AIIS Gulf Region Conference

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AIIS Gulf Region Conference
AHMSA in the NAFTA market
Lic. Alonso Ancira Elizondo Chairman of the Board
September 27, Houston, Tx.
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AHMSA is the largest integrated steel plant in
Mexico
In an area of nearly 3,000 acres AHMSA operates
two steelworks plants. Its operations start with
the extraction of coal and iron ore and finishes
with the manufacture of high value-added steel
products.
Currently, AHMSA operates at an annual production
rate of 3.4 million metric tons of liquid steel.
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Due to its integration AHMSA is a low cost
producer.
The main source of iron ore is located in
Hercules, Coahuila, a mine owned by AHMSA. From
that point the iron ore is transported to AHMSAs
facilities through a 180 mile pipe (called
Ferroduct) that crosses the Coahuila desert.
The Company also has iron ore mines in some other
Mexican states.
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• As an integrated steel producer, we manufacture a
  variety of steel products
  
• Wide Plate
• Hot rolled coil
• Cold rolled coil
• Tin plate / Tin free steel
• Wide flange beams
• Light Shapes

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AHMSAs participation in the international
market AHMSAs export sales are accomplished di
rectly to a variety of end users or through steel
traders. In addition to its direct export progr
am, AHMSA has joint export programs with certain
customers that further process its steel products
for export (co-export) to North America.
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AHMSAs direct export sales
2006 Jan-Dec 21 Th MT/Month
2007 Jan-July 38 Th MT/month
L. America Brasil Costa Rica Peru Venezuela
EUROPE UK Switzerland Belgium Luxemburg Franc
e
Germany
N.AMERICA USA Canada
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Main Expansion Projects. Fenix Project
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• Consolidation of NAFTA Market
• There are some steel users and fabricators
  growing in Mexico and Nafta markets. We expect
  this trend to continue and once the expansion is
  in place and running AHMSA will be in position to
  give a broad and better service.
• Trinity
• Caterpillar
• John Deere
• Steel Warehouse
• Steel Technologies
• Oneal
• Nacco Materials
• Gunderson
• Worthington
• Tempel
• Emerson

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Advantages in NAFTA integration

• Lead time
• Volume
• Less risk

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• Domestic Mexican Market
• AHMSA accounts for 20 of the overall domestic
  steel market, and 28 on domestic flat products.

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• Mexican Steel Trade with NAFTA partners during
  2006
  

Volume in million metric tons
Imports Exports USA 2.2 1.35 Canada 0.5 0
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• Mexico as part of the steel industry
  consolidation
  
• In 2005 The Techint Group (Ternium) bought
  Hylsamex.
  
• In 2006 Arcelor-Mittal adquired Sicartsa and
  Gerdau Group bought Siderurgica de Tultitlan
  
• In late July, 2007 Ternium completed its purchase
  of IMSA

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• AHMSAs Future
• Stand Alone Company or part of a bigger group
• AHMSA can continue as a stand alone company
  thanks to its great competitive advantages
  
• Fully integrated (Iron ore and coal)
• Low cost
• Growing domestic and NAFTA markets
• Méxicos advantages in fabrication (labor,
  logistics)

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Outlook for the rest of the year

• Supply side is already adequate
• Limited imports
• Low inventories
• Declining domestic production rates
• Scrap prices increased 50 since may
• Ocean freight rates are at their higher level
• Some industries start to show activation signs
• We believe a demand strong enough to sustain
  price increases could be present for the rest of
  the year.

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AIIS Gulf Region Conference
AHMSA in the NAFTA market T h a n k y o u !
Lic. Alonso Ancira Elizondo Chairman of the Board
September 27, Houston, Tx.