steel (-6%) was the worst-performing steel stock. Rio Tinto (-3%) and Fluor
(-3%) were the laggards in the other two sectors.
Exhibit 4. Global Steel, Mining & Cement: Sector Performance June 23 July 24 & YTD
Price (US$)
Steel
Arcelor
Mittal South Africa
Gerdau
CSN
Nippon Steel
Tenaris
Usiminas
Mittal
Arcelor Brasil
Ternium
Posco
Nucor
JFE Holdings
China Steel
Mechel
U.S. Steel
Mining
Cerro Verde
Norilsk
Grupo Mexico
Southern Copper
Kumba Resources
Kazakhmys
BHP-Billiton
Bradespar
Anglo American
Newmont
Buenaventura
CVRD
Antofagasta
Rio Tinto
Cement/Construction
ICA
Cemex
Holcim
Lafarge
Fluor
Indexes
Mexican Bolsa
Bovespa
Merval
S&P 500
Kospi
Mkt Cap (mn) Last 30-Days
----52 Week---% Ch. High

% Ch. Low
YTD
49.93
10.69
14.66
30.72
3.74
37.81
33.01
32.15
15.85
22.30
60.23
50.19
37.52
0.94
19.50
59.86
33,197
4,768
9,745
7,931
26,022
22,317
7,242
22,634
10,264
4,471
18,716
15,727
23,143
9,889
2,706
7,516
14%
11%
9%
6%
6%
5%
4%
0%
0%
-1%
-1%
-2%
-3%
-4%
-5%
-6%
101%
10%
6%
19%
5%
65%
16%
22%
32%
12%
9%
50%
12%
7%
-19%
25%
-2%
-12%
-19%
-18%
-8%
-22%
-22%
-24%
-17%
-22%
-19%
-16%
-15%
-7%
-47%
-22%
140%
44%
134%
78%
53%
119%
120%
36%
41%
12%
26%
88%
47%
35%
3%
73%
9.60
124.50
2.93
85.74
18.55
21.58
42.32
32.59
19.77
51.02
26.46
22.14
7.23
199.68
3,361
23,305
7,608
12,623
5,681
10,088
127,701
2,849
59,592
23,010
3,366
53,822
7,129
69,397
32%
21%
16%
12%
11%
8%
4%
4%
3%
2%
1%
1%
-1%
-3%
126%
31%
26%
28%
15%
62%
27%
28%
14%
-4%
-7%
8%
14%
9%
-4%
-22%
-20%
-19%
-12%
-16%
-14%
-25%
-17%
-18%
-15%
-24%
-25%
-19%
151%
86%
73%
81%
78%
115%
45%
77%
62%
36%
16%
39%
62%
53%
38.68
29.92
74.56
116.59
85.00
1,298
10,547
17,131
19,724
7,557
15%
9%
2%
-2%
-3%
32%
4%
11%
29%
10%
-13%
-17%
-16%
-11%
-17%
54%
39%
25%
46%
48%
1,828
16,545
541
1,261
1.33
NA
NA
NA
NA
NA
12%
7%
5%
1%
0%
9%
15%
6%
1%
0%
-9%
-19%
-15%
-5%
-14%
41%
68%
11%
7%
19%
Source: Bloomberg.
Page 11
Page 12
Exhibit 5. Selected GEM Steel, Mining & Cement Stocks (All Figures in US$)
24-Jul-06
BSC Rating
Ticker
Target Price
ADRs/Shares, mm
Market Capitalization
Total Debt
Minority Interest
Cash and S-T Invest.
Enterprise Value
EPADS/EPS
2004A
2005A
2006E
2007E
P/E
2005A
2006E
2007E
ADJ EPADS
2004A
2005A
2006E
2007E
ADJ P/E
2005A
2006E
2007E
EBITDA
2004A
2005A
2006E
2007E
Enterprise Value/EBITDA
2005A
2006E
2007E
Free Cash Flow
2004A
2005A
2006E
2007E
FCF YLD
2004A
2005A
2006E
2007E
Revenue
2004A
2005A
2006E
2007E
Dividend Yield '07E*
Ternium Arcelor Brasil

CSN
22.30
15.85
30.72
Outperf.
Peer Perf. Peer Perf.
TX
ARCE3
SID
Usiminas
Gerdau
33.01
14.66
Outperf. Peer Perf.
USIM5
GGB
Mittal
32.15
Outperf.
MT
Posco China Steel

Tenaris
60.23
0.94
37.81
Outperf. Peer Perf. Peer Perf.
PKX
2002 TT
TS
CVRD-ON
22.14
Outperf.
RIO
CVRD-PN
19.29
Outperf.
RIO-P
Bradespar
32.59
Outperf.
BRAP4
Kazakhmys Cerro Verde Antofagasta Gmexico^

21.58
9.60
7.23
2.93
Outperf.
Peer Perf.
Peer Perf.
Outperf.
KAZ
SMCV PE
ANTO GMEXICOB
SCopper^
85.74
Outperf.
PCU
Bventura
Cemex
ICA
26.46
29.92
38.68
Outperf. Peer Perf. Underperf.
BVN
CX
ICA
33.00
200
$4,471
1,752
2,493
903
$7,812
16.50
648
$10,264
1,663
450
618
$11,758
32.00
258
$7,931
4,062
0
1,494
$10,500
43.00
219
$7,242
1,564
41
602
$8,245
15.00
665
$9,745
3,674
961
2,532
$11,848
45.00
704
$22,634
8,350
2,589
2,151
$31,422
78.00
311
$18,716
3,662
380
3,141
$19,617
0.90
10,545
$9,889
573
0
1,138
$9,323
47.00
590
$22,317
969
295
1,209
$22,373
31.50
2,431
$53,822
6,024
924
994
$59,776
28.35
2,431
$46,894
6,024
924
994
$52,848
41.00
87
$2,849
101
0
88
$2,861
27.00
467.5
$10,088
207.7
26.3
879.5
$9,442
11.00
350
$3,361
20
0
159
$3,222
8.20
986
$7,129
465
721
1,317
$6,999
4.85
2,595
$7,608
1,705
3,156
1,208
$11,260
125.00
147
$12,623
1,172
12
371
$13,436
35.00
127
$3,366
6
33
150
$3,256
34.50
705
$21,094
9,370
543
908
$30,099
39.00
34
$1,298
1,015
390
570
$2,134
3.91
5.82
3.70
4.30
1.94
1.61
1.75
1.95
2.45
3.20
2.85
3.15
4.71
7.35
5.00
5.30
2.62
2.53
2.05
2.05
7.31
4.90
5.55
6.05
10.34
12.37
9.75
8.75
0.16
0.15
0.09
0.11
1.33
2.16
3.15
3.45
1.12
2.10
2.73
2.88
1.12
2.10
2.73
2.88
Curnt NAV
3,731
Curnt Discnt
-23.6%
1.06
1.29
2.90
2.50
0.39
0.67
1.60
2.20
0.57
0.74
1.02
0.82
0.30
0.41
0.75
0.65
7.46
9.51
15.15
12.25
1.64
2.16
2.80
2.70
1.96
3.05
3.25
3.35
0.32
1.64
2.15
2.45
3.8
6.0
5.2
9.8
9.1
8.1
9.6
10.8
9.8
4.5
6.6
6.2
5.8
7.2
7.2
6.6
5.8
5.3
4.9
6.2
6.9
6.3
10.1
8.8
17.5
12.0
11.0
10.5
8.1
7.7
9.2
7.1
6.7
NM
NM
NM
16.7
7.4
8.6
14.4
6.0
4.4
9.8
7.1
8.8
7.1
3.9
4.5
9.0
5.7
7.0
12.2
9.4
9.8
9.8
9.2
8.9
23.7
18.0
15.8
3.91
5.82
3.70
4.30
1.94
1.61
1.75
1.95
2.57
2.79
2.86
3.16
5.44
8.21
5.88
5.97
2.54
2.45
1.88
2.05
7.31
4.90
5.55
6.05
9.90
11.93
9.62
8.75
0.16
0.15
0.09
0.11
1.26
2.31
3.15
3.45
1.09
1.92
2.73
2.88
1.09
1.92
2.73
2.88
NM
NM
NM
NM
1.06
1.29
2.90
2.50
0.39
0.67
1.60
2.20
0.56
0.74
1.02
0.82
0.30
0.41
0.75
0.65
7.46
9.51
15.15
12.25
1.44
2.36
3.25
3.20
1.24
2.00
2.90
2.97
0.32
1.64
2.15
2.45
3.8
6.0
5.2
9.8
9.1
8.1
11.0
10.7
9.7
4.0
5.6
5.5
6.0
7.8
7.2
6.6
5.8
5.3
5.0
6.3
6.9
6.3
10.1
8.8
16.4
12.0
11.0
11.5
8.1
7.7
10.0
7.1
6.7
NM
NM
NM
16.7
7.4
8.6
14.4
6.0
4.4
9.8
7.1
8.8
7.1
3.9
4.5
9.0
5.7
7.0
11.2
8.2
8.3
14.9
10.3
10.1
23.7
18.0
15.8
613
1,709
2,163
2,384
1,730
2,014
2,141
2,369
1,579
1,902
1,971
2,061
1,884
2,239
1,936
1,925
1,908
1,954
2,209
2,327
6,699
5,575
6,973
7,542
5,678
7,222
5,630
5,374
2,047
2,189
1,458
1,681
895
2,163
2,907
3,195
3,522
6,051
8,405
9,061
3,522
6,051
8,405
9,061
NM
NM
NM
NM
777
1,072
2,426
1,998
163
242
628
1,111
1,329
1,634
2,375
1,881
1,952
2,621
3,856
3,280
1,005
2,376
3,618
3,009
439
543
594
535
2,538
3,557
4,131
4,312
130
168
248
269
4.6
3.6
3.3
5.8
5.5
5.0
5.5
5.3
5.1
3.7
4.3
4.3
6.1
5.4
5.1
5.6
4.5
4.2
2.6
3.3
3.5
4.3
6.4
5.5
10.3
7.7
7.0
9.9
7.1
6.6
8.7
6.3
5.8
NM
NM
NM
8.8
3.9
4.7
13.3
5.1
2.9
4.3
2.9
3.7
4.3
2.9
3.4
5.7
3.7
4.5
6.0
5.5
6.1
8.5
7.3
7.0
12.7
8.6
7.9
NA
NA
748
897
NA
1,033
1,124
1,513
380
1,206
1,086
1,243
1,230
1,217
1,355
1,106
665
1,499
841
1,108
3,775
3,346
2,813
3,687
3,184
3,749
2,975
2,945
1,434
954
715
1,021
253
899
1,074
1,299
2,892
4,398
5,710
6,383
2,892
4,398
5,710
6,383
NM
NM
NM
NM
370
456
1,095
1,410
115
176
496
857
1,110
1,056
1,233
1,386
893
1,335
1,722
1,839
574
1,380
2,008
1,791
182
194
283
276
1,512
2,013
2,307
2,544
(320)
(225)
585
262
NA
NA
17%
20%
NA
10%
11%
15%
5%
15%
14%
16%
17%
17%
19%
15%
7%
15%
9%
11%
17%
15%
12%
16%
17%
20%
16%
16%
15%
10%
7%
10%
1%
4%
5%
6%
5%
8%
11%
12%
6%
9%
12%
14%
NM
NM
NM
NM
4%
5%
11%
14%
3%
5%
15%
25%
16%
15%
17%
19%
12%
18%
23%
24%
5%
11%
16%
14%
5%
6%
8%
8%
7%
10%
11%
12%
-25%
-17%
45%
20%
1,599
4,448
6,394
6,762
4.0%
4,260
5,479
6,404
7,105
6.2%
3,356
4,131
4,121
4,459
6.1%
4,188
5,367
5,780
5,865
6.9%
6,967
8,894
10,747
11,170
3.2%
22,197
28,132
36,633
38,606
2.5%
17,288
21,189
20,513
20,541
2.9%
5,036
5,792
5,141
5,543
6.9%
4,136
6,736
7,917
8,606
2.0%
8,066
12,792
17,047
18,862
3.4%
8,066
12,792
17,047
18,862
3.9%
NM
NM
NM
NM
NM
1,259
2,598
4,845
4,189
3.5%
261
359
794
1,521
0.0%
1,909
2,445
3,225
2,647
3.5%
4,206
5,193
6,240
5,779
10.1%
1,716
4,113
5,447
4,914
13.7%
316
345
427
452
2.5%
8,149
15,321
18,198
18,535
2.5%
1,175
1,731
1,728
1,855
0.0%
Source: Bear, Stearns & Co. Inc. estimates. Target prices are for year-end 2006. ^ Pro forma post-transaction.
24-Jul-06
BSC Rating
Ticker
ADRs/Shares, mm
Total Debt
Minority Interest
Enterprise Value
Revenue Growth
2004A
2005A
2006E
2007E
EBITDA Growth
2005A
2006E
2007E
EBITDA Margin
2004A
2005A
2006E
2007E
Net Margin
2004A
2005A
2006E
2007E
Effective Tax Rate
2004A
2005A
2006E
2007E

CSN
22.30
15.85
30.72
Outperf.
TX
ARCE3
SID
200
648
258
$4,471
$10,264
$7,931
1,752
1,663
4,062
2,493
450
0
903
618
1,494
$7,812
$11,758
$10,500
Usiminas
Gerdau
33.01
14.66
Outperf. Peer Perf.
USIM5
GGB
219
665
$7,242
$9,745
1,564
3,674
41
961
602
2,532
$8,245
$11,848
Mittal
32.15
Outperf.
MT
704
$22,634
8,350
2,589
2,151
$31,422
Posco China Steel

Tenaris
60.23
0.94
37.81
PKX
2002 TT
TS
311
10,545
590
$18,716
$9,889
$22,317
3,662
573
969
380
0
295
3,141
1,138
1,209
$19,617
$9,323
$22,373
CVRD-ON
22.14
Outperf.
RIO
2,431
$53,822
6,024
924
994
$59,776
CVRD-PN
19.29
Outperf.
RIO-P
2,431
$46,894
6,024
924
994
$52,848
Bradespar
32.59
Outperf.
BRAP4
87
$2,849
101
0
88
$2,861

21.58
9.60
7.23
2.93
Outperf.
Peer Perf.
Peer Perf.
Outperf.
KAZ
SMCV PE
ANTO GMEXICOB
467
350
986
2,595
$10,088
$3,361
$7,129
$7,608
208
20
465
1,705
26
0
721
3,156
880
159
1,317
1,208
$9,442
$3,222
$6,999
$11,260
SCopper^
85.74
Outperf.
PCU
147
$12,623
1,172
12
371
$13,436
Bventura
Cemex
ICA
26.46
29.92
38.68
BVN
CX
ICA
127
705
34
$3,366
$21,094
$1,298
6
9,370
1,015
33
543
390
150
908
570
$3,256
$30,099
$2,134
NM
178%
44%
6%
NM
29%
17%
11%
48%
23%
0%
8%
48%
28%
8%
1%
54%
28%
21%
4%
NM
27%
30%
5%
43%
23%
-3%
0%
34%
15%
-11%
8%
30%
63%
18%
9%
51%
59%
33%
11%
51%
59%
33%
11%
NM
NM
NM
NM
50%
106%
87%
-14%
66%
38%
121%
92%
77%
28%
32%
-18%
69%
23%
20%
-7%
115%
140%
32%
-10%
35%
9%
24%
6%
14%
88%
19%
2%
38%
47%
0%
7%
179%
27%
10%
16%
6%
11%
20%
4%
5%
19%
-14%
-1%
2%
13%
5%
-17%
25%
8%
27%
-22%
-5%
7%
-33%
15%
142%
34%
10%
72%
39%
8%
72%
39%
8%
NM
NM
NM
38%
126%
-18%
49%
159%
77%
23%
45%
-21%
34%
47%
-15%
136%
52%
-17%
24%
9%
-10%
40%
16%
4%
30%
48%
9%
38%
38%
34%
35%
41%
37%
33%
33%
47%
46%
48%
46%
45%
42%
33%
33%
27%
22%
21%
21%
30%
20%
19%
20%
33%
34%
27%
26%
41%
38%
28%
30%
22%
32%
37%
37%
44%
47%
49%
48%
44%
47%
49%
48%
NM
NM
NM
NM
62%
41%
50%
48%
62%
67%
79%
73%
70%
67%
74%
71%
46%
50%
62%
57%
59%
58%
66%
61%
47%
38%
32%
32%
31%
23%
23%
23%
11%
10%
14%
14%
29%
16%
12%
13%
30%
19%
18%
18%
20%
20%
18%
18%
25%
30%
19%
20%
17%
13%
13%
12%
21%
12%
11%
11%
19%
18%
15%
14%
31%
27%
19%
21%
19%
19%
23%
24%
32%
38%
39%
38%
32%
38%
39%
38%
NM
NM
NM
NM
34%
21%
28%
28%
34%
65%
70%
51%
29%
30%
31%
31%
19%
21%
31%
29%
35%
34%
38%
37%
66%
80%
83%
76%
16%
14%
13%
13%
1%
3%
4%
4%
19%
17%
28%
30%
3%
20%
25%
25%
29%
30%
34%
34%
32%
26%
27%
28%
26%
28%
28%
28%
13%
17%
23%
25%
28%
25%
27%
29%
23%
23%
23%
23%
27%
31%
32%
32%
25%
16%
20%
20%
25%
16%
16%
20%
NM
NM
NM
NM
34%
35%
38%
35%
32%
-11%
0%
20%
21%
20%
22%
24%
30%
30%
29%
28%
34%
30%
32%
32%
47%
38%
32%
32%
14%
14%
16%
16%
104%
40%
40%
40%
Source: Bear, Stearns & Co. Inc. ^ Pro forma post-transaction.
Page 13
Page 14
24-Jul-06
BSC Rating
Ticker
ADRs/Shares, mm
Total Debt
Minority Interest
Enterprise Value
Total Sales Volume

2004A
2005A
2006E
2007E
Growth %
2004A
2005A
2006E
2007E
Home Market Volume (000s)
2004A
2005A
2006E
2007E
Growth %
2004A
2005A
2006E
2007E
Core Rev./Ton or Unit (USD)
2004A
2005A
2006E
2007E
Growth %
2004A
2005A
2006E
2007E

CSN
22.30
15.85
30.72
Outperf.
TX
ARCE3
SID
200
648
258
$4,471
$10,264
$7,931
1,752
1,663
4,062
2,493
450
0
903
618
1,494
$7,812
$11,758
$10,500
Usiminas
Gerdau
33.01
14.66
Outperf. Peer Perf.
USIM5
GGB
219
665
$7,242
$9,745
1,564
3,674
41
961
602
2,532
$8,245
$11,848
Mittal
32.15
Outperf.
MT
704
$22,634
8,350
2,589
2,151
$31,422
Posco China Steel

Tenaris
60.23
0.94
37.81
PKX
2002 TT
TS
311
10,545
590
$18,716
$9,889
$22,317
3,662
573
969
380
0
295
3,141
1,138
1,209
$19,617
$9,323
$22,373
CVRD-ON
22.14
Outperf.
RIO
2,431
$53,822
6,024
924
994
$59,776
CVRD-PN
19.29
Outperf.
RIO-P
2,431
$46,894
6,024
924
994
$52,848
Bradespar
32.59
Outperf.
BRAP4
87
$2,849
101
0
88
$2,861

21.58
9.60
7.23
2.93
Outperf.
Peer Perf.
Peer Perf.
Outperf.
KAZ
SMCV PE
ANTO GMEXICOB
467
350
986
2,595
$10,088
$3,361
$7,129
$7,608
208
20
465
1,705
26
0
721
3,156
880
159
1,317
1,208
$9,442
$3,222
$6,999
$11,260
SCopper^
85.74
Outperf.
PCU
147
$12,623
1,172
12
371
$13,436
Bventura
Cemex
ICA
26.46
29.92
38.68
BVN
CX
ICA
127
705
34
$3,366
$21,094
$1,298
6
9,370
1,015
33
543
390
150
908
570
$3,256
$30,099
$2,134
2.7
6.1
9.2
9.6
9.0
8.8
10.5
12.2
4.7
4.9
4.6
4.9
8.1
7.3
7.9
8.0
11.8
12.8
14.4
15.3
38.2
44.6
59.6
63.2
29.2
29.1
28.9
29.9
10.4
9.8
9.6
10.3
3.0
3.4
3.4
3.5
231.0
255.2
279.2
313.7
231.0
255.2
279.2
313.7
NM
NM
NM
NA
386.0
370.0
415.0
435.8
89.0
93.2
120.0
275.0
500.7
460.5
441.7
437.9
1,353.0
797.8
655.0
690.0
392.2
698.5
655.0
690.0
353.3
348.6
369.6
399.9
65.8
NA
NA
NA
NM
NM
NM
NM
NM
122%
51%
5%
NM
-2%
19%
16%
-7%
5%
-6%
7%
5%
-9%
7%
2%
4%
9%
13%
6%
NM
17%
34%
6%
4%
0%
-1%
3%
0%
-6%
-2%
8%
12%
14%
-1%
5%
24%
10%
9%
12%
24%
10%
9%
12%
NM
NM
NM
NA
-8%
-4%
12%
5%
3%
5%
29%
129%
5%
-8%
-4%
-1%
6%
-41%
-18%
5%
5%
78%
-6%
5%
13%
-1%
6%
8%
2%
NA
NA
NA
NM
NM
NM
NM
NA
NA
NA
NA
NA
NA
NA
NA
3.4
2.9
2.9
3.0
5.8
4.9
5.2
5.5
6.6
6.3
6.9
7.4
NM
NM
NM
NM
21.9
21.1
20.2
20.6
7.9
7.5
7.5
8.0
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
17.0
17.1
18.2
18.2
NM
NM
NM
NM
NA
NA
NA
NA
NA
NA
NA
NA
11%
-14%
0%
5%
8%
-14%
6%
5%
1%
-5%
9%
7%
NM
NM
NM
NM
3%
-3%
-4%
2%
2%
-5%
-1%
8%
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
2%
1%
6%
0%
NM
NM
NM
NM
582
730
697
702
473
621
611
583
626
833
830
803
520
730
734
733
593
693
744
732
528
572
558
554
592
728
710
687
483
591
536
536
1,223
1,771
2,084
2,174
204
227
250
280
204
227
250
280
NM
NM
NM
NA
1.30
1.68
3.00
2.40
1.33
1.75
3.00
2.40
1.41
1.88
2.80
2.40
1.29
1.68
2.75
2.40
1.30
1.68
2.75
2.40
409
445
580
625
NA
NA
NA
NA
NM
NM
NM
NM
NM
25%
-5%
1%
NM
31%
-2%
-5%
48%
33%
0%
-3%
48%
40%
0%
0%
48%
17%
7%
-2%
NM
8%
-2%
-1%
38%
23%
-2%
-3%
33%
22%
-9%
0%
18%
45%
18%
4%
25%
11%
10%
12%
25%
11%
10%
12%
NM
NM
NM
NA
61%
29%
78%
-20%
62%
31%
72%
-20%
97%
33%
49%
-14%
59%
30%
64%
-13%
60%
29%
64%
-13%
12%
9%
30%
8%
NA
NA
NA
NA
NM
NM
NM
NM
Source: Bear, Stearns & Co. Inc. ^ Pro forma post-transaction.
24-Jul-06
BSC Rating
Ticker
ADRs/Shares, mm
Total Debt
Minority Interest
Enterprise Value
Majority BV
P/BV
Debt/Total Cap
Net Debt/Total Cap
Net Debt/EBITDA
2004A
2005A
2006E
2007E

CSN
22.30
15.85
30.72
Outperf.
TX
ARCE3
SID
200
648
258
$4,471
$10,264
$7,931
1,752
1,663
4,062
2,493
450
0
903
618
1,494
$7,812
$11,758
$10,500
3,146.4
5,197
3,106.1
1.42
1.97
2.55
24%
23%
57%
11%
14%
36%
1.4
0.5
0.4
0.4
Usiminas
Gerdau
33.01
14.66
Outperf. Peer Perf.
USIM5
GGB
219
665
$7,242
$9,745
1,564
3,674
41
961
602
2,532
$8,245
$11,848
4,203.9
4,034.9
1.72
2.42
27%
42%
17%
13%
Mittal
32.15
Outperf.
MT
704
$22,634
8,350
2,589
2,151
$31,422
10,876.0
2.08
38%
28%
Posco China Steel

Tenaris
60.23
0.94
37.81
PKX
2002 TT
TS
311
10,545
590
$18,716
$9,889
$22,317
3,662
573
969
380
0
295
3,141
1,138
1,209
$19,617
$9,323
$22,373
19,725
6,473.4
3,960.5
0.95
1.53
5.63
15%
8%
19%
2%
-8%
-5%
CVRD-ON
22.14
Outperf.
RIO
2,431
$53,822
6,024
924
994
$59,776
16,555.0
3.25
26%
21%
CVRD-PN
19.29
Outperf.
RIO-P
2,431
$46,894
6,024
924
994
$52,848
16,555.0
2.83
26%
21%
Bradespar
32.59
Outperf.
BRAP4
87
$2,849
101
0
88
$2,861
501.5
5.68
17%
2%

21.58
9.60
7.23
2.93
Outperf.
Peer Perf.
Peer Perf.
Outperf.
KAZ
SMCV PE
ANTO GMEXICOB
467
350
986
2,595
$10,088
$3,361
$7,129
$7,608
208
20
465
1,705
26
0
721
3,156
880
159
1,317
1,208
$9,442
$3,222
$6,999
$11,260
2,599.8
880.0
2,041.7
2,048.8
3.88
3.82
3.49
3.71
7%
2%
14%
25%
-24%
-15%
-26%
7%
SCopper^
85.74
Outperf.
PCU
147
$12,623
1,172
12
371
$13,436
3,027.5
4.17
28%
19%
Bventura
Cemex
ICA
26.46
29.92
38.68
BVN
CX
ICA
127
705
34
$3,366
$21,094
$1,298
6
9,370
1,015
33
543
390
150
908
570
$3,256
$30,099
$2,134
939.0 10,221.3
807.5
3.58
2.06
1.61
1%
47%
46%
NM
42%
20%
0.6
0.5
0.5
0.4
1.6
1.4
1.3
1.2
0.5
0.4
0.5
0.5
0.6
0.6
0.5
0.5
0.9
1.1
0.9
0.8
0.1
0.1
0.1
0.1
NM
NM
NM
NM
NM
NM
NM
NM
1.4
0.8
0.6
0.6
1.4
0.8
0.6
0.6
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
0.3
0.2
0.1
0.2
0.8
0.3
0.2
0.3
NM
NM
NM
NM
3.3
2.4
2.0
2.0
3.4
2.7
1.8
1.7
13%
10%
11%
10%
13%
14%
14%
14%
16%
13%
14%
14%
12%
9%
10%
11%
9%
8%
9%
9%
11%
10%
9%
9%
3%
2%
3%
3%
23%
22%
22%
22%
13%
13%
13%
13%
13%
13%
13%
13%
NM
NM
NM
NM
10%
8%
8%
8%
0%
0%
0%
0%
16%
18%
17%
16%
14%
9%
10%
11%
18%
9%
12%
12%
7%
8%
6%
6%
5%
10%
10%
10%
34%
26%
26%
26%
18%
19%
20%
20%
25%
20%
22%
18%
18%
20%
24%
23%
23%
19%
17%
18%
18%
21%
18%
18%
12%
13%
14%
14%
16%
19%
23%
22%
31%
20%
18%
18%
11%
9%
8%
8%
11%
9%
8%
8%
NM
NM
NM
NM
23%
15%
12%
13%
10%
8%
10%
7%
4%
4%
3%
4%
16%
8%
10%
11%
6%
10%
5%
5%
7%
8%
7%
7%
8%
7%
7%
7%
10%
4%
5%
5%
NA
225
259
302
120
105
158
169
114
181
120
380
250
240
429
454
NA
800
1,313
1,394
1,200
1,200
1,200
1,280
156
336
332
207
183
284
400
400
568
757
1,000
1,050
568
757
1,000
1,050
NM
NM
NM
NM
100
130
145
158
17
50
75
75
77
223
560
250
451
667
580
580
172
440
450
450
41
37
45
45
400
785
750
750
96
58
90
90
Accounts Rec./Revenue
2004A
24%
2005A
17%
2006E
14%
2007E
14%
Inventory/Revenue
2004A
16%
2005A
22%
2006E
16%
2007E
15%
Maintenance Capex
2004A
NA
2005A
NA
2006E
120
2007E
120
Maintenance Capex/Revenue
2004A
NA
2005A
0%
2006E
2%
2007E
2%
Share Performance
52 Week High
28.49
52 Week Low
20.00
% Chng from 52 Wk High
-22%
% Chng from 52 Wk Low
12%
NA
4%
4%
4%
4%
3%
4%
4%
3%
3%
2%
6%
4%
3%
4%
4%
NA
3%
4%
4%
7%
6%
6%
6%
3%
6%
6%
4%
4%
4%
5%
5%
7%
6%
6%
6%
7%
6%
6%
6%
NM
NM
NM
NM
8%
5%
3%
4%
6%
14%
9%
5%
4%
9%
17%
9%
11%
13%
9%
10%
10%
11%
8%
9%
13%
11%
11%
10%
5%
5%
4%
4%
8%
3%
5%
5%
19.07
11.22
-17%
41%
37.38
17.24
-18%
78%
42.42
15.02
-22%
120%
18.10
6.25
-19%
134%
42.28
23.71
-24%
36%
74.41
47.85
-19%
26%
1.01
0.70
-7%
35%
48.26
17.30
-22%
119%
29.09
15.90
-24%
39%
24.20
13.53
-20%
43%
43.22
18.38
-25%
77%
25.79
10.02
-16%
115%
10.00
3.83
-4%
151%
9.61
4.46
-25%
62%
3.64
1.70
-20%
73%
105.85
47.44
-19%
81%
31.31
22.75
-15%
16%
35.85
21.52
-17%
39%
44.49
25.08
-13%
54%
Type of Shares (ADRs)

ADR Ratio
Free Float %
Free Float US$ mn
Local
NM
34.0%
3,490
NYSE
1:1
57.2%
4,538
144-A
1:1
70.6%
5,113
NYSE
1:1
54.0%
5,262
NYSE
1:1
12.0%
2,716
NYSE
1:4
90.6%
16,951
Local
NM
60.3%
5,963
NYSE
10:1
39.8%
8,871
NYSE
1:1
59.8%
32,186
NYSE
1:1
59.8%
28,043
Local
NM
71.6%
2,040
London
NM
33.0%
3,329
Local
NM
6.9%
232
London
NM
35.0%
2,495
Local
NM
30.0%
2,282
NYSE
NM
24.9%
3,143
NYSE
1:1
71.0%
2,391
NYSE
10:1
93.7%
19,756
NYSE
12:1
86.0%
1,117
NYSE
10:1
14.0%
626
Source: Bear, Stearns & Co. Inc. estimates. ^ Pro forma post-transaction.
Page 15
Page 16
Exhibit 9. Global Steel & Mining Comparables (All Figures in US$)

24-Jul-06
BSC Rating
Ticker
ADRs/Shares, mm
Market Cap.
Net Debt
Minority Interest
Enterprise Value
Arcelor Brasil
CSN Usiminas
Gerdau
15.85
30.72
33.01
14.66
Peer Perf. Peer Perf. Outperf. Peer Perf.
ARCE3
SID
USIM5
GGB
648
258
219
665
$10,264
$7,931
$7,242
$9,745
1,045
2,568
961
1,142
450
0
41
961
$11,758
$10,500
$8,245
$11,848
Revenues
2005A
2006E
2007E
EBITDA
2005A
2006E
2007E
EBITDA Mg
2005A
2006E
2007E
EV/EBITDA
2005A
2006E
2007E
EPS or EPADR (Adj)**
2005A
2006E
2007E
P/E
2005A
2006E
2007E
Sales Volume (mmt)
2005A
2006E
2007E
EV/ton
2005A
2006E
2007E
Ternium
22.30
Outperf.
TX
200
$4,471
849
2,493
$7,812
Mittal
32.15
Outperf.
MT
704
$22,634
6,199
2,589
$31,422
Nucor US Steel
50.19
59.86
Outperf. Peer Perf.
NUE
X
313
126
$15,727
$7,516
(1,231)
1,534
201
31
$14,698
$9,081
Arcelor *
49.94
NR
LOR FP
665
$33,197
6,997
3,251
$43,445
China Stl
0.94
Peer Perf.
2002 TT
10,545
$9,889
(565)
0
$9,323
Posco Nippon Stl*

60.23
3.87
Outperf.
NR
PKX
5401.JP
311
6,733
$18,716
$26,022
521
9,032
380
884
$19,617
$35,938
JFE*
39.51
NR
5411.JP
586
$23,143
9,597
319
$33,059
CVRD-ON
22.14
Outperf.
RIO
2,431
$53,822
5,030
924
$59,776
CVRD-PN
19.29
Outperf.
RIO-P
2,431
$46,894
5,030
924
$52,848
BHP*
42.32
NR
BHP
3,018
$127,701
8,722
292
$136,715
Rio Tinto* Anglo Am.*

199.68
19.77
NR
NR
RTP
AAUK
562
3,014
$69,397
$59,592
1,601
5,009
791
3,957
$71,789
$68,558
Kumba*
18.55
NR
KMB SJ
305
$5,655
220
0
$5,875
5,479
6,404
7,105
4,131
4,121
4,459
5,367
5,780
5,865
8,894
10,747
11,170
4,448
6,394
6,762
28,132
36,633
38,606
12,695
12,838
13,049
14,013
15,669
15,106
40,581
49,359
48,791
5,792
5,141
5,543
21,189
20,513
20,541
34,499
34,052
34,276
27,364
26,931
26,987
12,792
17,047
18,862
12,792
17,047
18,862
31,804
36,649
38,930
19,033
24,841
23,429
29,434
35,387
35,706
1,879
2,223
2,415
2,014
2,141
2,369
1,902
1,971
2,061
2,239
1,936
1,925
1,954
2,209
2,327
1,709
2,163
2,384
5,575
6,973
7,542
2,485
2,487
2,417
2,026
2,384
2,072
7,020
7,836
7,817
2,189
1,458
1,681
7,222
5,630
5,374
6,709
6,136
6,157
6,113
5,856
5,844
6,051
8,405
9,061
6,051
8,405
9,061
11,446
17,754
20,218
8,256
12,819
12,352
8,959
11,679
11,411
713
975
1,057
37%
33%
33%
46%
48%
46%
42%
33%
33%
22%
21%
21%
38%
34%
35%
20%
19%
20%
20%
19%
19%
14%
15%
14%
17%
16%
16%
38%
28%
30%
34%
27%
26%
19%
18%
18%
22%
22%
22%
47%
49%
48%
47%
49%
48%
36%
48%
52%
43%
52%
53%
30%
33%
32%
38%
44%
44%
5.8
5.5
5.0
5.5
5.3
5.1
3.7
4.3
4.3
6.1
5.4
5.1
4.6
3.6
3.3
5.6
4.5
4.2
5.9
5.9
6.1
4.5
3.8
4.4
6.2
5.5
5.6
4.3
6.4
5.5
2.6
3.3
3.5
5.4
5.9
5.8
5.4
5.6
5.7
9.9
7.1
6.6
8.7
6.3
5.8
11.9
7.7
6.8
8.7
5.6
5.8
7.7
5.9
6.0
8.2
6.0
5.6
1.61
1.75
1.95
2.79
2.86
3.16
8.21
5.88
5.97
2.45
1.88
2.05
5.82
3.70
4.30
4.90
5.55
6.05
4.11
5.35
4.45
7.05
9.29
5.90
7.79
6.32
6.21
0.15
0.09
0.11
12.37
9.75
8.75
0.45
0.39
0.40
4.66
4.25
4.32
1.92
2.73
2.88
1.92
2.73
2.88
2.09
3.06
3.87
9.27
22.79
21.53
2.43
1.97
1.92
1.65
1.82
2.16
9.8
9.1
8.1
11.0
10.7
9.7
4.0
5.6
5.5
6.0
7.8
7.2
3.8
6.0
5.2
6.6
5.8
5.3
12.2
9.4
11.3
8.5
6.4
10.1
6.4
7.9
8.0
6.3
10.1
8.8
4.9
6.2
6.9
8.6
10.0
9.8
8.5
9.3
9.1
11.5
8.1
7.7
10.0
7.1
6.7
20.2
13.8
10.9
21.5
8.8
9.3
8.1
10.0
10.3
11.3
10.2
8.6
8.8
10.5
12.2
4.9
4.6
4.9
7.3
7.9
8.0
12.8
14.4
15.3
6.1
9.2
9.6
44.6
59.6
63.2
18.5
18.9
19.7
17.8
20.4
20.5
42.0
42.0
42.0
9.8
9.6
10.3
29.1
28.9
29.9
29.6
29.6
29.6
27.1
27.1
27.1
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
1,333
1,121
965
2,159
2,308
2,165
1,122
1,046
1,031
923
821
776
1,283
851
811
704
527
497
793
776
746
509
446
442
1,034
1,034
1,034
951
973
902
674
679
656
1,215
1,215
1,215
1,218
1,218
1,218
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
NM
Source: Bear, Stearns & Co. Inc. estimates. * Based on consensus numbers. **Removes FX and monetary gains/losses.
Exhibit 10. Latin Steel Stock Charts, July 24, 2006

CSN ADR - USD
Arcelor Brasil Local - USD

$20
$41
$17
$32
$14
$23
$11
$14
$8
Nov- Dec- Jan- Feb- Mar- Apr- May- May- Jun- Jul05
05 06
06 06
06
06 06 06
06
Gerdau ADR - USD
Usiminas Local - USD

$20
$44
$15
$33
$10
$22
$5
$11
$0
Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul04
04
04
05
05
05
05
06
06
Ternium ADR - USD
Feb- Feb- Mar- Apr- May- May- Jun06

06
06
06
06
06
06
$5
04
04
05
05
05
05
06
06
$0
04
04
05
05
05
05
06
06
Tenaris ADR - USD
Jul06
$31
$50
$28
$38
$25
$26
$22
$14
$19
Jul06
Siderar Local - USD
$2
04
04
05
05
05
05
06
06
Acindar Local - USD

$12
$1.60
$9
$1.20
$6
$0.80
$3
$0.40
$0
04
04
05
05
05
05
06
06
$0.00
04
04
05
05
05
05
06
06
Source: Bloomberg; Bear, Stearns & Co. Inc.
Page 17
Exhibit 11. Global Steel Stock Charts, July 24, 2006

Arcelor Local - USD
Mittal ADR - USD

$44
$54
$38
$43
$32
$32
$26
$21
$20
Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul05
05
05
05
05
05
06
06
06
06
$10
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul03
04
04
04
05
05
05
05
06
06
China Steel Local - USD

$1.25
Posco ADR - USD
$76
$1.00
$62
$0.75
$48
$0.50
$34
$0.25
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul03 04 04 04 05 05 05 05 06 06
$20
Nippon Steel
Tata Iron & Steel Local - USD

$16
$4.50
$12
$3.50
$8
$2.50
$4
$1.50
$0
04
04
04 05
05
05
05
06
06
$0.50
US Steel
Nucor
78
$65
61
$50
44
$35
27
$20
10
$5
Page 18
Exhibit 12. Bloomberg Index Charts, July 24, 2006

US Mining Index
World Mining Index

300
195
250
160
200
125
150
90
100
04
04
04
05
05
05
05
06
06
55
Europe Mining Index

345
Asia Mining Index
370
275
300
205
230
135
160
65
Asia Steel Index
90
04
04
04
05
05
05
05
06
06
Japan Steel Index

290
1,350
240
1,050
190
750
140
450
90
04
04
04
05
05
05
05
06
06
150
Europe Steel Index
US Steel Index
360
305
280
245
200
185
120
125
40
04
04
04
05
05
05
05
06
06
65
Page 19
Exhibit 13. Latin Mining Stock Charts, July 24, 2006

CVRD ON ADR - USD
Feb- May- Sep- Jan- May- Aug- Dec- Apr04

04
04
05
05
05
05
06
CVRD PN ADR - USD

$32
$28
$24
$21
$16
$14
$8
$7
$0
Jul06
$0
04
04
05
05
05
05
06
06
Grupo Mexico Local - USD
Bradespar Local - USD

$45
$4
$35
$3
$25
$2
$15
$1
$5
04
04
05
05
05
05
06
06
Antofagasta - USD
$0
Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul-06
04
04
04
05
05
05
05
06
Southern Copper - USD

$10
$110
$8
$85
$6
$60
$4
$35
$2
04
04
05
05
05
05
06
06
$10
04
04
05
05
05
05
06
06
Cerro Verde Local - USD
Buenaventura ADR - USD

$32
$11.00
$28
$8.50
$24
$6.00
$20
$3.50
$16
04
04
05
05
05
05
06
06
$1.00
Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul04 04 04 05 05 05 05 06 06
Page 20
Exhibit 14. Global Mining Stock Charts, July 24, 2006

Rio Tinto ADR
BHP ADR
$52
$250
$41
$205
$30
$160
$19
$115
$8
04
04
04
05
05
05
05
06
06
$70
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul03 04 04 04 05
05 05 05 06 06
Anglo American - Local
Norilsk - Local
$1,440
$164
$1,200
$128
$960
$92
$720
$56
$480
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul03 04 04 04 05
05 05 05 06 06
$20
WMC Resources - Local
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr03

04
04
04
05
05
05
05
06
Inco Limited
$8
$73
$6
$59
$4
$45
$2
$31
$0
Jul06
$17
04
04
04
05
05
05
05
06
06
Alcan
Alcoa
$50
$61
$40
$52
$30
$43
$20
$34
$10
04
04
04
05
05
05
05
06
06
$25
04
04
04
05
05
05
05
06
06
Page 21
Exhibit 15. Global Mining Stock Charts, July 24, 2006

Xstrata - Local
Phelps Dodge
$105
$51
$82
$39
$59
$27
$36
$15
$13
Kazakhmys - Local
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr03

04
04
04
05
05
05
05
06
$3
Jul06
Freeport McMoran
Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun05

05
05
06
06
06
06
06
06
$28
$79
$23
$63
$18
$47
$13
$31
$8
Jul06
Newmont
$15
Oct- Feb- May- Sep- Jan- May- Aug- Dec- Apr- Jul03 04
04
04 05
05
05 05 06
06
Barrick Gold
$65
$37
$54
$31
$43
$25
$32
$19
$21
04
04
04
05
05
05
05
06
06
$13
04
04
04
05
05
05
05
06
06
FMG - Local
Placer Dome - Local

$27
$10.00
$22
$7.50
$17
$5.00
$12
$2.50
$7
04
04
04
05
05
05
05
06
06
$0.00
Page 22
Exhibit 16. Latin Cement & Construction Stock Charts, July 24, 2006
Cementos Lima Local - USD
Moctezuma Local - USD

$2.50
$1.50
$2.00
$1.25
$1.50
$1.00
$1.00
$0.75
$0.50
04
04
05
05
05
05
06
06
Cemex ADR - USD
$0.50
04
04
05
05
05
05
06
06
Consorcio ARA ADR - USD

$38
$57
$30
$47
$22
$37
$14
$27
$6
04
04
05
05
05
05
06
06
Consorcio Hogar ADR - USD
$17
04
04
05
05
05
05
06
06
Corporacion GEO ADR - USD

$6
$20
$5
$15
$4
$10
$3
$5
$2
04
04
05
05
05
05
06
06
$0
04
04
05
05
05
05
06
06
ICA ADR - USD
GCC ADR - USD

$4
$46
$3
$37
$2
$28
$1
$19
$0
04
04
05
05
05
05
06
06
$10
04
04
05
05
05
05
06
06
Page 23
Exhibit 17. ADR Short Interest Ratio, July 2006

Mittal
CVRD ON
12
12
9
Down 0.2 m/m

Down 0.6 y/y
0
Jul-03
Jan-04
Jul-04
Up 1.1 m/m
Up 1.9 y/y
Jan-05
Jul-05
Jan-06
Jul-06
0
Jan-05
Apr-05
Jul-05
Oct-05
CSN
12
0
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
0
Jul-03
Jan-04
Jul-04
Jan-05
Posco
Up 0.1 m/m
Down 1.2 y/y
9
6
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
0
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-06
Jul-06
Southern Copper
16
Down 0.4 m/m

Down 0.4 y/y
12
0
Jul-03
Jul-06
Up 0.5 m/m
Down 1.5 y/y
Buenaventura
4
3
Jan-06
Tenaris
0
Jul-03
Jul-05
12
8
6
Jul-06
Up 1.1 m/m
Down 0.6 y/y
Apr-06
Gerdau
12
Up 0.5 m/m
Down 1.6 y/y
Jan-06
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
0
Jul-03
Up 0.5 m/m
Up 1.4 y/y
Jan-04
Jul-04
Jan-05
Jul-05
Page 24
Exhibit 18. ADR Short Interest Ratio, July 2006

ICA
Cemex
24
12
Down 0.1 m/m

Down 0.4 y/y
Up 1.0 m/m
Down 4.4 y/y
18
12
6
.
3
0
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
0
Jul-03
Jan-04
Jul-04
BHP Billiton
Up 0.7 m/m
Down 0.9 y/y
Jul-06
10
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Up 0.3 m/m
Down 2.7 y/y
15
Jul-06
0
Jul-03
Jan-04
Jul-04
Jan-05
Nucor
Jul-05
Jan-06
Jul-06
US Steel
12
Up 0.5 m/m
Down 0.5 y/y
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Up 0.7 m/m
Down 1.2 y/y
Jul-06
0
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Newmont Mining
Phelps Dodge
8
Down 0.1 m/m

Down 1.8 y/y
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Up 0.8 m/m
Down 0.8 y/y
0
Jul-03
Jan-06
20
0
Jul-03
Jul-05
Rio Tinto
0
Jul-03
Jan-05
Jul-06
0
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Page 25
Exhibit 19. Stock Performance vs. Domestic Index, July 24, 2006
Arcelor Brasil Local (USD) vs Bovespa (USD)
20,700
CSN ADR vs Bovespa (USD)

$20
Arcelor Brasil
21,000
Bovespa
$40
CSN
Bovespa
18,900
$17
16,500
$30
17,100
$14
12,000
$20
15,300
$11
7,500
$10
13,500
21,000
$8
Dec-05 Jan-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06
Gerdau ADR vs Bovespa (USD)
Gerdau
3,000
$20
Bovespa
21,000
$0
Oct-03 Apr-04 Sep-04 Mar-05 Aug-05 Feb-06 Jul-06
Usiminas Local (USD) vs Bovespa (USD)
Usiminas
$44
Bovespa
$15
16,500
$33
12,000
$10
12,000
$22
7,500
$5
7,500
$11
3,000
$0
3,000
16,500
Posco ADR vs Kospi (USD)
$0
China Steel (USD) vs TWSE (USD)
$80
270
1.40
$65
230
$1
1.10
$50
190
$1
0.80
$35
150
$1
0.50
$20
110
$0
1.70
Posco
160
Kospi
China Steel
Nippon (USD) vs Nikkei 225 (USD)

Nippon
$5
160
Nikkei 225
TWSE
JFE (USD) vs Nikkei 225 (USD)

JFE
$1
$50
Nikkei 225
135
$4
135
$40
110
$3
110
$30
85
$2
85
$20
60
$1
60
$10
Page 26
Mittal ADR vs S&P 500
1,340
US Steel vs S&P 500

$44
Mittal
1,350
$80
S&P
US Steel
S&P
1,280
$38
1,250
$60
1,220
$32
1,150
$40
1,160
$26
1,050
$20
1,100
$20
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06
950
$0
Ternium ADR vs Merval (USD)
Tenaris ADR vs Merval (USD)
$31
650
600
$28
540
$38
550
$25
430
$26
500
$22
320
$14
450
$19
Feb-06 Mar-06 Apr-06 Apr-06 May-06 Jun-06 Jun-06 Jul-06
210
650
Ternium
Merval
CVRD ADR vs Bovespa (USD)
Tenaris
$50
Merval
$2
BHP ADR vs ASX 200 (USD)
$32
4,300
16,500
$24
3,700
$40
12,000
$16
3,100
$30
7,500
$8
2,500
$20
3,000
$0
1,900
$10
21,000
CVRD
3,650
RTP ADR vs FTSE 100 (USD)

RTP
BHP
Bovespa
$250
$50
ASX 200
Anglo American ADR vs FTSE 100 (USD)

3,650
FTSE 100
$25
Anglo American
FTSE 100
3,300
$200
3,300
$20
2,950
$150
2,950
$15
2,600
$100
2,600
$10
2,250
$50
2,250
$5
Page 27
Grupo Mexico Local vs Bolsa (USD)
2,100
S. Copper ADR vs Lima Index (USD)

$3.80
Grupo Mexico
Bolsa
3,100
$110
Southern Copper
Lima Index
1,700
$2.90
2,400
$85
1,300
$2.00
1,700
$60
900
$1.10
1,000
$35
500
$0.20
300
$10
Kazakhmys vs FTSE 100 (USD)
Antofagasta vs IPSA (USD)

$10
3,600
$8
3,400
$22
$6
3,200
$17
$4
3,000
$12
$2
2,800
5
Antofagasta
3,100
Kazakhmys
Cerro Verde vs Lima Index (USD)

Cerro Verde
$27
IPSA
$12
Oct-05
3,100
Lima Index
Dec-05
FTSE
Mar-06
May-06
$7
Jul-06
Buenaventura ADR vs Lima Index (USD)

Buenaventura
$34
Lima Index
2,400
$9
2,400
$28
1,700
$6
1,700
$22
1,000
$3
1,000
$16
300
$0
300
$10
2100
Cemex ADR vs Bolsa (ADR)

Cemex
$40
ICA ADR vs Bolsa (USD)

2,100
Bolsa
$46
ICA
Bolsa
1700
$31
1,700
$36
1300
$22
1,300
$26
900
$13
900
$16
500
$4
500
$6
Page 28
Exhibit 22. Stock Performance vs. Bloomberg Industry Index, July 24, 2006
Arcelor Brasil Local (USD) vs US Steel Index
360
CSN ADR vs US Steel Index

$20
Arcelor Brasil
350
$40
US Steel Index
CSN
US Steel Index
310
$17
275
$30
260
$14
200
$20
210
$11
125
$10
160
Nov-05 Dec-05 Feb-06 Mar-06 May-06 Jun-06
Gerdau ADR vs US Steel Index
$8
Jul-06
50
Oct-03 Apr-04 Sep-04 Mar-05 Aug-05 Feb-06
Usiminas Local (USD) vs US Steel Index
$0
Jul-06
$20
350
275
$15
275
$37
200
$10
200
$26
125
$5
125
$15
50
$0
50
350
Gerdau
Posco ADR vs Asia Steel Index
300
Posco
Usiminas
US Steel Index
US Steel Index
$80
China Steel Local vs Asia Steel Index
300
Asia Steel Index
China Steel
$48
$4
Jul-06
$1.50
Asia Steel Index
250
$65
250
$1.25
200
$50
200
$1.00
150
$35
150
$0.75
100
$20
100
$0.50
1,200
Nippon Local vs Japan Steel Index

Nippon
800
600
400
Oct-03
1,200
$4
1,000
$39
$3
800
$31
$2
600
$23
$1
Jul-06
400
$15
Japan Steel Index
1,000
Apr-04 Sep-04 Mar-05 Aug-05 Feb-06
JFE Local vs Japan Steel Index
$5
JFE
$47
Japan Steel Index
Page 29
Mittal ADR vs US Steel Index
US Steel vs US Steel Index
370
$44
Mittal
370
$83
US Steel
US Steel Index
US Steel Index
310
$38
290
$66
250
$32
210
$49
190
$26
130
$32
130
$20
Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06
50
$15
Ternium ADR vs US Steel Index
385
Tenaris ADR vs US Steel Index
$32
370
345
$29
290
$38
305
$26
210
$26
265
$23
130
$14
225
$20
Feb-06 Mar-06 Apr-06 May-06 May-06 Jun-06 Jul-06
50
Ternium
300
Tenaris
US Steel Index
CVRD ADR vs World Mining Index

CVRD ON
$30
US Steel Index
300
$2
Jul-06
BHP ADR vs World Mining Index

BHP
World Mining Index
$50
$50
World Mining Index
250
$23
250
$40
200
$16
200
$30
150
$9
150
100
$2
100
300
Rio Tinto ADR vs World Mining Index

Rio Tinto
$260
300
$10
Anglo American ADR vs World Mining Index

Anglo American
World Mining Index
$20
$24
World Mining Index
250
$215
250
$20
200
$170
200
$16
150
$125
150
$12
100
$80
100
$8
Page 30
G. Mexico (USD) vs World Mining Index
Southern Copper vs World Mining Index
300
$4
Grupo Mexico
300
$115
PCU
World Mining Index
World Mining Index
250
$3
250
$90
200
$2
200
$65
150
$1
150
$40
$0
Jul-06
100
$15
100
Antofagasta (USD) vs World Mining Index
300
Antofagasta
$10
Kazakhmys (USD) vs World Mining Index
300
Kazakhmys
World Mining Index
$29
World Mining Index
250
$8
260
$23
200
$6
220
$17
150
$4
180
$11
100
$2
140
Cerro Verde (USD) vs World Mining Index
Oct-05
Dec-05
Feb-06
Apr-06
May-06
$5
Jul-06
Buenaventura ADR vs World Mining Index
$12
300
250
$9
250
$30
200
$6
200
$25
150
$3
150
$20
100
$0
100
$15
300
Cerro Verde
World Mining Index
Cemex vs World Bldg Materials Index
Buenaventura
$35
World Mining Index
ICA vs US E&C Index
$38
300
205
$31
250
$35
170
$24
200
$25
135
$17
150
$15
100
$10
100
240
Cemex
World Bldg Materials Index
ICA
$45
US E&C Index
$5
Page 31
Exhibit 25. Stock Performance vs. Domestic Currency, July 24, 2006
CSN ADR vs Brazilian Real
Arcelor Brasil Local (USD) vs Brazilian Real

2.0
$20
2.0
2.1
$17
2.5
2.2
$14
2.3
$11
2.4
Gerdau ADR vs Brazilian Real
CSN
Real
$30
3.0
$21
3.5
$12
4.0
$3
Usiminas Local (USD) vs Brazilian Real
2.0
2.5
$15
2.5
$33
3.0
$10
3.0
$22
3.5
$5
3.5
$11
4.0
$0
4.0
Posco ADR vs Korean Won

Posco
$79
Won
$63
1,100
$47
1,200
1,300
$44
Real
$0
China Steel (USD) vs Taiwanese Dollar

China Steel
1,000
90
30.0
$1.25
NT$
31.5
$1.00
33.0
$0.75
$31
34.5
$0.50
$15
36.0
$0.25
Nippon Local vs Japanese Yen

Nippon
/US$
100
NT$/US$
900
Usiminas
Real
R$/US$
Gerdau
R$/US$
R$/US$
$8
Nov-05 Dec-05 Jan-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06
$39
$20
2.0
KRW/US$
Real
JFE Local vs Japanese Yen
$5
90
$4
100
$40
110
$30
Yen
JFE
/US$
R$/US$
Arcelor Brasil
$50
Yen
110
$3
120
$2
120
$20
130
$1
130
$10
Page 32
Mittal ADR vs US$/Euro
0.70
US$/
0.80
$26
0.85
$14
0.90
Aug-05
$31
3.1
$25
3.2
3.3
0.80
$46
0.90
$28
1.00
$10
2.5
Tenaris ADR vs Argentine Peso
$50
Peso
$38
2.9
$26
$22
3.1
$14
$19
Feb-06 Mar-06 Apr-06 May-06 May-06 Jun-06 Jul-06
3.3
CVRD ADR vs Brazilian Real
ARP/US$
2.7
$32
0.5
Real
$2
BHP vs Australian Dollar

BHP
2.5
$24
3.0
$16
3.5
4.0
$50
AUD
0.6
$40
0.7
$30
$8
0.8
$20
$0
0.9
$10
Rio Tinto ADR vs British Pound
Anglo America ADR vs British Pound
$250
1.4
1.6
$200
1.6
$20
1.8
$150
1.8
$15
2.0
$100
2.0
$10
CVRD
2.2
Pound
Anglo American
$50
US$/
1.4
$64
Tenaris
$28
US$/
0.70
Peso
CVRD
R$/US$
$2
Jul-06
3.0
2.0
US$/
Mar-06
Ternium ADR vs Argentine Peso

Ternium
ARP/US$
Dec-05
US$/
$38
Apr-05
$82
US Steel
0.75
Jan-05
0.60
AUD/US$
US$/
Mittal
2.9
US Steel vs US$/Euro
$50
2.2
$25
Pound
$5
Page 33
Grupo Mexico (USD) vs Mexican Peso
9.6
$110
Peso
10.3
$3
11.0
$2
11.7
12.4
Southern Copper
Nuevo Sol
$85
3.4
$60
$1
3.5
$35
$0
3.6
$10
Antofagasta vs Chilean Peso
PEN/US$
3.3
Kazakhmys (USD) vs British Pound
$12
1.6
500
$9
1.7
$23
600
$6
1.8
$18
700
$3
1.9
$13
800
$0
2.0
3.20
Cerro Verde vs Nuevo Sol

Cerro Verde
Kazakhmys
Peso
3.2
Nuevo Sol
Dec-05
3.40
$6
3.50
3.60
$28
Pound
Feb-06
Apr-06
May-06
Buenaventura ADR vs Nuevo Sol

BVN
$9
$8
Jul-06
$36
Nuevo Sol
3.3
$30
3.4
$24
$3
3.5
$18
$0
3.6
$12
Cemex ADR vs Mexican Peso

Cemex
$40
9.6
ICA ADR vs Mexican Peso

ICA
Peso
$31
P$/US$
10.3
11.0
$22
11.7
$13
12.4
Oct-05
$12
3.30
9.6
US$/
Antofagasta
PEN/US$
400
CLP/US$
3.2
$4
P$/US$
P$/US$
Grupo Mexico
PEN/US$
Southern Copper ADR vs Nuevo Sol
$4
$48
Peso
10.3
$38
11.0
$28
11.7
$18
12.4
$8
Page 34
Exhibit 28. Stock Performance vs. Underlying Commodity, July 24, 2006
Arcelor Brasil Local vs. HR (Avg.)
CSN ADR vs. HR (Avg.)

650
40
615
14
580
11
545
US$
17
450
10
300
Jul-06
Gerdau ADR vs. Rebar (U.S.)
Jul-04
Jul-05
150
Jul-06
Usiminas Local (USD) vs. HR (Avg.)

40
18
575
30
600
12
450
20
450
325
10
300
0
Jul-01
Jul-02
Jul-03
Jul-05
US$
Rebar (U.S.)
Jul-04
200
Jul-06
0
Jul-01
Posco ADR vs. HR (Japan)

76
28
300
Jul-04
Jul-05
US$
450
US$/mt
US$
44
Jul-03
450
0.50
300
150
Jul-02
600
40
450
Jul-05
Jul-06
US$
US/mt
HR (Japan)
Jul-04
Jul-03
Jul-04
Jul-05
Jul-06
JFE vs. HR (Avg.)

50
Jul-03
HR (Japan)
0.75
750
Jul-02
150
Jul-06
600
0.25
Jul-01
150
Jul-06
1
Jul-01
Jul-05
1.00
Nippon vs. HR (Avg.)

Nippon
Jul-04
750
China Steel
HR (Japan)
600
Jul-02
Jul-03
China Steel Local (USD) vs. HR (Japan)
60
12
Jul-01
Jul-02
HR (Avg.)
1.25
750
Posco ADR
750
Usiminas
US$/mt
Gerdau ADR
US$
Jul-03
700
24
US$
Jul-02
US$/mt
May-06
20
US$/mt
Mar-06
600
750
JFE
HR (Japan)
600
30
450
300
20
300
150
10
Sep-02
US$/mt
Jan-06
HR (Avg.)
30
0
Jul-01
510
Nov-05
750
CSN ADR
HR (Avg.)
US$/mt
US$
Arcelor Brasil
US$/mt
20
150
Jun-03
Mar-04
Dec-04
Sep-05
Jun-06
Source: Bloomberg; Bear, Stearns & Co. Inc.; CRU Monitor; Pipe Logix. Average HR Price of EU, US and Japan Export.
Page 35
Exhibit 29. Stock Performance vs. Underlying Commodity/Spreads, July 24, 2006
US Steel vs HR (Avg.)
750
56
33
600
21
450
300
Dec-05
450
22
300
Ternium vs. HR (Avg.)

50
615
38
25
580
22
545
19
US$
US$
HR (Avg.)
650
US$/mt
Ternium
510
Jan-06
Mar-06
May-06
41
0
Jul-01
27
Jul-05
Rio Tinto vs Fines (Carajas)
83
55
105
41
Jul-04
1,400
650
Dec-03
Dec-04
Dec-05
83
Jul-05
27
Jul-06
Fines (Carajas)
37
69
27
55
17
41
25
27
Jul-02
Jul-03
Jul-04
Jul-05
Anglo American vs Fines (Carajas)

Anglo American
Fines (Carajas)
20
US$
150
Jul-03
Casing
900
Fines (Carajas)
69
Jul-02
Tenaris
14
7
Jul-01
Jul-06
195
60
Jul-01
US$
US$/mt
55
US$/mt
US$
US$
Fines (Carajas)
14
Rio Tinto
Jul-06
1,650
BHP
69
240
Jul-05
BHP vs Fines (Carajas)
21
Jul-04
Jul-04
47
83
Jul-03
Jul-03
1,150
2
Dec-02
Jul-06
28
Jul-02
Jul-02
26
CVRD-P vs Fines (Carajas)

RIO-P
150
Tenaris vs. Casing
31
28
600
39
5
Jul-01
Jun-06
HR (Avg.)
US$/mt
Jun-05
US Steel
Jul-06
83
69
15
55
10
41
5
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
27
Jul-06
Page 36
US$/mt
9
Dec-04
750
US$/mt
US$
HR (Avg.)
73
US$
Mittal ADR
45
900
US$/mt
57
US$/mt
Mittal ADR vs HR (Avg.)
Exhibit 30. Stock Performance vs. Underlying Commodity/Spreads, July 24, 2006
Grupo Mexico vs Copper
Southern Copper vs Copper
77
1
0
Jul-02
Jul-03
Jul-04
Jul-05
27
Antofagasta vs. Copper
Jul-05
4.20
US$/lb
US$
1.20
0.20
0.20
Jul-06
Oct-05
4.20
360
0.20
0
Jul-01
250
0
Jul-01
Antofagasta vs. Molybdenum
Jul-06
40
20
10
Jul-03
Jul-04
Jul-05
0
Jul-06
Jul-03
Jul-04
Jul-05
PCU vs. Molybdenum

Southern Copper
US$
30
Jul-02
108
Moly
Jul-02
US$
1.20
US$/mt
470
US$/lb
US$
US$
18
2.20
Jul-05
690
Gold
580
0
Jul-01
Jun-06
27
3.20
Antogafasta
Apr-06
BVN ADR
12
Feb-06
36
Copper
Jul-04
Dec-05
BVN ADR vs. Gold
12
Jul-03
3.20
Cerro Verde vs. Copper
Jul-02
Copper
1.20
0
Jul-01
Cerro Verde
Jul-06
2.20
Jul-04
Jul-05
14
2.20
Jul-03
Jul-04
Kazakhmys
21
3.20
US$/lb
US$
Copper
Jul-02
Jul-03
28
4.20
Antogafasta
0
Jul-02
Kazakhmys vs. Copper
12
9
52
2
Jul-01
Jul-06
Copper
Jul-06
40
Moly
83
30
58
20
33
10
8
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
0
Jul-06
US$/oz
0
Jul-01
Southern Copper
US$/lb
US$/lb
US$
Copper
102
US$
GMexico
US$/lb
Page 37
Exhibit 31. Correlation Charts, July 24, 2006

CSN ADR vs Usiminas Local (USD)
CSN ADR vs US Steel
44
40
CSN
80
40
CSN
Usiminas
US Steel
33
30
60
30
22
20
40
20
11
10
20
10
0
CSN ADR vs Posco ADR
78
CSN
40
0
Gerdau ADR vs Nucor
70
Gerdau
Posco
20
Nucor
61
30
55
15
44
20
40
10
27
10
25
10
0
10
0
Arcelor Brasil Local (USD) vs Gerdau ADR
20
Arcelor Brasil
20
Gerdau
Mittal ADR vs Arcelor Local (USD)
54
Mittal
44
Arcelor
17
17
45
38
14
14
36
32
11
11
27
26
18
20
Mar-05 May-05 Aug-05 Oct-05 Dec-05 Mar-06 May-06 Jul-06
8
Dec-05 Jan-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06
Posco ADR vs China Steel (USD)
Posco ADR vs Nippon (USD)
78
78
1.05
62
62
0.90
46
46
0.75
30
30
0.60
14
14
Jul-06
1.20
Posco
Posco
China Steel
Oct-03
Nippon
Apr-04 Sep-04 Mar-05 Aug-05 Feb-06
Page 38

Ternium ADR vs Gerdau ADR
Tenaris ADR vs Grant Prideco
$20
$31
$57
$50
$15
$28
$44
$38
$10
$25
$31
$26
$22
$18
$14
$19
Jul-06
$5
$5
Ternium
Gerdau
$0
Feb-06
$135
Mar-06
May-06
Jun-06
Tenaris
Cemex ADR vs Lafarge (USD)
GP
$2
ICA ADR vs Fluor
$40
$110
$115
$31
$90
$37
$95
$22
$70
$28
$13
$50
$75
Cemex
$55
Lafarge
CVRD ADR vs Bradespar (USD)
$19
ICA
$4
$30
$46
Fluor
$10
CVRD ADR vs BHP ADR
$30
$53
$35
$23
$41
$23
$25
$16
$29
$16
$9
$17
$45
$15
CVRD
$5
Bradespar
CVRD ADR vs Rio Tinto ADR
$9
CVRD
$2
$5
$30
BHP
$2
CVRD ADR vs Kumba Resources (USD)
$30
$22
$205
$23
$17
$23
$160
$16
$12
$16
$9
$7
$250
$115
CVRD
$70
$2
$9
CVRD
Rio Tinto
$2
$30
Kumba
$2
Page 39

Grupo Mexico (USD) vs Southern Copper
Grupo Mexico (USD) vs Phelps Dodge
$110
$4
$110
$4
$85
$3
$85
$3
$60
$2
$60
$2
$1
$35
$35
GMexico
GMexico
$0
$10
G. Mexico (USD) vs Antofagasta (USD)
$10
$1
S. Copper
PD
$0
$10
Antofagasta (USD) vs Kazakhmys (USD)
$4
$28
$8
$3
$21
$8
$6
$2
$14
$6
$1
$7
$4
$0
$0
$4
GMexico
$2
$110
Antofagasta
Kazakhmys (USD) vs Phelps Dodge
Antofagasta
$10
Kazakhmys
$2
Jul-06
Nov-05 Jan-06 Feb-06 Apr-06 Jun-06
Cerro Verde vs Phelps Dodge
$27
$110
$95
$22
$85
$9
$80
$17
$60
$6
$12
$35
$65
Kazakhmys
PD
$50
Nov-05 Jan-06 Feb-06 Apr-06 Jun-06
Cerro Verde vs Buenaventura ADR
$3
Cerro Verde
$7
Jul-06
$10
$12
PD
$0
Buenaventura ADR vs Newmont
$12
$66
$31
$9
$55
$31
$24
$6
$44
$24
$3
$33
$0
$22
$38
$17
Cerro Verde
$10
$17
BVN
BVN
$38
Newmont
$10
Page 40
Exhibit 34. Holding Company Discounts and Spreads, July 24, 2006
Bradespar Discount to Estimated NAV
GMexico Discount to Estimated NAV

-12%
-16%
-21%
-22%
-30%
-28%
-39%
-34%
-48%
Mar- May05
05
Jul05
Sep- Nov- Jan- Mar- May05

05
06
06
06
-40%
Mar- May05
05
Jul06
Jul05
Sep- Nov- Jan05

05
06
Mar- May06
06
RIO/RIO-P Discount
Met Gerdau Discount to Estimated NAV
Jul06
25%
-5%
-12%
20%
-19%
15%
-26%
10%
-33%
Mar- May05
05
Jul05
Sep- Nov- Jan- Mar- May05

05
06
06
06
5%
Aug- Nov- Jan- Apr- Jul- Sep- Dec- Feb- May- Jul04
04
05
05
05
05
05
06
06
06
Jul06
Gerdau/GNA Spread
1.10
Ternium/Siderar Spread
2.50
0.80
2.00
0.50
1.50
0.20
1.00
-0.10
04
05
05
05
05
05
06
06
06
Arcelor/Arcelor Brasil Spread

2.40
Feb- Feb- Mar- Apr- May- May- Jun06

06
06
06
06
06
06
BVN/Newmont Spread
Jul06
0.50
Jul06
0.75
2.00
0.65
1.60
0.55
1.20
0.45
0.80
Nov- Dec- Jan- Feb- Mar- Apr- May- May- Jun- Jul05
05
06
06
06
06
06
06
06
06
0.35
04
05
05
05
05
05
06
06
06
Source: Bloomberg; Company filings; Bear, Stearns & Co. Inc.
Page 41
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Page 42
Appendix I Monthly Industry Data
Page 43
Page 44
Exhibit 35. Industrial Production by Country, (Y/Y % Change)

Mexico
Brazil
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
15%
15%
10%
10%
5%
5%
0%
0%
-5%
-5%
-10%
Jun-06
-10%
Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06
United States
EU
6%
6%
4%
3%
2%
0%
0%
-3%
May-03 Nov-03 May-04 Nov-04
-6%
May-05 Nov-05 May-06
-2%
Jun-03
Dec-03
Jun-04
Korea
Dec-04
Jun-05
Dec-05
-4%
Jun-06
Japan
22%
15%
10%
14%
5%
6%
0%
-2%
-5%
-10%
May-03 Nov-03 May-04
May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06
China
Nov-04
May-05 Nov-05
-10%
May-06
China Fixed Assets Investments- YOY %

75%
55%
60%
45%
45%
35%
30%
25%
15%
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
0%
Jun-06
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
15%
Jun-06
Source: Bloomberg. EU data is work day adjusted.
Page 45
Exhibit 36. Leading Economic Indicators (Annualized % 6-Month Rate of Change)

OECD Total
Major 7
12.5%
12.5%
7.5%
7.5%
2.5%
2.5%
-2.5%
-2.5%
-7.5%
May-00 May-01 May-02 May-03 May-04 May-05 May-06
-7.5%
NAFTA
OECD Europe
12.5%
12.5%
7.5%
7.5%
2.5%
2.5%
-2.5%
-2.5%
-7.5%
-7.5%
United States
Japan
12.5%
12.5%
7.5%
7.5%
2.5%
2.5%
-2.5%
-2.5%
-7.5%
-7.5%
Germany
UK
12.5%
12.5%
7.5%
7.5%
2.5%
2.5%
-2.5%
-2.5%
-7.5%
-7.5%
Source: OECD.
Page 46
Exhibit 37. Global Steel Production (IISI), June 2006

Global Crude Steel Production - MMT
US Crude Steel Production - MMT
109.0
9.0
100.0
8.0
91.0
7.0
82.0
Up 13% y/y
Down 1% m/m
73.0
Jun- Oct- Feb- Jun- Oct- Feb- Jun- Oct- Feb- Jun03
03
04
04
04
05
05
05
06
06
6.0
5.0
03
04
04
04
05
05
05
06
06
EU Crude Steel Production - MMT

20.0
40.0
17.5
33.8
15.0
27.5
12.5
Up 12% y/y
Down 2% m/m
10.0
03
04
04
04
05
05
05
06
06
11.0
21.3
Japan Crude Steel Production - MMT

7.0
6.0
9.0
5.0
Up 3% y/y
Down 2% m/m
7.0
03
04
04
04
05
05
05
06
06
4.5
Korea Crude Steel Production - MMT
4.0
Up 13% y/y
Down 6% m/m
Brazil Crude Steel Production - MMT
3.5
2.5
2.5
03
04
04
04
05
05
05
06
06
Russia Crude Steel Production - MMT
3.5
3.0
Up 9% y/y
Up 3% m/m
Up 19% y/y
Up 2% m/m
3.0
03
04
04
04
05
05
05
06
06
4.0
3.0
China Crude Steel Production - MMT
15.0
03
04
04
04
05
05
05
06
06
10.0
8.0
Up 17% y/y
Down 6% m/m
2.0
Down 4% y/y
Down 5% m/m
1.5
03
04
04
04
05
05
05
06
06
Source: IISI.
Page 47
Exhibit 38. Global Steel Production (IISI), Annual

Global Crude Steel Production - MMT
1,300
140
1,125
120
950
100
775
80
600
1976
1981
1986
1991
1996
2001
2006E
EU Crude Steel Production - MMT
60
1976
210
440
190
330
170
220
150
110
130
1976
1981
1986
1991
1996
2001
2006E
Japan Crude Steel Production - MMT

110
115
90
105
70
95
50
50
1981
1986
1991
1996
2001
2006E
25
20
13
12
1991
1996
2001
1996
2001
2006E
1981
1986
1991
1996
2001
2006E
Russia Crude Steel Production - MMT
1981
1986
1991
1996
2001
2006E
36
28
1986
1991
Brazil Crude Steel Production - MMT
Korea Crude Steel Production - MMT
1981
1986
China Crude Steel Production - MMT
30
1976
38
0
1976
1981
0
1976
125
85
1976
US Crude Steel Production - MMT
2006E
4
1976
1981
1986
1991
1996
2001
2006E
Source: IISI; Bear, Stearns & Co. Estimates.
Page 48
Exhibit 39. Global Steel and Pig Iron Production by Region, June 2006 & YTD (Million Tons)
--------------- Steel Output --------------Steel % Total
Y/Y YTD 2006
--------------- Pig Iron --------------Pig Iron % Total

Y/Y YTD 2006
Daily Steel Prod.

Y/Y
M/M
Daily Iron Prod.

Y/Y
M/M
China
Japan
South Korea
India
Taiwan
(+) Asia total
36.6
9.7
4.3
3.4
1.7
55.6
35%
9%
4%
3%
2%
54%
19%
3%
9%
13%
9%
14%
18%
0%
0%
17%
4%
12%
35.1
6.9
2.3
2.2
0.9
47.3
48%
9%
3%
3%
1%
64%
22%
-1%
3%
4%
5%
16%
21%
-1%
2%
6%
1%
15%
19%
3%
9%
13%
9%
14%
5%
1%
6%
0%
0%
4%
22%
-1%
3%
4%
5%
16%
3%
0%
4%
0%
0%
2%
Germany
Italy
France
Spain
U.K.
Other
(+) European Union
4.0
2.7
1.8
1.7
1.2
5.8
17.1
4%
3%
2%
2%
1%
6%
17%
9%
8%
11%
6%
15%
19%
12%
2%
5%
5%
-1%
4%
6%
4%
2.5
1.0
1.1
0.3
0.9
3.5
9.3
3%
1%
2%
0%
1%
5%
13%
9%
2%
14%
-33%
10%
20%
11%
0%
1%
7%
-35%
6%
3%
1%
9%
8%
11%
6%
15%
19%
12%
2%
0%
0%
1%
1%
1%
1%
9%
2%
14%
-33%
10%
20%
11%
3%
1%
0%
-1%
3%
0%
1%
United States
Canada
Mexico
Other
(+) North America
8.3
1.3
1.3
0.1
11.1
8%
1%
1%
0%
11%
17%
4%
-2%
45%
13%
7%
-2%
-5%
9%
5%
3.2
0.7
0.3
0.0
4.2
4%
1%
0%
0%
6%
21%
0%
-21%
NM
13%
3%
-1%
-13%
NM
1%
17%
4%
-2%
45%
13%
-3%
0%
0%
4%
-2%
21%
0%
-21%
NM
13%
-3%
0%
1%
NM
-2%
Russia
Ukraine
Other
(+) C.I.S.
5.8
3.5
0.7
10.0
6%
3%
1%
10%
13%
23%
-4%
15%
7%
0%
-3%
4%
4.4
2.8
0.3
7.4
6%
4%
0%
10%
22%
27%
-7%
23%
9%
4%
-7%
7%
13%
23%
-4%
15%
-3%
0%
6%
-1%
22%
27%
-7%
23%
-4%
-1%
3%
-3%
(+) Other Europe
2.9
3%
15%
10%
1.0
1%
21%
7%
15%
5%
21%
3%
Brazil
(+) South America total
2.4
3.6
2%
3%
-4%
-2%
-9%
-4%
2.4
2.8
3%
4%
-9%
-7%
-13%
-11%
-4%
-2%
-1%
0%
-9%
-7%
1%
1%
1.5
1.2
0.7
103.8
1%
1%
1%
100%
-1%
1%
3%
13%
-5%
2%
1%
8%
0.6
0.2
0.6
73.5
1%
0%
1%
100%
4%
-9%
1%
14%
-2%
-10%
6%
9%
-1%
1%
3%
13%
4%
0%
7%
2%
4%
-9%
1%
14%
6%
12%
-6%
1%
(+) Africa total

(+) Middle East total
(+) Oceania total
(=) Total
Source: IISI.
Global Steel Production vs. Hot Rolled Price*
mmt per Month
95
700
Steel Production
HRC Price
575
80
450
65
325
50
Jun-01
Jun-02
Jun-03
Jun-04
Source: IISI; CRU Monitor; Bear, Stearns & Co. Inc. estimates.
38
Jun-05
200
Jun-06
29
US$/mt
110
Global Steel: Top 4 Producers (mmt)
E.U.
Japan
China
U.S.
20
11
2
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
* Average for U.S., Japan, and E.U.
Page 49
Exhibit 40. U.S. Steel Production & Utilization, Weekly (000 Net Tons)
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
15
22
29
5
12
19
26
3
10
17
24
31
7
14
21
28
4
11
18
25
4
11
18
25
1
8
15
22
29
6
13
20
27
3
10
17
24
1
8
15
Total
Y/Y
M/M
----- Utilization ----%

Y/Y
M/M
2,008
2,010
1,966
1,960
1,976
1,956
1,993
2,032
2,014
1,969
1,988
2,020
2,064
2,077
2,058
2,047
2,066
2,118
2,101
2,074
2,098
2,071
2,083
2,127
2,051
2,074
2,044
2,062
2,101
2,046
2,105
2,094
2,078
2,096
2,076
2,108
2,061
2,091
2,083
2,037
1%
0%
-3%
0%
0%
0%
3%
4%
2%
-1%
0%
-1%
1%
-1%
1%
0%
0%
3%
3%
3%
4%
3%
3%
5%
1%
10%
-2%
0%
-2%
1%
7%
0%
5%
8%
12%
17%
10%
11%
12%
11%
0%
0%
-1%
-2%
-2%
-3%
1%
4%
2%
1%
0%
-1%
2%
5%
4%
1%
0%
2%
2%
1%
2%
-2%
-1%
3%
-2%
0%
-2%
-3%
2%
-1%
3%
2%
-1%
2%
-1%
1%
-1%
0%
0%
-3%
87
87
85
85
86
85
86
88
87
85
86
88
87
87
86
86
87
89
88
87
88
87
87
89
86
87
86
87
88
86
88
88
87
88
87
88
86
87
88
86
-3
-4
-7
-4
-4
-4
-1
0
-2
-4
-4
-5
-6
-8
-6
-7
-4
-2
-2
-1
-1
-2
-2
0
-3
4
-5
-4
-5
-3
2
-3
0
3
6
9
4
5
7
7
0
0
-1
-2
-1
-2
1
3
2
1
0
0
-1
2
0
-2
0
2
2
1
1
-2
-1
2
-2
0
-2
-3
2
-1
3
1
-2
2
-2
0
-1
0
1
-2
----- Contribution By Region ----N/East Pitt/Ytown Ind/Chig Midwest

South
9%
8%
8%
9%
8%
8%
8%
8%
8%
8%
8%
8%
9%
8%
8%
8%
8%
8%
8%
8%
8%
8%
8%
7%
8%
8%
8%
8%
7%
7%
8%
8%
8%
8%
8%
8%
8%
8%
7%
7%
11%
11%
11%
11%
10%
11%
11%
11%
11%
11%
11%
11%
11%
10%
9%
9%
9%
8%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
9%
25%
24%
23%
24%
25%
25%
23%
24%
24%
24%
23%
24%
24%
24%
25%
24%
24%
26%
26%
26%
27%
27%
26%
26%
27%
27%
28%
27%
27%
27%
27%
27%
27%
26%
27%
27%
27%
25%
25%
26%
14%
13%
14%
13%
13%
13%
14%
13%
13%
14%
14%
14%
14%
14%
13%
13%
12%
13%
13%
12%
11%
12%
12%
12%
13%
12%
13%
12%
12%
13%
13%
12%
12%
12%
12%
12%
13%
13%
12%
13%
28%
29%
29%
30%
30%
30%
30%
29%
29%
30%
29%
29%
29%
30%
31%
31%
32%
31%
31%
31%
31%
31%
31%
32%
31%
32%
30%
30%
31%
30%
31%
31%
30%
31%
30%
30%
30%
31%
32%
31%
Other
10%
10%
10%
9%
9%
9%
10%
11%
11%
10%
11%
11%
10%
10%
10%
11%
10%
10%
9%
10%
10%
10%
10%
10%
8%
8%
8%
10%
10%
10%
9%
10%
10%
10%
10%
10%
10%
10%
10%
9%
Source: AISI.
Exhibit 41. U.S. Steel Production & Utilization, Weekly (000 Net Tons)
US Steel Production (000 Net Tons)
US Steel Capacity Utilization (%)
2,400
100
2,200
92
2,000
84
1,800
76
1,600
Jul-04
Oct-04
Feb-05
May-05
Sep-05
Dec-05
Apr-06
Jul-06
68
Jul-04
Oct-04
Feb-05
May-05
Sep-05
Dec-05
Apr-06
Jul-06
Source: AISI.
Page 50
Exhibit 42. Brazilian Steel Production (June 2006) and Shipments (May 2006) in Kmt
Flat Steel Production
Crude Steel Production

3,000
1,300
2,750
1,175
2,500
1,050
Down 4% y/y
Down 5% m/m
2,250
2,000
Jul-03
835
Feb-04
Sep-04
Apr-05
Up 12% y/y
Up 4% m/m
925
Nov-05
Jun-06
800
Jul-03
Feb-04
Sep-04
Apr-05
Nov-05
Jun-06
Semi-Finished Steel Production
Long Steel Production

850
765
725
695
600
625
485
Jul-03
300
Feb-04
Sep-04
Apr-05
Nov-05
Jun-06
Hot Roll Shipments - Domestic
350
Jul-03
250
260
220
220
190
180
160
Up 24% y/y
Up 8% m/m
140
100
Jun-03
Jan-04
Aug-04
Mar-05
Oct-05
May-06
100
Jun-03
Plate Shipments - Domestic
225
145
175
120
Aug-04
Mar-05
Oct-05
Apr-05
Nov-05
Jun-06
Cold Roll Shipments -Domestic
Up 22% y/y
Up 5% m/m
Jan-04
95
Down 24% y/y

Down 10% m/m
Jan-04
Sep-04
Aug-04
Mar-05
Oct-05
May-06
Galvanized Shipments - Domestic

170
75
Jun-03
Feb-04
130
275
125
Down 14% y/y

Down 10% m/m
475
Up 9% y/y
Down 4% m/m
555
May-06
70
Jun-03
Up 29%y/y
Up 17% m/m
Jan-04
Aug-04
Mar-05
Oct-05
May-06
Source: IBS.
Page 51
Exhibit 43. Global Steel Sheet Quarterly Production and Consumption (Million Metric Tons)
Japan Steel Sheet
US Steel Sheet
18.0
12.5
16.0
11.0
Consumption
14.0
9.5
12.0
8.0
Production
10.0
6.5
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
South Korea Sheet
7.0
2Q 04
4Q 04
21.0
5.0
17.0
4.0
13.0
3.0
4Q 05
2Q 06
4Q 05
2Q 06
4Q 05
2Q 06
China Sheet
25.0
6.0
2Q 05
9.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
2Q 04
4Q 04
Latin America Sheet
4.5
Europe Sheet
23.0
4.0
21.5
3.5
20.0
3.0
18.5
2.5
2Q 05
17.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
4Q 04
2Q 05
Total World Sheet *
CIS Sheet
11.0
2Q 04
105.0
8.5
100.0
6.0
95.0
3.5
90.0
1.0
85.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
Source: CRU Monitor. * Production is equal to Consumption.
Page 52
Exhibit 44. Global Steel Sheet Quarterly Net Exports (Million Metric Tons)
Japan Steel Sheet
US Steel Sheet
1.0
6.0
0.0
4.5
-1.0
3.0
-2.0
1.5
0.0
-3.0
2Q 04
4Q 04
2Q 05
4Q 05
South Korea
2.0
2Q 04
2Q 06
4Q 04
-1.5
1.0
-3.0
0.5
-4.5
0.0
4Q 05
2Q 06
4Q 05
2Q 06
4Q 05
2Q 06
China Sheet
0.0
1.5
2Q 05
-6.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
2Q 04
4Q 04
Latin America Sheet
1.5
Europe Sheet
1.0
1.0
0.5
0.5
0.0
0.0
-0.5
-0.5
2Q 05
-1.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
4Q 04
2Q 05
Total World Sheet *
CIS Sheet
4.6
2Q 04
3.0
4.1
2.0
3.6
1.0
3.1
0.0
2.6
-1.0
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
4Q 03
2Q 04
4Q 04
2Q 05
4Q 05
2Q 06
Source: CRU Monitor. * Production is equal to Consumption.
Page 53
Exhibit 45. China Key Industry Trade Statistics

China Steel Imports - MMT
China Steel Exports- MMT

6.0
5.2
4.2
Up 0.21 mmt m/m

Down 0.95 mmt y/y
4.5
3.2
3.0
2.2
1.5
1.2
0.0
Jun-03
China Steel Net Exports - MMT

Up 1.00 mmt m/m
Up 3.56 mmt y/y
3.0
2.2
-2.0
1.4
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-04
Jun-05
Dec-05
Jun-06
Down 0.20 mmt m/m

Down 0.66 mmt y/y
0.6
China Steel Semi Finished Imports - MMT
China Steel Semi Finished Exports - MMT

3.2
0.70
0.55
Jun-04
China Steel Sheet & Plates Imports- MMT
0.0
-4.0
Jun-03
Dec-03
3.8
4.0
2.0
Up 1.21 mmt m/m

Up 2.61 mmt y/y
Down 0.01 m/m

Down 0.04 y/y
2.4
Up 0.10 mmt m/m

Down 1.42 mmt y/y
0.40
1.6
0.25
0.8
0.10
0.0
China Iron & Steel Imports - US$MN
China Iron & Steel Exports - US$MN
$3,750
$3,000
$2,800
Down $201 mn m/m

Down $630 mn y/y
$2,100
$2,250
$1,400
$1,500
$700
$750
Up $482 mn m/m
Up $386 mn y/y
$0
Source: China Customs Data; Bloomberg.
Page 54
Exhibit 46. China Key Industry Monthly Trade Statistics

China Steel Imports - MMT
China Steel Exports- MMT

6.0
4.5
5-yr avg: 2.6 mmt

10-yr avg: 2.0 mmt
3.5
4.5
2.5
3.0
1.5
1.5
0.5
Jun-96
Jun-98
Jun-00
5-yr avg: 1.4 mmt

10-yr avg: 1.0 mmt
Jun-02
Jun-04
Jun-06
0.0
Jun-96
China Steel Net Exports - MMT
Jun-98
Jun-00
Jun-02
Jun-04
Jun-06
China Steel Sheet & Plates Imports- MMT

3.4
4.0
5-yr avg: -1.1 mmt

10-yr avg: -1.0 mmt
2.0
0.0
1.8
-2.0
1.0
-4.0
Jun-96
Jun-98
Jun-00
5-yr avg: 1.9 mmt

10-yr avg: 1.4 mmt
2.6
Jun-02
Jun-04
Jun-06
0.2
May-96
China Steel Semi Finished Imports - MMT
May-98
May-00
May-02
May-04
May-06
China Non Ferrous Metal Imports - US$MN

$1,800
2.20
5-yr avg: 0.3 mmt

10-yr avg: 0.3 mmt
1.65
$1,375
1.10
$950
0.55
$525
0.00
May-96
May-98
May-00
May-02
May-04
May-06
$100
May-96
China Iron & Steel Exports - US$MN
May-00
May-02
May-04
May-06
$3,000
5-yr avg: US$853

10-yr avg: US$582
$2,250
$1,400
$1,500
$700
$750
$0
May-96
May-98
China Iron & Steel Imports - US$MN
$2,800
$2,100
5-yr avg: US$995

10-yr avg: US$686
May-98
May-00
May-02
May-04
May-06
$0
May-96
5-yr avg: US$1,652

10-yr avg: US$1,155
May-98
May-00
May-02
May-04
May-06
Source: China Customs Data.
Page 55
Exhibit 47. China Import Statistics

------- Quantity (kmt) ------% Total
Y/Y
YTD 2006
6%
(13%)
447
Bars, Wire Rod

Plates
HR sheets
CR sheets
Tin plate
Galvanized sheets
Other Flat
Subtotal Flat products
112
91
280
32
251
439
1,205
8%
6%
19%
2%
17%
30%
83%
45%
(69%)
(51%)
(21%)
(17%)
(25%)
(36%)
499
538
1,724
108
1,387
1,029
5,284
(1%)
(50%)
(37%)
(52%)
(18%)
(13%)
(29%)
618
463
569
652
732
1,367
892
(2%)
9%
3%
(5%)
0%
(2%)
1%
630
438
552
683
736
2,956
1,067
56
28
0
85
4%
2%
0%
6%
7%
(10%)
(2%)
1%
301
117
1
419
9%
(28%)
(18%)
(5%)
3,494
1,526
765
2,834
(0%)
(5%)
(10%)
(2%)
3,336
1,641
764
2,856
85
1,458
6%
100%
(22%)
(33%)
1,595
7,745
(33%)
(28%)
1,204
1,026
32%
3%
313
1,002
34
5
0
421
(73%)
(42%)
563%
(48%)
172
14
234
2,934
(73%)
(67%)
111%
(30%)
1,344
254
594
305
10%
(7%)
NM
16%
918
262
219
271
------- Quantity (kmt) ------% Total

Y/Y
YTD 2006
31%
89%
3,326
YTD Y/Y
24%
Seamless pipes
Welded pipes
Pipe fittings, knuckles, casing
Subtotal Pipes
Other
Finished steel products
Slab
Pig Iron
DRI
Steel Scrap
YTD Y/Y
(1%)
------- Value/mt ------May

M/M YTD (Ave.)
949
(6%)
951
May
83
Exhibit 48. China Export Statistics

------- Value/mt ------May
M/M YTD (Ave.)
408
1%
408
Bars, Wire Rod
May
1,073
Plates
HR sheets
CR sheets
Tin plate
Galvanized sheets
Other Flat
Subtotal Flat products
695
240
100
18
185
250
1,489
20%
7%
3%
1%
5%
7%
43%
60%
52%
46%
65%
188%
0%
51%
2,595
1,130
546
75
718
734
5,798
29%
40%
93%
35%
81%
(10%)
33%
418
415
502
801
605
652
490
2%
7%
6%
2%
5%
(11%)
3%
415
393
484
787
577
743
484
188
269
43
501
5%
8%
1%
14%
63%
56%
(8%)
49%
805
911
220
1,936
60%
31%
38%
43%
1,125
675
520
831
(3%)
(1%)
(6%)
(5%)
1,132
669
510
844
430
3,492
12%
100%
89%
65%
1,610
12,669
65%
35%
713
541
(4%)
(1%)
754
553
682
38
1
0
16%
(88%)
9%
(34%)
2,063
69
5
4
(51%)
(95%)
3%
272%
354
304
529
257
7%
(4%)
2%
15%
337
291
528
250
Seamless pipes
Welded pipes
Other pipe
Subtotal Pipes
Other
Finished steel products
Slab
Pig Iron
DRI
Steel Scrap
Page 56
Exhibit 49. Global / U.S. Steel Pricing Early- July 2006

US Midwest Hot Roll Price - US$/Mt
Japan Hot Roll Export Price - US$/Mt
$900
$675
$725
$550
$550
$425
Up 2% m/m
Up 40% y/y
$375
$200
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Up 9% m/m
Down 8% y/y
$300
Jul-06
$175
Jul-03
Jan-04
Germany Hot Roll Price - US$/Mt

$925
$610
$775
$460
$625
$160
Jul-03
Up 1% m/m
Up 22% y/y
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
$325
Jul-03
$450
$515
$375
$390
$300
Up 5% m/m
Up 68% y/y
Jan-04
Jul-04
Jan-05
Jul-05
Jan-04
Jul-04
Jan-05
Jul-06
Jul-05
Jan-06
Jul-06
Jan-06
NOM
NOM
$225
Jul-06
$150
Jul-03
US Rebar Price - US$/Mt
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
US HDG Galvanized Price - US$/Mt
$650
$1,020
$550
$850
$450
$680
Up 3% m/m
Up 18% y/y
$350
$250
Jul-03
Jan-06
Latam Billet Price - US$/Mt
FOB Latin Slab Price -US$/Mt
$140
Jul-03
Jul-05
Up 1% m/m
Up 34% y/y
$475
$640
$265
Jan-05
US Cold Roll Price -US$/Mt
$760
$310
Jul-04
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Up 1% m/m
Up 43% y/y
$510
Jul-06
$340
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Source: CRU Monitor.
Page 57
Exhibit 50. Global / U.S. Steel Pricing, Early- July 2006

US Pig Iron Price - US$/Mt
US #1 HMS Price -US$/Mt

$270
$450
$225
$375
$180
$300
Down 1% m/m
Up 69% y/y
$135
$90
Jul-04
Jan-05
Flat m/m
Up 71% y/y
$225
Jul-05
Jan-06
$150
Jul-04
Jul-06
Jan-05
China Coke 10.5%-12.5% Ash - US$/t
$400
$295
$200
$230
Up 10% m/m
Down 21% y/y
$100
$0
Jul-04
Jan-05
Jan-06
Jul-06
FOB Latin Slab (l) vs. US Hot Roll (r) - US$/Mt

$570
$900
$460
$725
Jul-06
Flat m/m
Up 24% y/y
$165
Jul-05
Jan-06
South Korea #1 HMS Price - US$/Mt
$360
$300
Jul-05
$100
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Latam Billet (l) vs. US Rebar (r) - US$/Mt
$440
$650
$570
$365
$490
$350
$550
$290
$240
$375
$215
Slab
$130
Jul-03
Jan-04
Jul-04
Jan-05
Jan-06
$330
Billet
HR
Jul-05
$410
$200
Jul-06
$140
Jul-03
US Hot Roll (l) vs. German Hot Roll (r) - US$/Mt
Jan-04
Jul-04
Jan-05
Jul-05
Rebar
$250
Jul-06
Jan-06
US Hot Roll (l) vs. US Galvanized (r) - US$/Mt
$900
760
$900
$980
$725
610
$725
$810
$550
460
$550
$640
$375
310
$375
$470
US
$200
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
HR
Ger
Jan-06
160
Jul-06
$200
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Gal
Jan-06
$300
Jul-06
Page 58
Exhibit 51. Global / U.S. Steel Pricing July 1987-2006, July 1997-2006
US Midwest Hot Roll Price - US$/Mt
Japan Hot Roll Export Price - US$/Mt
$900
$675
5-yr avg: US$480/mt

20-yr avg: US$395/mt
$725
$550
$550
$425
$375
$300
$200
Jul-87
Sep-90
Nov-93
Jan-97
Mar-00
May-03
Jul-06
5-yr avg: US$411/mt

$175
Jul-87
Sep-90
Germany Hot Roll Price -US$/Mt
Jan-97
Mar-00
May-03
Jul-06
US Cold Roll Price -US$/Mt
$760
$950
5-yr avg: US$425/mt

$610
$600
$310
$425
$160
Jul-87
Sep-90
Nov-93
Jan-97
Mar-00
May-03
Jul-06
$250
Jul-87
$375
$370
$300
$245
$225
Jan-99
Jul-00
Jan-02
Jul-03
Jan-05
Jul-06
$150
Jul-97
May-03
Jul-06
Jan-99
Jul-00
Jan-02
Jul-03
Jan-05
Jul-06
$1,000
$825
$450
$650
$350
$475
Jul-00
Mar-00
US HDG Galvanized Price - US$/Mt
5-yr avg: US$430/mt

Jan-99
Jan-97
5-yr avg: US$282/mt

US Rebar Price - US$/Mt

$650
$250
Jul-97
Nov-93
$450
5-yr avg: US$326/mt

$120
Jul-97
Sep-90
Latam Billet Price - US$/Mt
FOB Latin Slab Price -US$/Mt

$620
$495
5-yr avg: US$582/mt

$775
$460
$550
Nov-93
Jan-02
Jul-03
Jan-05
Jul-06
$300
Jul-97
5-yr avg: US$617/mt

Jan-99
Jul-00
Jan-02
Jul-03
Jan-05
Jul-06
Page 59
Exhibit 52. Latin American Steel Pricing November 2002 - July 2006
Latam HR Export - US$/Mt
Latam CR Export - US$/Mt

$660
1-Year AvgUS$442/mt
3-Year Avg US$498/mt
Nov-02
Jul-03
Mar-04
Oct-04
$800

$545
Jun-05
Dec-05
$675
$430
$550
$315
$425
$200
Jul-06
Nov-02
Latam Galvanized Export - US$/Mt
Jul-03
Mar-04
Oct-04
Jun-05 Dec-05
Latam Heavy Plate Export - US$/Mt

$920

Nov-02
Jul-03
Mar-04
Oct-04
$700

$790
Jun-05 Dec-05
$575
$660
$450
$530
$325
$400
Jul-06
Nov-02
Latam Rebar Export - US$/Mt
Jul-03
Mar-04 Oct-04
Jun-05 Dec-05
Nov-02
Jul-03
Mar-04
Oct-04
$550

$450
Jun-05
Dec-05
$450
$350
$350
$250
$250
$150
Jul-06
Nov-02
Jul-03
Latam Wire Rod Export - US$/Mt
Mar-04 Oct-04 Jun-05 Dec-05
Nov-02
Jul-03
Mar-04
Oct-04
$575
Jun-05
Dec-05
$150
Jul-06
Pig Iron Export - US$/Mt

$700

$200
Jul-06
Latam Merchant Bar Export - US$/Mt

$550

$300
Jul-06
$600

$450
$450
$300
$325
$150
$200
Jul-06
Mar-04
Oct-04
Jun-05
Dec-05
$0
Jul-06
Source: Metal Bulletin.
Page 60
Exhibit 53. Brazilian Domestic Steel Pricing (1Q03-1Q06) and Flat Steel Distributors Inventories (May 2003 - 2006)
Brazilian HR Domestic - US$/Mt
Brazilian Slab Domestic - US$/Mt
$750
$500
Down 2% q/q
Up 3% y/y
1Q03
3Q03
Down 4% q/q
Down 4% y/y
$400
1Q04
3Q04
1Q05
3Q05
$300
$450
$200
$300
$100
1Q06
1Q03
Brazilian CR Domestic - US$/Mt
1Q03
3Q03
3Q04
1Q05
3Q05
1Q04
3Q04
1Q05
3Q05
$900
$737
$550
$575
$400
$412
$250
1Q06
1Q03
Brazilian EG Galvanized Dom. - US$/Mt
3Q03
1Q04
3Q04
1Q05
3Q05
1Q03
3Q03
$1,300
Down 21% q/q

Up 9% y/y
$1,050
1Q04
3Q04
1Q05
3Q05
$250
1Q06
Brazilian HDG Galvanized Dom. - US$/Mt

$1,300
Down 1% q/q
Up 12% y/y
$150
1Q06
Down 1% q/q
Up 19% y/y
$700
1Q04
3Q03
Brazilian Plate Domestic - US$/Mt
$850
Down 3% q/q
Up 5% y/y
$600
$1,050
$800
$800
$550
$550
$300
1Q06
1Q03
BZ HRC vs. EU - US$/Mt
3Q03
1Q04
3Q04
1Q05
3Q05
$300
1Q06
Distributors Flat Steel Inventories - Kmt
$750
850
$600
725
$450
600
$300
475
EU
BZ
$150
1Q03
3Q03
Down 37% y/y

Up 4% m/m
3y-avg 548 kmt
1Q04
3Q04
1Q05
3Q05
1Q06
350
Source: Company Reports and INDA.
Page 61
Exhibit 54. Domestic Chinese Steel Pricing* July 2006

HRC - US$/Mt
CRC - US$/Mt
$550
$700
$500
$625
$450
$550
Down 5% m/m
Down 2% y/y
$400
$350
Jul-05
Oct-05
Jan-06
Apr-06
Down 4% m/m
Down 9% y/y
$475
Jul-06
$400
Jul-05
Oct-05
Galvanized - US$/Mt
$600
$650
$525
$575
$450
$425
Jul-05
Down 1% m/m
Down 7% y/y
Oct-05
Jan-06
Apr-06
Jul-06
$300
Jul-05
Oct-05
Rebar - US$/Mt
$350
$350
$325
$325
Down 10% m/m

Down 3% y/y
Oct-05
Jan-06
Jan-06
Apr-06
Jul-06
Wire-Rod - US$/Mt
$375
$275
Jul-05
Jul-06
Down 8% m/m
Up 15% y/y
$375
$375
$300
Apr-06
Plate - US$/Mt
$725
$500
Jan-06
Apr-06
Down 11% m/m

Up 1% y/y
$300
Jul-06
$275
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Source: CISA, Metal Bulletin. *Excludes VAT.
Page 62
Exhibit 55. Monthly U. S. Steel Imports: Value and Prices by Country* (June 2006)
370
$744
400
$700
270
$588
325
$600
170
$431
Dec-04
Jun-05
Dec-05
Dec-03
Jun-06
Brazil
Jun-04
Dec-04
Jun-06
390
$685
525
$1,085
280
$540
400
$860
170
$395
275
$635
$250
150
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Volume (000 mt)
650
60
Jun-06
Dec-03
$1,310
EU**
$410
Jun-04
Dec-04
Japan
Jun-05
Dec-05
Korea
Jun-06
$1,400
250
225
$1,200
200
$875
150
$1,000
150
$700
$800
100
$525
$600
50
75
0
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Volume (000 mt)
300
Value/Ton-US$
Volume (000 mt)
Dec-05
$830
500
Jun-06
Dec-03
$1,050
$350
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Ukraine + Russia
Pacific Rim
$960
500
$1,025
900
$820
375
$813
650
$680
250
$600
400
$540
125
$388
$400
150
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Volume (000 mt)
1,150
Value/Ton-US$
Volume (000 mt)
Jun-05
Value/Ton-US$
Jun-04
Dec-03
Value/Ton-US$
Dec-03
$275
70
$500
250
Volume (000 mt)
Volume (000 mt)
$800
Value/Ton-US$
475
Value/Ton-US$
$900
470
Value/Ton-US$
Volume (000 mt)
Mexico
$900
Value/Ton-US$
Canada
550
$175
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Source: US Department of Commerce * Bar represents volume, Line represents prices. ** Switches to EU 25 in April 2004.
Page 63
Exhibit 56. Monthly U.S. Steel Imports: Value and Prices by Product* (June 2006)
Sheet HR
Billets & Slab
825
$550
525
$550
350
$450
$350
175
$350
$250
$450
375
150
Dec-03
Jun-04
Jun-05
Dec-05
Dec-04
Jun-05
Dec-05
Jun-06
Sheet CR
425
$625
275
$950
300
$500
200
$750
175
$375
125
$550
Volume (000 mt)
$1,150
Value/Ton-US$
350
50
$250
Dec-05
Bars
550
450
350
Dec-04
Jun-05
Dec-05
OCTG
185
Jun-05
Dec-05
Jun-06
Galvanized
$800
260
$800
195
$700
130
$600
$900
65
$350
Jun-04
Dec-04
325
$500
150
$350
Jun-04
$950
$650
250
Dec-03
Dec-03
Jun-06
Value/Ton-US$
Jun-05
Jun-06
Dec-03
$500
Jun-04
Dec-04
Jun-05
Dec-05
Total
Jun-06
3,700
145
$1,256
3,100
$775
105
$1,013
2,500
$625
1,900
$475
$769
25
Dec-03
$525
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
$925
Volume (000 mt)
65
Value/Ton-US$
$1,500
1,300
Value/Ton-US$
Dec-04
Volume (000 mt)
Jun-04
Value/Ton-US$
Dec-03
Volume (000 mt)
Jun-04
$750
50
Volume (000 mt)
$250
Dec-03
Jun-06
Wire Rods
550
Volume (000 mt)
Dec-04
Value/Ton-US$
600
Value/Ton-US$
$650
Volume (000 mt)
700
Value/Ton-US$
$650
Volume (000 mt)
1,050
$325
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Source: US Department of Commerce * Bar represents volume, Line represents prices.
Page 64
Exhibit 57. Monthly U.S. Steel Imports: Value and Prices by Country and Product
--------- Quantity --------Y/Y
YTD 2006
YTD 2006
--------- Value --------June

M/M YTD (Ave.)
June
% Total
M/M
Europe
Russia
Canada
Brazil
Mexico
Korea
Japan
Australia
China
Taiwan
Argentina
Venezuela
Other
(=) Total
956
155
497
113
210
197
156
100
326
161
16
10
318
3,059
31%
5%
16%
4%
7%
6%
5%
3%
11%
5%
1%
0%
10%
100%
-24%
-52%
2%
-24%
-30%
-11%
-25%
27%
16%
27%
215%
-51%
-27%
-14%
12%
-14%
15%
26%
-39%
27%
57%
NM
84%
NM
-29%
-81%
NM
25%
6,931
1,583
2,800
1,286
1,527
1,240
993
599
1,836
833
80
126
1,953
20,204
55%
94%
6%
-5%
-24%
38%
51%
NM
58%
166%
-46%
-50%
104%
34%
773
79
418
72
160
136
144
42
231
129
12
8
198
2,325
-16%
-47%
1%
-18%
-20%
-6%
-33%
18%
7%
23%
150%
-30%
-23%
-11%
836
119
388
116
173
140
158
39
212
105
10
14
197
2,389
Billets and Slabs

Wire Rods
Sheet HR
Sheet CR
Bars
OCTG
Other
Total
435
216
387
296
363
122
1,240
3,059
14%
7%
13%
10%
12%
4%
41%
100%
-36%
50%
-26%
16%
-5%
-30%
-12%
-14%
-2%
7%
87%
163%
3%
-12%
25%
25%
4,230
1,396
2,349
1,609
2,375
902
7,343
20,204
35%
8%
56%
72%
33%
25%
30%
34%
215
106
203
239
258
165
1,138
2,325
-29%
36%
-23%
9%
-7%
-25%
-9%
-11%
305
114
200
212
268
188
1,102
2,389
Source: U.S. Department of Commerce.
Page 65
Exhibit 58. Monthly U.S. Steel Exports: Value and Prices, by Product** (April 2006)
$1,600
600
$915
400
$785
$655
15
$800
200
$400
Apr-04
Oct-04
Apr-05
Oct-05
Long Products
$525
Apr-04
Apr-06
Oct-04
Apr-05
Oct-05
Apr-06
Tubes, Pipes, Fittings
175
$1,125
120
$2,450
150
$950
80
$2,100
125
$775
40
$1,750
$600
100
Apr-04
Oct-04
Apr-05
Oct-05
Volume (000 mt)
160
Value/Ton-US$
$1,300
200
Oct-04
1250
$300
1,200
1000
$250
750
$200
400
$150
Oct-04
Apr-05
Oct-05
Apr-06
Volume (000 mt)
1,600
Value/Ton-US$
$350
Apr-04
Apr-05
Oct-05
Apr-06
Top-3 Exports
1500
500
$2,800
$1,400
Apr-04
Apr-06
Scrap
Volume (000 mt)
Value/Ton-US$
$1,200
$1,045
Flat
Scrap
Long
800
Apr-04
Oct-04
Apr-05
Oct-05
Apr-06
Source: US Department of Commerce ** Bar represents volume, Line represents prices.
Page 66
Value/Ton-US$
30
Volume (000 mt)
800
Volume (000 mt)
Volume (000 mt)
45
Flat Rolled
$2,000
Value/Ton-US$
Semifinished
60
Exhibit 59. Global Commodity Prices vs Exchange Stocks (in mt) June 2006
Copper Prices vs Inventories (LME)
4.00
Inventories
4.00
Price
300,000
2.65
200,000
1.98
100,000
1.30
May-05 Aug-05 Nov-05
Jan-06
Apr-06
0
Jul-06
Price
3.33
450,000
2.65
300,000
1.98
150,000
1.30
May-05 Aug-05 Nov-05 Jan-06
Lead Prices vs Inventories (LME)
Apr-06
0
Jul-06
Nickel Prices vs Inventories (LME)
1,200
400,000
30,000
100,000
1,000
300,000
23,750
75,000
800
200,000
600
100,000
Inventories
US$/mt
US$/mt
600,000
Inventories
US$/lb
3.33
US$/lb
Copper Prices vs. Exchanges Inventories*

400,000
17,500
50,000
11,250
25,000
Price
400
Jan-06
Inventories
Apr-06
Price
5,000
May-05 Aug-05 Nov-05 Jan-06 Apr-06
0
Jul-06
Tin Prices vs Inventories (LME)
0
Jul-06
Zinc Prices vs Inventories (LME)

2,500
1,250,000
8,500
30,000
2,050
975,000
7,000
20,000
1,600
700,000
5,500
10,000
2,500
1,900
Jan-06
Price
Apr-06
US$/mt
US$/mt
1,900
1,600
Copper vs Molybdenum
4.00
40.0
2,350,000
1,275,000
3.33
33.8
2.65
27.5
1.98
21.3
PricePrice
1,300
1,300
May-05
May-05 Aug-05
Aug-05 Nov-05
Nov-05 Jan-06
Jan-06 Apr-06
Apr-06
150,000
Jul-06
3,000,000
1,500,000
1,050,000
825,000
Stocks
Inventories
Price
700
May-05 Aug-05 Nov-05 Jan-06 Apr-06
0
Jul-06
1,700,000
1,050,000
1,600
1,450
425,000
Inventories
Aluminum
Prices
vs vs
Inventories
(LME)
Aluminum
Prices
Stocks (LME)
2,200
1,750
1,150
US$/lb
Inventories
4,000
US$/mt
40,000
US$/mt
10,000
Molybdenum
400,000
600,000
Jul-06
1.30
May-05 Aug-05 Nov-05 Jan-06
Copper
Apr-06
15.0
Jul-06
Source: CRU Monitor; Metalprices.com * Exchange stocks include LME, COMEX and Shanghai. All prices are 3-month forward.
Page 67
Exhibit 60. Global Commodity Prices Sep 2003 - July 2006

Gold
Silver
$16.00
$769
US$/oz
$581
Up 13% m/m
Up 51% y/y
$13.00
US$/oz
$675
$488
$10.00
$7.00
$394
$300
Sep-03
Up 9% m/m
Up 56% y/y
$4.00
Apr-04
Oct-04
May-05
Dec-05
Sep-03
Jul-06
Apr-04
Oct-04
Aluminum
$3.28
US$/lb
US$/lb
Up 2% m/m
Up 36% y/y
$1.53
$0.30
$0.65
Apr-04
Oct-04
May-05
Dec-05
Sep-03
Jul-06
Apr-04
Oct-04
Nickel
$1.58
US$/lb
US$/lb
Up 34% m/m
Up 80% y/y
Dec-05
Jul-06
Dec-05
Jul-06
Up 10% m/m
Up 170% y/y
$1.15
$0.73
$6.00
$0.30
Apr-04
Oct-04
May-05
Dec-05
Jul-06
Sep-03
Apr-04
Palladium
Oct-04
May-05
Hot Roll *
$500
$750
Up 5% m/m
Up 63% y/y
$625
US$/mt
US$/Troy oz
Jul-06
Zinc
$9.00
$400
May-05
$2.00
$15.00
$3.00
Sep-03
Dec-05
Up 14% m/m
Up 109% y/y
$2.40
$0.63
$12.00
Jul-06
$4.15
$0.95
Sep-03
Dec-05
Copper
$1.60
$1.28
May-05
$300
$500
$200
$375
$100
Sep-03
$250
Apr-04
Oct-04
May-05
Dec-05
Jul-06
Up 4% m/m
Up 18% y/y
Jul-03
Feb-04
Sep-04
Apr-05
Source: CRU Monitor; Metalprices.com * Average of U.S., E.U. Export, and Japan Export.
Page 68
Exhibit 61. Global Commodity Prices June 1992-2006

Gold
Silver
$16.00
$750
5-yr avg: US$396

15-yr avg: US$357
5-yr avg: US$6.30

15-yr avg: US$5.47
$12.75
US$/oz
$625
$500
$9.50
$375
$6.25
$250
Jul-92
Jan-96
Jul-99
Jan-03
$3.00
Jul-92
Jul-06
Jan-96
Aluminum
5-yr avg: US76
15-yr avg: US70
US$/lb
$3.24
$0.45
Jul-92
Jan-03
Jul-06
Dec-02
Jun-06
Jan-03
Jul-06
5-yr avg: US$1.27

15-yr avg: US$1.06
$2.33
$1.41
$0.78
Jan-96
Jul-99
Jan-03
Jul-06
$0.50
Jul-92
Jan-96
Nickel
$2.00
5-yr avg: US$5.08
15-yr avg: US$3.78
$1.58
$6.75
$1.15
$4.13
$1.50
Jun-92
5-yr avg: US53

15-yr avg: US50
US$/lb
$9.38
Jul-99
Zinc
$12.00
$0.73
Dec-95
Jun-99
Dec-02
Jun-06
$0.30
Jun-92
Dec-95
Palladium
Jun-99
Hot Roll *
$700
1,200
5-yr avg: US$269
15-yr avg: US$276
US$/mt
$575
$600
$300
$0
Jul-92
Jul-06
Copper
$1.10
$900
Jan-03
$4.15
$1.75
$1.43
Jul-99
5-yr avg: US$439

15-yr avg: US$378
$450
$325
Jan-96
Jul-99
Jan-03
Jul-06
$200
Jul-92
Jan-96
Jul-99
Source: CRU Monitor; Metalprices.com * Average of U.S., E.U. Export, and Japan Export.
Page 69
Exhibit 62. China Raw Material & CVRD Iron Ore Prices
China Iron Ore Imports
China Iron Ore Production

60
Up 14% m/m
Up 45% y/y
Jun-03
Dec-03
35
Up 17% m/m
Up 31% y/y
49
Jun-04
Dec-04
Jun-05
Dec-05
28
38
20
26
13
15
Jun-06
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
5
Jun-06
Dec-05
CVRD Pellet Europe FOB 65% Fe
CVRD Sinter Feed Europe FOB 65% Fe
$80
$55
Up 19% y/y
1994
1996
Down 3% y/y
1998
2000
2002
2004
$45
$65
$35
$50
$25
$35
$15
2006
1994
1996
Indian Iron Ore China CFR
1998
2000
2002
$20
2006
2004
Coke 10.5-12.5% Ash China FOB

$100
Up 2% m/m
Up 15% y/y
Jul-05
$250
Up 8% m/m
Down 22% y/y
$85
Sep-05 Nov-05
Jan-06
Mar-06 May-06
$215
$70
$180
$55
$145
$40
Jul-06
Jul-05
Sep-05
Nov-05
Jan-06
Mar-06
May-06
$110
Jul-06
Source: Bloomberg; SBB.
Exhibit 63. Natural Gas Prices Henry Hub (USD/MMbtu)

Spot Price
16
12
Future Price
16
Down 9% m/m
Down 24% y/y
12
0
Jul-03
Down 9% m/m
Down 20% y/y
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Source: Bloomberg.
Page 70
Exhibit 64. Freight Rates

Baltic Dry Index
Baltic Capesize Index
Up 14% m/m
Up 42% y/y
Oct-03
Jun-04
Mar-05
7,000
9,200
5,250
6,900
3,500
4,600
Up 22% m/m
Up 38% y/y
1,750
Nov-05
0
Jul-06
Oct-03
Baltic Panamax Index
Up 10% m/m
Up 57% y/y
Oct-03
Jun-04
Mar-05
Up 9% m/m
Up 9% y/y
Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06
Nov-04 Mar-05
Jul-05
5,250
18
3,500
12
0
Jul-06
Flat m/m
Up 6% y/y
Nov-03
Jul-04
Mar-05
Nov-05
0
Jul-06
Tubarao to Rotterdam Capesize $/mt

50
29
40
23
30
17
20
10
Jul-06
Up 20% m/m
Up 27% y/y
11
5
Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06
W Australia to China Capesize $/mt

40
20
30
15
20
10
10
Nov-05 Mar-06
0
Jul-06
24
Queensland to Rotterdam Capesize $/mt
Up 16% m/m
Up 28% y/y
Nov-05
Brazilian vs. Australian Freight Premium
1,750
Nov-05
Mar-05
7,000
Tubarao to Baoshan Capesize $/mt
Jul-04
Jun-04
2,300
0
Jul-06
Up 21% m/m
Up 36% y/y
Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06
5
0
Jul-06
Source: Bloomberg; MBR Research.
Page 71
Exhibit 65. Chilean Copper and Molybdenum Production

Copper
Molybdenum
300
Up 4% m/m
Down 2% y/y
250
3,625
225
200
Mar-02
Up 10% m/m
Down 5% y/y
4,438
mt
kmt
275
5,250
2,813
Jan-03
Nov-03
Sep-04
Jul-05
2,000
Mar-02
May-06
Jan-03
Nov-03
Sep-04
Jul-05
May-06
Source: Chilean Copper Commission.
Exhibit 66. Alumina Contract and Spot Prices

Alumina Spot Prices vs. % Aluminum
Alumina Contract Prices vs. % Aluminum

$650
30%
$650
$525
26%
$525
26%
$400
23%
$400
23%
$275
19%
$275
19%
$150
15%
$150
15%
Price
% of Al (LME 3M)
Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06
Price
30%
% of Al (LME 3M)
Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06
Source: CRU Monitor and Bloomberg.
Exhibit 67. Commodity Price Assumptions Table
Aluminum (LME cash/lb)

Copper (LME spot/lb)
Nickel (LME cash/lb)
Gold Avg. (London/troy oz)
Silver Avg. (London/troy oz)
HRC Steel (Global Avg/mt)
Iron Ore (Fines/mt)
-----2006E-----1st Call
2004
ACTUAL
2005
ACTUAL
BSC
$0.78
$1.30
$6.29
$409
$6.66
$575
$24.64
$0.86
$1.67
$6.73
$445
$7.32
$570
$42.25
$1.10
$2.80
$8.00
$580
$10.00
$500- $550
$50.28
$1.15
$2.64
$7.83
$602
NA
-
BSC
-----2007E-----1st Call
$1.00
$2.40
$7.00
$625
$11.00
$500- $550
$50.28
$1.10
$2.44
$7.21
$661
NA
-
Source: First Call; Bear, Stearns & Co. Estimates.
Page 72
Exhibit 68. Monthly Auto Production & Sales: South Korea (in 000 units)
--- Domestic Origin--2004
2005
2006 YTD
2005 May
June
July
Aug
Sep
Oct
Nov
Dec
2006 Jan
Feb
Mar
Apr
May
Production
3,469
3,699
1,639
311
331
311
220
236
324
380
368
319
306
362
324
328
Sales
1,094
1,143
458
92
101
102
90
82
97
110
128
84
89
102
90
93
------ Domestic Origin Y/Y% ----Exports

2,380
2,586
1,133
219
230
211
166
159
219
260
257
217
208
255
226
227
Total Sales
3,473
3,729
1,591
311
331
314
257
241
316
369
385
300
297
357
316
321
Inventories
(4)
(29)
48
0
(0)
(2)
(36)
(6)
8
10
(17)
18
10
5
8
7
Production
9%
7%
7%
10%
16%
15%
-7%
-17%
3%
13%
5%
-4%
31%
9%
1%
5%
Sales
-17%
4%
6%
-1%
9%
18%
8%
-9%
2%
16%
30%
4%
23%
10%
-4%
2%
Exports
31%
9%
5%
14%
12%
14%
1%
-19%
-1%
8%
-1%
-3%
20%
8%
-2%
4%
Source: Korea Automobile Manufacturers Association; Bloomberg.
Exhibit 69. Monthly Auto Production & Sales: Brazil (in 000 units)
--- Domestic Origin---
------ Domestic Origin Y/Y% -----
Production
Sales
Exports Total Sales
Inventories
Production
Sales
2004
2,210
1,517
650
2005
1,018
620
2006-YTD
2005 June
July
Aug
Sep
Oct
Nov
Dec
2006 Jan
Feb
March
April
May
June
1,303
216
206
218
208
191
214
206
195
206
230
204
242
226
812
141
132
144
137
130
150
172
126
122
150
123
153
138
Exports Total Sales
1,579
45
32%
27%
32%
25%
283
652
100
-54%
-59%
-56%
-59%
317
74
74
69
74
62
66
62
46
55
56
51
55
52
861
148
139
152
144
138
158
184
133
128
157
131
164
148
176
0
(1)
4
(3)
(1)
(2)
(29)
23
28
25
30
33
36
64%
15%
9%
9%
2%
0%
6%
9%
19%
6%
2%
-3%
13%
5%
67%
12%
3%
15%
3%
-1%
13%
1%
24%
11%
5%
-6%
13%
-2%
46%
21%
19%
2%
29%
-1%
9%
6%
12%
10%
-8%
-21%
-27%
-31%
69%
14%
4%
16%
5%
1%
14%
3%
25%
11%
5%
-5%
15%
0%
Source: ANFAVEA.
Page 73
Exhibit 70. Global Rig Count

--- Y/Y% --* 2005
* 2006
Mex
107
85
Venz
68
81
Argy
77
78
Latam
316
321
Int'l
855
904
Can
458
474
U.S. Can./US
1,380
1,838
1,576
2,049
Total
2,693
2,954
Latam
9%
2%
Int'l
10%
6%
Can
24%
3%
Total
15%
10%
2005 June
July
Aug
Sep
Oct
Nov
Dec
2006 Jan
Feb
Mar
Apr
May
June
121
104
103
106
92
92
94
92
79
85
85
89
80
70
68
66
63
64
71
75
75
79
81
82
82
84
74
79
80
75
74
82
81
80
76
69
79
82
81
328
318
308
307
295
318
327
323
309
306
327
333
328
876
854
859
852
846
878
891
905
885
898
912
920
906
293
450
545
497
541
600
575
660
715
620
198
240
408
1,355
1,398
1,435
1,452
1,479
1,486
1,470
1,473
1,533
1,551
1,597
1,635
1,665
2,524
2,702
2,839
2,801
2,866
2,964
2,936
3,038
3,133
3,069
2,707
2,795
2,979
12%
11%
4%
4%
0%
0%
7%
5%
-3%
-3%
2%
1%
0%
11%
12%
8%
6%
8%
7%
10%
13%
9%
8%
9%
0%
3%
11%
28%
54%
82%
45%
34%
31%
20%
21%
48%
9%
-3%
39%
13%
16%
19%
21%
20%
17%
18%
17%
17%
20%
15%
12%
18%
1,648
1,848
1,980
1,949
2,020
2,086
2,045
2,133
2,248
2,171
1,795
1,875
2,073
Source: Baker Hughes *Average monthly and annual data.
Exhibit 71. Rig Counts vs. WTI Price & Tenaris Top 4 Markets
WTI Price
Int'l Rigs
Rigs
900
78
135
61
105
44
650
US$/Barrel
1,150
27
400
Jun-88
Dec-92
Jun-97
Dec-01
10
Jun-06
Mex
Ven
740
Arg
Can (r)
555
75
370
45
185
15
Jun-98
Jun-00
Jun-02
0
Jun-06
Jun-04
Source: Baker Hughes; Bloomberg.
Exhibit 72. Selected OCTG Prices (US$/ton)
Carbon Seamless Casing

1,450
Carbon Seamless Tubing

1,650
Up 2% m/m
Up 4% y/y
1,250
Flat m/m
Flat y/y
1,450
1,050
1,250
850
1,050
650
850
Jun-03
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Source: Pipe Logix, Inc.
Page 74
Exhibit 73. U.S. Construction Spending by Sector

--------------------- Y/Y % ---------------------(a) Streets /
(b)
Non
Public Highways
Private Residential Residential
2006-YTD
2005 May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2006 Jan
Feb
Mar
Apr
May
10.2%
6.6%
6.6%
4.6%
8.1%
6.7%
8.8%
6.6%
7.7%
9.9%
9.5%
11.0%
10.6%
9.8%
14.9%
5.5%
6.3%
7.9%
13.4%
17.5%
10.7%
6.7%
9.7%
12.5%
7.8%
12.7%
20.6%
17.3%
8.2%
12.7%
11.9%
10.0%
9.3%
10.9%
11.0%
12.1%
11.7%
10.5%
9.3%
9.2%
7.2%
5.8%
6.1%
14.2%
14.1%
13.1%
11.5%
12.9%
12.7%
13.5%
11.4%
9.5%
8.4%
7.6%
4.4%
2.4%
13.1%
9.2%
6.5%
2.2%
3.6%
6.0%
6.9%
8.7%
12.4%
12.7%
11.2%
12.9%
14.2%
14.5%
---------- M/M % ---------(a+b)

Total
Public
Private
Total
8.6%
11.4%
10.7%
8.8%
9.0%
9.9%
10.5%
10.9%
10.8%
10.4%
9.3%
9.6%
7.9%
6.6%
10.2%
12.7%
11.5%
0.5%
6.8%
-2.5%
-7.7%
-6.4%
-12.1%
-9.7%
0.5%
10.8%
10.1%
11.9%
8.2%
8.0%
4.7%
2.1%
3.1%
-2.1%
0.1%
-3.7%
-10.0%
-8.0%
-2.8%
15.6%
2.8%
6.6%
8.6%
9.0%
6.2%
1.7%
3.9%
-2.2%
-1.7%
-4.3%
-10.5%
-8.3%
-2.2%
14.6%
4.2%
7.7%
Exhibit 74. U.S. Construction Spending (US$ bn) Seasonally Adjusted

675
Public + Private Non-Residential
Private Residential
600
525
450
375
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Page 75
Page 76
Appendix II GEM Watch

Highlights
Page 77
Page 78
Gem Watch Highlights Steel & Mining

BRAZIL STEEL
The Strong Domestic Recovery Continues in June (7/20/06)

Key Points
Crude steel output lower y/y and m/m. Brazilian steel output in June fell 4.4% y/y
(or 109 kmt) to 2.38 mmt and was down 1.5% from May on a per-day basis. We
believe that the bulk of the decline can still be explained by the CSN BF outage,
which we estimate resulted in a 250- to 280-kmt reduction in crude steel output for
the month. CSN restarted its BF#3 in late June.
Domestic shipments up y/y and m/m. Finished product shipments rose nearly 15%
y/y, to 1.46 mmt, and are up 10% y/y in 2Q06. This compares to y/y declines of 6%
and 9% in 1Q06 and 2005, respectively. Demand was likely helped by restocking, an
uptick in construction spending (mostly residential), growth in auto production, and
lower interest rates. On a per-day basis, shipments rose 3.5% m/m.
Flat steel outperforms long for a change. Flat steel domestic sales rose ~19% y/y
to 935 kmt, the second straight month of increases (+~6% m/m). This was the first
time flat steel outperformed since September 2005, with long steel sales up a smaller
7% y/y. For 2Q06, long is up 10% y/y and flat 9% y/y.
Inventories might have declined in June. Total shipments (domestic + export) of
2.43 mmt were higher than production, implying inventories may have declined. The
June figures may end a two-month trend of rising flat steel inventories after a major
destocking. Distributor inventories were recorded at 453 kmt (or 2.3 months) in May.
Bottom line. The data continue to point to improved domestic demand and should
translate into a better product mix for 2Q06. We expect solid volumes across the
board, with the exception of CSN, which was still recovering from its BF accident.
Our top Brazilian steel pick is Usiminas.
Crude steel output lower y/y and m/m. Brazilian steel output in June fell 4.4% y/y (or
109 kmt) to 2.38 mmt and was down 1.5% from May on a per-day basis. We believe that
the bulk of the decline can still be explained by the CSN BF outage, which we estimate
resulted in a 250- to 280-kmt reduction in crude steel output for the month. CSN
restarted its BF#3 in late June.
Domestic shipments up y/y and m/m. Finished product shipments rose nearly 15% y/y,
to 1.46 mmt, and are up 10% y/y in 2Q06. This compares to y/y declines of 6% and 9%
in 1Q06 and 2005, respectively. Demand was likely helped by restocking, an uptick in
construction spending (mostly residential), growth in auto production, and lower interest
rates. On a per-day basis, shipments rose 3.5% m/m.
Flat steel outperforms long for a change. Flat steel domestic sales rose ~19% y/y to
935 kmt, the second straight month of increases (+~6% m/m). This was the first time flat
steel outperformed since September 2005, with long steel sales up a smaller 7% y/y. For
2Q06, long is up 10% y/y and flat 9% y/y.
Exports fell y/y and but rose m/m. Exports of 921 kmt dropped 27% y/y, representing
about 38% of total shipments, below the 49% last year but up from 35% in May.
Semifinished steel products were 41% of total exports (YTD average is 46%), followed
by flats at 31% (34% YTD) and longs at 28% (20% YTD).
Page 79
Inventories might have declined in Flat Steel Inventories at Distributors (kmt)

June. Total shipments (domestic + 750
export) of 2.43 mmt were higher than
production, implying inventories may 650
have declined. The June figures may end
a two-month trend of rising flat steel 550
inventories after a major destocking.
450
Distributor inventories were recorded at
453 kmt (or 2.3 months) in May.
350
Bottom line. The data continue to point

to improved domestic demand and should Source: INDA.
translate into a better product mix for
2Q06. We expect solid volumes across the board, with the exception of CSN, which was
still recovering from its BF accident. We also look for flat domestic prices to rise 3% q/q
on average as companies remove some of the discounts given in 1Q06, with long steel
stable. Export prices are seen up 5%-10%, with a bigger gain expected in 3Q. Our top
Brazilian steel pick is Usiminas.
Brazil June Steel Production/Sales (in kmt)
In kmt
Production
Crude Steel
Finished
Flat
Long
Semi Finished-For-Sale
June 06
% ttl
June 05
y/y
May 06
m/m
m/m*
YTD 06
YTD 05
2,380
1,934
1,193
740
467
NM
NM
NM
NM
NM
2,489
1,744
1,066
678
540
-4.4%
10.9%
12.0%
9.1%
-13.7%
2,496
1,923
1,149
774
521
-4.6%
0.5%
3.8%
-4.4%
-10.4%
-1.5%
3.9%
7.3%
-1.2%
-7.4%
14,479
11,158
6,698
4,460
3,024
15,927
11,117
6,947
4,170
3,483
Domestic Sales
Finished
Flat
Long
Semi Finished
Total Domestic Sales
1,457
935
522
52
1,509
97%
62%
35%
3%
100%
1,271
783
489
49
1,321
14.6%
19.4%
6.9%
4.5%
14.2%
1,455
0.2% 3.5%
907
3.1% 6.5%
548
-4.7% -1.5%
71 -58.1% -25.0%
1,526
-1.1% 2.2%
8,217
5,038
3,179
356
8,573
8,111
5,227
2,884
306
8,417
Exports
Finished
Flat
Long
Semi Finished
Total Exports
Total Sales (Dom. + Exp.)
542
282
260
379
921
2,429
59%
31%
28%
41%
100%
547
351
196
707
1,254
2,575
-1.0%
-19.8%
32.9%
-46.4%
-27%
-6%
358
207
150
455
813
2,338
3,074
1,890
1,184
2,591
5,664
14,237
2,739
1,468
1,271
2,914
5,653
14,070
73%
73%
78%
69%
% Domestic (Flat)
% Domestic (Long)
77%
67%
69%
71%
Source: IBS preliminary data; Bear, Stearns & Co. Inc.
51.5% 56.5%
36.0% 40.5%
72.9% 78.6%
-16.8% -14.0%
13.3% 17.0%
3.9% 7.3%
81%
78%
*
On a per-day basis.
Pricing is as of market close July 19, 2006
CVRD
Highlights from the Analyst Day (6/30/06)

Key Points
Still bullish on (and highly dependent on) China growth. CVRD remains very
bullish on the China growth story, which is driven by urbanization and its
Page 80
byproducts. It sees seaborne iron ore demand growing by 225 mmt from 2005
through 2010, of which 85% is from China. Imports are seen steadily gaining market
share (currently 55%) given their superior quality and limited reserves in China.
Company sees supply response but is not worried about excess levels. Unlike that
for some base metals, the supply response for iron ore looks to be significant and
fairly visible. The effect on future iron ore prices is seen as mitigated by (a) the Big
3l dominating new availability; (b) utilization rates remaining above 95%; and (c)
dramatically higher capital costs.
Or Brazil newcomers. CVRD estimates 115 mmt of new seaborne capacity by 2010
will come from Brazil. Interestingly, it assumes only 25 mmt from outside the
company, which is a clear signal of skepticism (which we share) about the potential
magnitude/timing of new players. We think new producers in Brazil face challenges
(e.g., financing, infrastructure, other newcomers, and incumbent advantage).
Robust view on alumina potential. The company made a strong case that it is in a
good position to become a top global producer of alumina given its (a) long-term
bauxite reserves at Paragominas/MRN; (b) extensive infrastructure/logistics; (c)
capital costs that are among the lowest in the industry; (d) large-scale mining
operations; and (e) optimization of plant assets.
Still trying to get into Usiminas control group. CVRD confirmed it is trying to get
into the Usiminas control group. We think it will ultimately succeed but only for part
of its holding so that it does not become too large within the group. We would like to
see CVRD use its influence to encourage Usiminas to consider selling itself/merging
with another steelmaker.
Risks to the target price include: lower commodity pricing, reduced global demand, and
financial-market uncertainty. Since company doesn't issue employee stock options, there
are no stock-option expenses to subtract from earnings estimates.
CVRD held its annual analyst/investor event this week. Below are a few of the highlights
from the presentations in Rio:
Still bullish on (and highly dependent on) China growth. CVRD remains very bullish
on the China growth story, which is driven by urbanization and its byproducts (housing,
infrastructure, and consumer durables). It sees seaborne iron ore demand growing by 225
mmt from 2005 through 2010, of which 85% is from China. Imports are seen steadily
gaining market share (currently 55%) given their superior quality and the limited
reserves in China.
Company sees supply response but is not worried about excess levels . . . . Unlike
that for some base metals, the supply response for iron ore looks to be significant and
fairly visible, though equipment shortages and high logistics costs continue to push out
the impact. The effect on future iron ore prices is seen mitigated by (a) the Big-3s
dominance of new availability allowing it to try to match supply with demand via
contracts; (b) utilization rates remaining above 95%; and (c) dramatically higher capital
costs, increasing the marginal cost curve. Management also noted that a lower utilization
rate in the future would allow it to better optimize product mix and lower demurrage
costs.
. . . or Brazil newcomers. CVRD estimates 115 mmt of the 265 mmt in new seaborne
capacity by 2010 will come from Brazil. Interestingly, it assumes only 25 mmt from
outside the company, which is a clear signal of skepticism (which we share) about the
potential magnitude/timing of new players (CSN, MMX, etc.). We think new producers
in Brazil face several challenges, including financing, equipment/infrastructure,
competition from other newcomers, and the incumbent advantage of the Big 3 producers.
The right product mix (i.e., weighed toward concentrates) and commercial access to
China are other key factors to watch.
Page 81
Constructive comments on price leadership. Over the past few years, we have seen a
souring in the relationship between the iron ore producers and the steelmakers,
highlighted again by the recent 19% price hike (the 72% rise last year was less
controversial, in our view, as it followed a similar move in steel prices). We liked
managements response to this issue. It was firm, noting that (a) although it is not easy to
be the price leader, it accepts the role and is willing to take the negative heat if necessary
to attain its goals; (b) structurally, it does not have the option of hiding behind an LMEquoted price like other commodity producers; and (c) iron ore has risen less than other
commodities.
Robust
view
on
alumina
potential.
Management
noted
that
the
aluminum/alumina/bauxite segment has established itself as the #2 business within
CVRD, contributing 12% of 1Q EBITDA (albeit overshadowed by iron ore at ~79%).
The company made a strong case that it is in a good position to become a top global
producer of alumina given its (a) long-term bauxite reserves at Paragominas/MRN; (b)
extensive infrastructure/logistics; (c) capital costs that are among the lowest in the
industry; (d) large-scale mining operations; and (e) optimization of plant assets
Alunorte is set to expand another 1.8 mmt to 6.3 mmt by 2Q08, and CVRD is planning a
new refinery near Alunorte. Although we would like to see the company as a bigger
aluminum producer, given limitations on low-cost energy, we think the alumina focus
makes good economic sense.
Still trying to get into Usiminas control group. CVRD confirmed it is trying to get into
the Usiminas control group. It referred to its desire as wanting to be in First Class as
opposed to the current Business Class (ON shares outside the control group). We think it
will ultimately succeed but only for part of its holding so that it does not become too
large within the group. CVRDs stated intention is to see Usiminas build a new slab
plant (to consume additional CVRD iron ore), and it indicated a willingness to be a
shareholder in the project. We still think Usiminas needs another steel company to join
the project. We would also like to see CVRD use its influence to encourage Usiminas to
consider selling itself or merging with another steelmaker.
Bottom line. CVRD remains one of our top picks, due to its high FCF, leading global
market share, good earnings visibility/defensiveness, and strong volume
growth/expansions. The story, as always, remains highly levered to economic growth in
China. Our end-06 price target is US$31.50/ADR.
Pricing is as of market close June 27, 2006
MITTAL STEEL
Running on MT? (7/11/06)

Key Points
Mittal shares down big. Mittal shares have declined 32% from their 52-week high,
one of the worst performances of all global steelmakers, and are down over 10%
since the Arcelor board accepted its revised offer terms on June 25. In this note are
some thoughts about/explanations of the share weakness as well as our view on the
potential pro forma valuation.
Key reasons for weakness. We attribute Mittals recent share weakness to (1) bigpicture industry concerns; (2) trading spreads that have favored Arcelor shares over
MT; (3) profit-taking among hedge and arb funds; (4) Mittals perceived generous
Page 82
offer terms; (5) potential integration issues; (6) forecast risk; and (7) uncertain U.S.
investor interest.
EV multiples are low compared to peers'. Based on our preliminary pro forma
numbers, MT is trading at ~4.3x 2007E EBITDA, compared to an average of ~6x for
Japan/Taiwan, nearly 6x for the U.S., and 5x for Brazil. Only PKX and TX are lower
in our coverage group. This peer discount is hard to justify given the companys
industry-leading scale, diversification, financial strength, and liquidity.
P/E and FCF yield even more compelling than EBITDA. The 2007E pro forma
P/E of around 5x is low in absolute, relative, and historical terms. This may be a
better measure than EBITDA as it gives the company credit for low borrowing costs
and taxation. The pro forma FCF yield is also solid double digit, which is attractive
given Arcelor-Mittals investment, deleveraging, and dividend options.
Bottom line. We think these technical and top-down factors and merger concerns, as
well as an expected turnover in the shareholder base, could limit upside for the next
several months. On a longer horizon, we see solid valuation upside from current
levels. While we still need to refine our pro forma numbers, we think a range of
US$43-48/ADR looks achievable based on 5.5x 2007E EBITDA, or 8x P/E.
Risks to the target price include: lower steel prices, weaker global economic demand,
financial-market uncertainty, and higher input costs.
Mittal shares have declined 32% from their 52-week high, one of the worst performances
of all global steelmakers, and are down over 10% since the Arcelor board accepted its
revised offer terms on June 25. Below are some thoughts about/explanations of the share
weakness as well as our view on the potential pro forma valuation.
(1) Big-picture risks. The steel sector is currently benefiting from strong demand,
sharply rising prices, and relatively low inventories. However, there are several risk
factors pressuring equities, including: (a) Chinese steel output/net exports have been
surprisingly high; (b) Chinese steel prices have retreated in recent weeks after a big rise;
(c) ex-China steel production rates are growing, in part as a supply response to higher
prices; and (d) rising interest rates have reduced sentiment for commodity-related stocks
due to concerns about slower global demand. Our view: We expect fundamentals to give
back some of the gains later this year while remaining at strong levels we think this
concern may be overdone.
(2) Deal skeptics. Mittal gave up a lot to win the support of Arcelor management, and
some investors may be think it was too much essentially a Pyrrhic victory. Our view:
The final economic terms, which valued Arcelor at a US$12 bn premium to Mittal, were
generous, and barely (if at all) earnings accretive for MT in the near term (although FCF
positive). Similarly, by sharing management and board control with Arcelor, the
company ceded part of the Mittal premium that we had assigned. We are mixed on this
issue.
(3) Integration risk. Given the two very different cultures and management styles, as
well as the bad blood during the bidding phase, integration issues are seen as a key
concern. Synergy plans are always easier said than done, and Arcelor management may
have difficulties adjusting to a dominant family owner watching over it. Our view: We
think Arcelor agreed to this transaction more out of need than want (it ran out of
blocking actions, and management was facing increasing public scrutiny over the
proposed Severstal deal). Still, we think the industrial logic of the merger and some
pushing from Mittal will keep the process relatively smooth.
(4) Arbitrage spreads. Arcelor shares have been trading at a 2%-7% discount to the
offer price since the terms were revised (the gap closed partly on July 10). Our view: For
Page 83
investors interested in gaining exposure to Mittal, it has made more sense to buy Arcelor
shares at a discount to the offer price than to buy MT shares. This is a short-term factor.
(5) Selling pressure. Hedge funds and arbitrage funds have gained a significant presence
in Arcelors ownership base since Mittals original bid in January. Many of these funds
may be locking in profits by selling in the short term, thus avoiding a long-term view on
the steel cycle. Our view: This is a legitimate concern for the next several months. The
overhang of many sellers could continue to pressure the shares, as they did Mittal shares
after the ISG acquisition.
(6) Forecast risk. Analyst estimates for both Mittal and Arcelor have risen materially
since the start of the year to reflect a much better than expected recovery in global steel
prices. While large, Arcelor-Mittal would only control 10% of the global steel market
and remains susceptible to uncertainties such as oversupply from China (where the
company has only a small presence) and pricing competition from Russian exports. Our
view: We think investors should not be wed to a particular pro forma figure for the
merger beyond 2006 we note a small US$10/ton move in steel prices would alter
annual EBITDA forecasts by ~US$1 bn. We think it makes sense to err on the side of
conservatism but do not see a scenario in which prices/margins collapse given producer
discipline/high industry costs.
(7) Uncertain U.S. investor interest. Whereas Mittal was viewed by many as a U.S. or
partly-U.S. company (given major contributions of ISG and Inland), the merged entity
could be perceived more as a European vehicle. Although the overwhelming amount of
MT trading currently takes place on the NYSE, we understand most Arcelor holders
(representing the majority of the float) will receive MT Paris shares. Our view: With
index participation, liquidity, and analyst coverage mostly in Europe, we do think MT
could lose some of its U.S. following. However, given its size and global presence, we
still see it evolving into the effective ETF for the steel industry.
Thoughts on pro forma valuation
EV multiples are low compared to peers. Based on our preliminary pro forma
numbers, Mittal is trading at approximately 4.3x 2007E EBITDA. This compares to an
average of around 6x for Japan/Taiwan (based on IBES estimates for Japan), nearly 6x
for the U.S., and 5x for Brazil. Among our global steel comps, only Posco and Ternium
carry lower multiples. This peer discount is hard to justify given that the company will
have industry-leading scale, diversification, financial strength, and liquidity.
Even more compelling P/E multiple and FCF yield. The P/E and FCF discount appear
even more attractive than the industry-standard EV/EBITDA. The 2007E pro forma P/E
looks to be around 5x, which is very low in absolute, relative, and historical terms.
Earnings as opposed to EBITDA may be a better measure as they give the company
credit for the low borrowing costs and taxation. The pro forma FCF yield is also solid
double-digit, which is attractive given Arcelor-Mittals investment, deleveraging, and
dividend options.
Bottom line. The stock has been under pressure given both technical and top-down
factors as well as legitimate concerns about the merger. We think these factors, as well as
an expected turnover in the company shareholder base, could limit upside for the next
several months. On a longer horizon, we arrive at sold valuation upside from current
levels. While we still need to refine our pro forma numbers, we think a range of US$4348/ADR looks achievable based on 5.5x 2007E EBITDA, or 8x P/E. Our current standalone target is US$45/ADR.
Page 84
POSCO
2Q06 Results Beat on Higher Margins; Somewhat Cautious Company

View on 4Q (7/13/06)
Key Points
Revenues below, on lower volumes, while prices in line. Revenue of US$4.92 bn
was 3% lower than forecast on 3%-lower volumes of 6.95 mmt. Average
revenue/ton of US$708/mt was down 9% y/y but rebounded a solid 6% q/q, in line
with our forecast. We think the gain was mostly from exports (product mix actually
weakened slightly) and was helped by the 3% appreciation of the Korean Won.
Operating income above on higher margins/net income even better. Operating
income/ton grew nearly US$30/mt to US$143, nearly US$10/mt above our estimate.
As a result, operating income of US$991 mn was 3% above forecast, and the 20.1%
margin (+320 bps q/q) was 110 bps higher. Net income of US$748 mn beat our
estimate by 6%, likely helped by below-the-line items, including taxes.
2006 guidance mostly unchanged conservative view on 4Q06 prices.
Management lowered its volume guidance slightly to 29.0 mmt but maintained its
revenue numbers implying slightly higher prices. Interestingly, this implies flat
prices in 2H06 vs 1H, with revenues and shipments both up 6% h/h. This looks
conservative given the 3Q domestic/export price hikes, as PKX appears to be
cautious on 4Q.
Raising estimates. On the back of the 2Q results, we are tweaking our estimates
primarily to reflect: (a) higher prices; (b) better margins in 2006; (c) the stronger
Korean Won; and (d) greater equity income. Our EBITDA estimates rise by 8% and
1% in 2006 and 2007, respectively, while our price target remains US$78/ADR.
Bottom line. We continue to like Poscos high FCF, technology, growing high-end
product mix, size/scale/liquidity, and inexpensive valuation. On the flip side, we do
not see it as a takeover candidate, the balance sheet is highly undercapitalized, it
remains exposed to Chinese imports/pricing trends, and expansion plans into
India/China are progressing very slowly.
Risks to the target price include: high capital outlays, headwinds from rising U.S.
interest rates, lower steel prices, and financial-market uncertainty.
Posco reported summary parent-company results late Wednesday, July 12, in Korea
(before the open in New York) and held a North American conference call. Full
financials were not made available. Below are our thoughts:
Key Highlights:
Revenues below our estimate on lower volumes . . . Revenue of US$4.92 bn
(KRW4.67 tn) was 3% lower than forecast on 3%-lower volumes of 6.95 mmt (+1%
y/y). Domestic volumes fell 4% y/y, offset by a 16% gain in exports (with export prices
similar to or slightly higher than domestic, the decline in Korean sales has little adverse
impact). The export ratio did decline 170 bps q/q to ~30%. After rising throughout 2005,
finished product inventories declined for the second straight quarter (-35 kmt q/q).
. . . with prices in line . . . Average revenue/ton of US$708/mt was down 9% y/y but
rebounded a solid 6% q/q (or US$37/mt), in line with our forecast. We think the gain
was mostly from exports (product mix actually weakened slightly) and was helped by the
Page 85
3% appreciation of the Korean Won in 2Q. The biggest price gain appears to be in
stainless products, up 16% q/q in dollar terms (demand pull and cost push).
. . . but operating income above on higher margins . . . Operating income/ton grew
nearly US$30/mt to US$143, nearly US$10/mt above our estimate. As a result, operating
income of US$991 mn was 3% above forecast, and the 20.1% margin (+320 bps q/q) was
110 bps higher. The overall level rose 22% q/q but was still off 42% y/y. Lower costs
look to be a factor (Posco is aiming for savings in raw material procurement, purchasing,
and energy of KRW890 bn in 2006).
. . . and EPADR was even better. Net income of US$748 mn beat our estimate by 6%
(+7% q/q), likely helped by below-the-line items, including taxes. EPADR of US$2.41
were 16 above our estimate (+10% q/q), as Posco reduced its share count by 3%.
Net cash increased more than expected. While a full balance sheet/cash flow statement
was not published, the company commented on the call that net cash was around
KRW0.8 tn (US$840 mn) at the end of 2Q06 well above our estimate and similar to the
1Q level. The difference from our estimate is likely from lower working capital, capex,
and taxes.
2006 guidance mostly unchanged conservative view on 4Q06 prices. Management
lowered its sales volume guidance slightly back to 29.0 mmt after raising it to 29.2
mmt in 1Q. Revenue guidance was kept at KRW19-20 tn (US$19.8-20.8 bn) implying
slightly higher prices. Interestingly, the guidance implies flat prices in 2H06 versus 1H,
with revenues and shipments both up 6% h/h. This looks conservative given the 3Q
domestic/export price hikes, as the company appears to be taking a cautious view on 4Q
(also emphasized in its presentation, in which it cites rising steel output in China).
Raising estimates. On the back of the 2Q results, we are tweaking our estimates
primarily to reflect: (a) higher prices; (b) better margins in 2006; (c) a stronger Korean
Won; and (d) greater equity income. As a result, we now look for 2006 revenues of
US$20.51 bn (+8% from our previous estimate), EBITDA of US$5.63 bn (+8%), and
EPADR of US$9.75 (+US$1.35/ADR). In 2007, we now forecast revenues of US$20.54
bn (+4%), EBITDA of US$5.37 bn (+1%), and EPADR of US$8.75 (+30/ADR).
Bottom line. We continue to like Poscos high FCF generation, leading technology,
growing high-end product mix, and size/scale/liquidity. The absolute/relative valuation
remains inexpensive, and the market does not appear to give Posco full credit for its
nonconsolidated assets and equity holdings. On the flip side, we do not see it as a
takeover candidate, the balance sheet is highly undercapitalized (dividends are not
expected to rise), it remains exposed to Chinese imports/pricing trends, and expansion
plans into India/China are progressing very slowly. Our end-06 price target remains
US$78/ADR.
Page 86
SOUTHERN COPPER
Dividends Down But Still Robust and Likely to Recover/Grow

(7/14/06)
Key Points
2Q06 dividend. PCU announced on Thursday morning, July 13, a 2Q06 dividend of
US$2/share to be paid on August 25, 2006, with a record date of August 2.
This total outlay is ~US$295 mn, down 27% from the payment made in both
1Q06 and 4Q05. We think the decline reflects an effort to be conservative due to the
current labor strikes (which now affect roughly half of copper production) as
opposed to a change in strategy. Recall, PCU has only a negligible net debt position
and has stated its aversion to a negative-carry.
The payout ratio is 102% of our estimated 2Q06 EPS forecast not that
different from the high 95% over the past two quarters. Recall, we see EPS
down 32% q/q due to an estimated US$250 mn in hedging losses (mostly noncash;
operating results are actually forecast up despite lower shipments). Revenues are
seen at US$1.24 bn and EBITDA at US$736 mn (results are expected on July 26).
Even with the reduction, this dividend represents an annualized yield of a high
~9%. The company does not have a formal policy/payout ratio calculation. Still,
going forward, and assuming normal production levels are resumed, we think PCU is
positioned to pay a quarterly dividend of around US$3/share, a nearly 14% yield.
Bottom line. Near-term stock performance could remain rocky given the strike
impact (weekly cost of US$20-25 mn in EBITDA), poor sentiment for
commodity/EM shares, hedging losses in 2Q06, and the risk of higher taxation in
Peru. Still, we continue to recommend PCU on the back of robust fundamentals,
scarcity value for copper equities, a healthy dividend yield, and a potential company
sale. Risks to the target price include: lower commodity pricing, reduced global
demand, and financial-market uncertainty.
Risks to the target price include: lower commodity pricing, reduced global demand, and
financial-market uncertainty.
SOCIEDAD MINERA
CERRO VERDE
Seeing Green Initiating Coverage with Peer Perform Rating

(7/18/06)
Key Points
Initiating coverage. On July 18, we initiated coverage of Cerro Verde with a Peer
Perform rating. The company, controlled by Phelps Dodge, is in the midst of a major
capacity expansion that will rank it among the leading copper producers in Peru,
with 300 kmt of output. Even with lower assumed copper prices, we forecast 2007
EBITDA will be nearly double the 2006 level.
Bullish on copper. Copper is benefiting from a very tight supply/demand dynamic,
with low inventories and high prices. Output is likely to stay constrained by
structural issues and recurring outages. Meanwhile, new projects are increasingly
located in areas with higher political risk, greater capital costs, and longer buildout
periods. Infrastructure spending/urbanization underpins demand growth.
Low valuation for big copper play. Cerro Verde trades at a low 4.4x 2007E P/E
and 3.0x EV/EBITDA. While it represents 25% of majority owner Phelps Dodges
equity reserves and 37% of consolidated reserves, its current market capitalization
Page 87
represents only around 20% of Phelps Dodge. Other positives include sky high
margins, strong free cash flow, advanced technology, and leading management.
Some valuation upside still seen. Our end-2006 price target is US$11/share, based
on a 50% discount multiple to 2007E EPS given its tiny 7% float (unlikely to grow),
low liquidity, lack of ADR, and increased taxation risk. Given the strong (and
surprising) jump in the shares, up 16% in the past week, to all-time highs, while its
peers have seen big corrections, our target upside is less than 15%.
Risks to the target price include: country risk, low liquidity and float, lower commodity
prices, global economic demand, and financial-market uncertainty. Since company
doesn't issue employee stock options, there are no stock-option expenses to subtract from
earnings estimates.
Executive Summary
On July 18, we initiated coverage of Cerro Verde at the previous days closing price of
US$9.90/share. The company, controlled by Phelps Dodge, is in the midst of a major
capacity expansion that will rank it among the leading copper producers in Peru, with
300 kmt of output. Our end-2006 price target is US$11/share, based on a 5x P/E to
2007E a 50% discount to its peers. While we like its cash flow and growth profile, our
discount multiple reflects its tiny 7% public float (unlikely to grow), low share liquidity,
lack of ADR, and taxation risk in Peru. With the strong/surprising jump in the shares, up
16% in the past week, to all-time highs, while its peers have seen big corrections, we
now see less than 15% potential upside and rate the stock Peer Perform.
Investment positives
Bullish view on copper. Copper is benefiting from a very tight supply/demand dynamic,
which has propelled exchange inventories to minimal levels (roughly 3 days of
consumption), and prices to historic highs. The most compelling story is on the supply
side, where output growth is being constrained by both structural issues (declining
grades, few new major ore discoveries, labor/equipment shortages, water/power
availability, etc.) and the byproduct of high utilization/profitability (accidents, labor
strikes, etc.). Meanwhile, new projects are increasingly located in areas with higher
political risk, much greater capital costs, and longer buildout periods.
On the demand side, secular trends such as infrastructure development and urbanization
in developing countries underpin strong growth. Barring a major global slowdown, we
expect supply/demand tightness for the remainder of the decade. We conservatively
forecast copper prices to average US$3.00/lb in 2006, US$2.40/lb in 2007, and
US$2.00/lb in 2008 Cerro Verde sales are fully unhedged.
Major expansion plans on track to open soon and funded without new net debt. The
Cerro Verde mine is undergoing a major expansion, lifting annual copper production to
300 kmt by mid-2007E (with over 25 years of mine life) versus 2005 production of 94
kmt. Molybdenum output will be around 4 mn lbs. According to management, the project
is running on time and on budget. While it raised equity capital, Cerro Verde effectively
is able to pay the estimated US$850 mn in expansion capex with strong internal cash
flows net cash levels at end-2007E (adjusting for the US$440 mn in equity) look higher
than preconstruction levels. Even with lower assumed copper prices, we forecast 2007
EBITDA will be nearly double the 2006 level.
Page 88
Robust margins and cash flow. Given strong pricing, low taxes, and a highly
competitive cost structure, free cash flow generation is forecast to average over US$750
mn in 2007-08, a 25% yield. Its cost advantage is helped by efficient production, low
labor costs, and modern equipment including the first high-pressure grinder used in
copper, which is expected to reduce energy costs. EBITDA margins are amongst the
highest in the industry nearly 80% in 2006E and well above 70% in 2007E, even with a
reduced copper price forecast.
2007E EBITDA Margins of Selected Copper Producers
80%
65%
50%
35%
Kazakhmys
Phelps
Dodge
Freeport
Grupo
Mexico
Southern
Copper
Antofagasta
Cerro Verde
20%
Source: Companies; Bear, Stearns & Co. Inc. estimates.
Strong ownership group/discounted play on Phelps Dodge. The Cerro Verde

ownership group consists of Phelps Dodge (53.6%) bringing industry-leading copper
production and development expertise; Sumitomo (21.0%) which offers technology
and a buyer for at least half of the expanded concentrate production; and Buenaventura
(18.5%) a local partner with a 50-year-plus history of Peruvian mining. While Cerro
Verde represents 25% of majority owner Phelps Dodges equity reserves and 37% of
consolidated reserves, its current market capitalization represents only around 20% of
Phelps Dodge.
Good community/labor relations. Unlike some of the other major miners in Peru
(including Yanacocha and Southern Copper), Cerro Verde has largely managed to avoid
production disturbances/unrest from local communities and/or major labor strikes. The
company benefits from its proximity to the city of Arequipa, minimizing the need for a
large mining town and related infrastructure. In addition, Cerro Verde builds good will
by contributing to local educational/job training/health programs as well as to water
infrastructure in the Arequipa area.
Investment risks
Commodity price/sentiment risk. As a commodity producer with limited
diversification, the company remains highly levered to the copper price a factor over
which it has no control. While we think the shares are discounting a much lower copper
price, a major correction in the metal price could be an important barrier for stock
performance. The shares are also susceptible to top-down investor concerns about global
growth, emerging markets, and interest rates.
Page 89
Extremely low float/liquidity and lack of ADR. The public float is a tiny 7%, seriously
limiting potential investor interest and contributing to low share liquidity. We think the
potential for an increased float is unlikely given that the controlling shareholders have a
long-term horizon and rights of first refusal on share sales. Although ADTV has
increased significantly in 2006, it is still only ~US$700k. The company trades solely on
the Lima Stock Exchange and does not have an ADR facility, another key limitation.
Minority shareholders have limited voice in the company/disclosure is limited. With
only 7% ownership of Cerro Verde, and no board membership, minority shareholders
have little influence over the company. As the majority shareholders are unlikely to sell,
and the company is not an acquisition target, we do not see much incentive for
management to focus on obtaining a higher share price. We also note company
disclosure is limited, with no quarterly press release/conference call or company website.
Peru country risk higher mining taxes to come? Although the election of Alan
Garcia as president of Peru was a far better outcome than a victory for his competitor, we
still believe it will result in increased royalties for the mining sector. New taxes on
mining are politically popular (a 3% royalty introduced in 2004 was easily passed in
Congress), and companies are easy targets given very high industry profitability and lack
of geographic flexibility. Companies with tax-stabilization agreements (including Cerro
Verde) could lose this benefit. We think Garcia could look to the Chilean model, which
recently set a royalty of 5% of tax-adjusted operating profit. This level of tax would
reduce our price target by roughly US$0.50/share.
Dividend policy unclear while significant, likely on hold until expansion is
complete. Given its substantial cash flow and a large net cash position, we think Cerro
Verde stands to be a big dividend payer in the future. The company paid US$147 mn in
dividends in 2005; however, we think it will hold off on paying dividends at least until
the expansion is complete. To be conservative, we do not forecast an outlay in our model
until 2008. The lack of near- to medium-term liquidity from the company could dissuade
new investors.
Valuation
Heavily discounted multiple versus copper peers, but still upside to target. We think
Cerro Verde shares merit a significant discount to global copper peers due to the low
liquidity/float, Peru risk, and lack of geographic/mine diversification. Our end-2006
price target is US$11/share, based on a 5x P/E multiple to 2007E EPS of US$2.20/share
a 50% peer discount. Our target translates to roughly 6.7x our 2008E earnings, which
assume a US$2/lb copper price.
DCF gives us a similar price target. Our DCF analysis leads us to a similar valuation,
based on a WACC of 10.6% and a 4.5x EV/EBITDA multiple for the terminal value. We
use a long-term copper price of US$1.75/lb, less than half of the current spot price, to
reflect increased future supply. We think this estimate could be conservative in light of
the difficulty and high costs of developing major new reserves.
Page 90
Selected Copper Comparables (in U.S. dollars)

17-Jul-06
BSC Rating
Ticker
ADRs/Shares, mm
Market Cap.
Net Debt
Minority Interest
Enterprise Value
EPADS/EPS
2004A
2005A
2006E
2007E
P/E
2005A
2006E
2007E
EBITDA
2004A
2005A
2006E
2007E
EV/EBITDA
2005A
2006E
2007E
Freeport
51.57
Peer Perf.
FCX
Phelps Dodge
76.95
Outperf.
PD
Southern Copper
86.87
Outperf.
PCU
Antofagasta
7.37
Peer Perf.
ANTO
Grupo Mexico
2.89
Outperf.
GMEXICOB
Cerro Verde
9.80
Peer Perf.
SMCV
Kazakhmys
21.02
Outperf.
KAZ
221
$11,422
817
216
$12,454
203
$15,652
(1,459)
1,019
$15,212
147
$12,790
801
12
$13,602
986
$7,262
(852)
721
$7,131
2,595
$7,500
497
3,197
$11,195
350
$3,431
(139)
0
$3,292
467
$9,828
(672)
26
$9,183
0.56
4.68
6.74
5.31
5.10
8.94
13.25
12.00
7.46
9.51
15.15
12.25
0.57
0.74
1.02
0.82
0.30
0.41
0.75
0.65
0.39
0.67
1.60
2.20
1.06
1.29
2.90
2.50
11.0
7.6
9.7
8.6
5.8
6.4
9.1
5.7
7.1
10.0
7.2
9.0
7.0
3.9
4.4
14.7
6.1
4.4
16.3
7.2
8.4
823
2,177
3,129
2,753
2,044
2,803
4,738
4,299
1,005
2,376
3,618
3,009
1,329
1,634
2,375
1,881
1,952
2,621
3,856
3,280
163
242
628
1,111
777
1,072
2,426
1,998
5.7
4.0
4.5
5.4
3.2
3.5
5.7
3.8
4.5
4.4
3.0
3.8
4.3
2.9
3.4
13.6
5.2
3.0
8.6
3.8
4.6
Source: Company reports; Bloomberg; Bear, Stearns & Co. Inc. estimates.
TENARIS
International Rigs Down M/M Due to Temporary Factors; Drilling Still

Robust (7/12/06)
Key Points
Worldwide rig count up m/m due to Canada. Baker Hughes reported June
worldwide rigs rose 7% m/m to 2,979 the increase is attributable to a rise of 198
rigs m/m in North America (168 of which were due to a seasonal increase in
Canada). On a y/y basis, rigs climbed a strong 18%, versus a 31% rise in the WTI
price.
International rigs down. International rigs, a more relevant benchmark for Tenaris,
fell 2% m/m to 906 (+3% y/y). Europe dropped 8 rigs m/m to 78, Latin America
(328) and Asia Pacific (217) were both down 5 rigs, and Africa edged down 2 rigs to
48. These declines offset a 6-rig increase in the Middle East to 235. International
offshore rigs (which are more pipe intensive) fell 10 rigs m/m to 265.
Domestic Tenaris OCTG markets were mixed. Mexico (80) dropped 9 rigs m/m,
mostly due to temporary factors. Rigs are down 27 y/y, attributed to greater
bureaucracy/management changes at Pemex. Canada (408) increased 168 rigs m/m,
due to larger-than-usual seasonal factors, and is +115 rigs y/y, while Venezuela (82)
rose 2 m/m and is +14 y/y. Argentina (81) edged down 1 rig m/m but is +4 y/y.
Other main Tenaris markets were also mixed. Indonesia rose 1 rig m/m to 43 but
is -11 y/y. Both China (16) and Nigeria (9) were flat m/m, with China flat and
Nigeria -1 y/y. Norway edged down 1 rig m/m, to 19, but is flat y/y. Saudi Arabia, a
Page 91
key growth region where Tenaris has leading market share, fell 3 rigs m/m (59), also
due to temporary factors, but remains up 23 y/y.
Bottom line. Drilling levels remain robust, which we see as a secular multiyear trend
reflected for TS in strong demand/volumes, improving mix, and rising prices. We
look for a very strong 2Q06 result roughly US$2.01 bn in revenues, US$740 mn
EBITDA, and EPADR of US$0.80. Positive sentiment for OSX and/or EM stocks as
well as a successful integration of MVK will be key for the next move up.
Risks to the target price include: reduced drilling, energy/OCTG prices, peer multiples,
and Venezuelan exposure. Since company doesn't issue employee stock options, there are
no stock-option expenses to subtract from earnings estimates.
Worldwide rig count up m/m due to Canada . . . Baker Hughes reported June
worldwide rigs rose 7% m/m to 2,979 the increase is attributable to a rise of 198 rigs
m/m in North America (168 of which were due to a seasonal increase in Canada). On a
y/y basis, rigs climbed a strong 18%, versus a 31% rise in the WTI price.
. . . but international rigs down. International rigs, a more relevant benchmark for
Tenaris, fell 2% m/m to 906 (+3% y/y). Europe dropped 8 rigs m/m to 78, Latin America
(328) and Asia Pacific (217) were both down 5 rigs, and Africa edged down 2 rigs to 48.
These declines offset a 6-rig increase in the Middle East to 235. International offshore
rigs (which are more pipe intensive) fell 10 rigs m/m to 265 and are down 18 y/y.
Domestic Tenaris OCTG markets were mixed. Mexico (80) dropped 9 rigs m/m,
mostly due to temporary factors (e.g., maintenance, in transit, etc.). Rigs are down 27
y/y, attributed to greater bureaucracy/management changes at Pemex. Canada (408)
increased 168 rigs m/m, due to larger-than-usual seasonal factors, and is +115 rigs y/y,
while Venezuela (82) rose 2 m/m and is +14 y/y. Argentina (81) edged down 1 rig m/m
but is +4 y/y.
Other main Tenaris markets were also mixed. Indonesia rose 1 rig m/m to 43 but is 11 y/y. Both China (16) and Nigeria (9) were flat m/m, with China flat and Nigeria -1
y/y. Norway edged down 1 rig m/m, to 19, but is flat y/y. Saudi Arabia, a key growth
region where Tenaris has leading market share, fell 3 rigs m/m (59), also due to
temporary factors, but remains up 23 y/y.
Bottom line. Drilling levels remain robust, which we see as a secular multiyear trend
reflected for Tenaris in strong demand/volumes, improving product mix, and rising
prices. We continue to like the Tenaris story, which benefits from strong
industry/company fundamentals and a growing investor following. We look for a very
strong 2Q06 result, which the company reports in the first week of August roughly
US$2.01 bn in revenues, US$740 mn EBITDA, and EPADR of US$0.80. Positive
sentiment for OSX and/or EM stocks (which contributed to much of the rally in the
shares) as well as a successful integration of Maverick will be key for the next move up.
Our stand-alone price target, which does not include Maverick, is US$47/ADR.
Page 92
International Rig Counts: June 2006*

--- Y/Y% --* 2005
* 2006
Mex
107
86
Venz
68
80
Argy
77
77
Latam
316
320
Int'l
855
904
Can
458
487
U.S. Can./US
1,380
1,838
1,558
2,044
Total
2,693
2,948
Latam
9%
1%
Int'l
10%
6%
Can
24%
6%
Total
15%
9%
2005 June
July
Aug
Sep
Oct
Nov
Dec
2006 Jan
Feb
Mar
Apr
May
June
121
104
103
106
92
92
94
92
79
85
85
89
80
70
68
66
63
64
71
75
75
79
81
82
82
84
74
79
80
75
74
82
81
80
76
69
79
82
81
328
318
308
307
295
318
327
323
309
306
327
333
328
876
854
859
852
846
878
891
905
885
898
912
920
906
293
450
545
497
541
600
575
660
715
620
198
240
408
1,355
1,398
1,435
1,452
1,479
1,486
1,470
1,473
1,533
1,551
1,597
1,635
1,665
2,524
2,702
2,839
2,801
2,866
2,964
2,936
3,038
3,133
3,069
2,707
2,795
2,979
12%
11%
4%
4%
0%
0%
7%
5%
-3%
-3%
2%
1%
0%
11%
12%
8%
6%
8%
7%
10%
13%
9%
8%
9%
0%
3%
11%
28%
54%
82%
45%
34%
31%
20%
21%
48%
9%
-3%
39%
13%
16%
19%
21%
20%
17%
18%
17%
17%
20%
15%
12%
18%
Source: Baker Hughes.
* Annual figures are based on monthly average.
Rig Counts vs. WTI Price
Rig Counts: Tenariss Top 4 Markets
WTI Price
Int'l Rigs
Rigs
900
78
135
61
105
44
650
27
400
Dec-92
Jun-97
Dec-01
10
Jun-06
US$/Barrel
1,150
Jun-88
1,648
1,848
1,980
1,949
2,020
2,086
2,045
2,133
2,248
2,171
1,795
1,875
2,073
Mex
Ven
740
Arg
Can (r)
555
75
370
45
15
Jun-98
185
Jun-00
Jun-02
Jun-04
0
Jun-06
Source: Baker Hughes; Bloomberg.
Page 93
Addendum
Important Disclosures
Posco[PKX], Mittal Steel Co.[MT]: The subject company is or during the past twelve (12) months has
been a non-investment banking client (securities related services) of Bear Stearns & Co. Inc.
Posco[PKX]: Bear Stearns is affiliated with the specialist that makes a market in the common stock of
this issuer, and such specialist may have a position (long or short) and may be on the opposite side of
public orders in such common stock.
For important disclosure information regarding the companies in this report, please contact your
registered representative at 1-888-473-3819, or write to Sandra Pallante, Equity Research Compliance,
Bear, Stearns & Co. Inc., 383 Madison Avenue, New York, NY 10179.
Ratings for Stocks (vs. analyst coverage)
Outperform (O) Stock is projected to outperform analysts industry coverage universe over the next
12 months.
Peer Perform (P) Stock is projected to perform approximately in line with analysts industry
coverage universe over the next 12 months.
Underperform (U) Stock is projected to underperform analysts industry coverage universe over the
next 12 months.
Ratings for Sectors (vs. regional broader market index)
Market Overweight (MO) Expect the industry to perform better than the primary market index for
the region (S&P 500 in the U.S.) over the next 12 months.
Market Weight (MW) Expect the industry to perform approximately in line with the primary market
index for the region (S&P 500 in the U.S.) over the next 12 months.
Market Underweight (MU) Expect the industry to underperform the primary market index for the
region (S&P 500 in the U.S.) over the next 12 months.
Daniel Altman,GEM Steel, Mining & Cement : Antofagasta plc,Arcelor Brasil,Bradespar
PN,CSN,CVRD,Cemex,China Steel Corp,Cia de Minas Buenaventura,Empresas ICA Sociedad
Controladora S.A. de C.V.,GRUPO MEXICO S.A. DE C.V.,Gerdau, Kazakhmys Plc,Mittal Steel
Co.,Posco,Sociedad Minera Cerro Verde S.A.,Southern Copper Corp,Tenaris,Ternium S.A.
ADR,USIMINAS
Bear, Stearns & Co. Inc. Ratings Distribution as of June 30, 2006:
Percentage of BSC universe with this rating / Percentage of these companies which were BSC
investment banking clients in the last 12 months.
Outperform (Buy): 45. 6 / 10.0
Peer Perform (Neutral): 45.7 / 9.4
Underperform (Sell): 8.7 / 2.0
For individual coverage industry data, please contact your account executive or visit www.bearstearns.com
Page 94
Addendum
Important Disclosures
Analyst Certification
The Research Analyst(s) who prepared the research report hereby certify that the views expressed in
this research report accurately reflect the analyst(s) personal views about the subject companies and
their securities. The Research Analyst(s) also certify that the Analyst(s) have not been, are not, and
will not be receiving direct or indirect compensation for expressing the specific recommendation(s) or
view(s) in this report.
Daniel C. Altman, CFA
The costs and expenses of Equity Research, including the compensation of the analyst(s) that prepared
this report, are paid out of the Firms total revenues, a portion of which is generated through investment
banking activities.
This report has been prepared in accordance with the Firm's conflict management policies. Bear
Stearns is unconditionally committed to the integrity, objectivity, and independence of its research.
Bear Stearns research analysts and personnel report to the Director of Research and are not subject to
the direct or indirect supervision or control of any other Firm department (or members of such
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Emerging Markets

JULY 25, 2006

GEM Steel, Mining & Cement

Top Picks Update...............................................................................................................................................................3

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

Top Picks Update

Key Investment Positives

Risks to Our Target Price

Outperform ** Strong Volume Growth/Expansions

** Profit Taking for Commodity Equities

Outperform ** Size/Scale/Diversification/Market Reach

** Generous Acquisition Price/Terms for Arcelor

Outperform ** Robust Outlook for Copper Fundamentals

** Significant Volume Losses Due to Ongoing Strikes

Outperform ** Substantial Reserves/Growing Output

** Kazakhstan Country Risk

Outperform ** High FCF/Low Cost Production

** Hugo Chavez Risk in Venezuela

BEAR, STEARNS & CO. INC.

Sector Spotlight Global Steel/Iron: Rise Cause for Concern?

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

BEAR, STEARNS & CO. INC.

Company Spotlight Kazakhmys: Initiating w/Outperform

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

estimates an average transportation cost of about US$15/mt to the China border,

BEAR, STEARNS & CO. INC.

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

Sector Valuation Monthly Highlights

EBITDA Growth '07E

EBITDA Margin '07E

EV/ EBITDA '07E

Net Debt/ EBITDA '07E

BEAR, STEARNS & CO. INC.

Sector Liquidity Monthly Highlights

--- % change versus --A/B

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

Stock Performance Monthly Highlights

Mkt Cap (mn) Last 30-Days

----52 Week---% Ch. High

BEAR, STEARNS & CO. INC.

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

Ternium Arcelor Brasil

Posco China Steel

Kazakhmys Cerro Verde Antofagasta Gmexico^

BEAR, STEARNS & CO. INC.

Ternium Arcelor Brasil

Posco China Steel

Kazakhmys Cerro Verde Antofagasta Gmexico^

Source: Bear, Stearns & Co. Inc. ^ Pro forma post-transaction.

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK

Total Sales Volume

Ternium Arcelor Brasil

Posco China Steel

Kazakhmys Cerro Verde Antofagasta Gmexico^

Source: Bear, Stearns & Co. Inc. ^ Pro forma post-transaction.

BEAR, STEARNS & CO. INC.

Ternium Arcelor Brasil

Posco China Steel

Kazakhmys Cerro Verde Antofagasta Gmexico^

Type of Shares (ADRs)

Exhibit 9. Global Steel & Mining Comparables (All Figures in US$)

GEM STEEL, MINING & CEMENT: MONTHLY REVIEW & OUTLOOK