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Steel Earning Barometer

   
Frequently Asked Questions:
  
  How is the Steel Earnings Barometer calculated ?
  What is EBITDA and why is it used ?
  What are the limitations of EBITDA ?
  Which companies are included in the Steel Earnings Barometer ?
  Which companies are included in the Iron Ore Earnings Barometer ?
  Which companies are included in the Automotive Earnings Barometer ?

  How is the Steel Earnings Barometer calculated?
   

The Steel Earnings Barometer is an index (Q1 2000=100) based on the aggregate EBITDA figures (US$ denominated) of the main steel mills in a particular region.

For mills that have operations in more than one region, EBITDA has been broken down by region and attributed to the various regions accordingly.

In case of mergers and acquisitions, all merged/acquired parts have also been included as separate companies before the merger/acquisition to ensure a consistent and complete history.

The EBITDA figures underlying the index include all mill earnings generated from steel-related activities including in-house coal and iron ore mining activities, energy production, by-products, processing activities and distribution activities and services. The index includes EBITDA from carbon steel, special steel and stainless activities, but excludes earnings from non-steel related activities such as aluminium production.

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  What is EBITDA and why is it used?
   

EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation and is a commonly used indicator for the "true" operational profit of companies. A main advantage of the EBITDA indicator is that it allows a better like-for-like comparison of different companies as it excludes distorting differences in accounting practices and tax regimes between countries and companies.

EBITDA indicates a company's gross cash generation capability and its fundamental ability to pay its costs of capital and finance future investments.

As such, the Steel Earnings Barometer provides a comprehensive picture of the financial health of the steel industry including the effects of changes in sales prices, operating expenses and raw materials prices on industry profitability.

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  What are the limitations of EBITDA ?
   

As the name says, EBITDA does not take into account interest, taxes and depreciation/amortisation. Especially when comparing the EBITDA of different industries, which have different capital intensities and different risk levels, care should be taken in the interpretation of EBITDA numbers.

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  Which companies are included in the Steel Earnings Barometer ?   

              

The Steel Earnings Barometer includes 51 of the world's Top-78 steel producers. (29, mostly non-listed, companies are not included because of insufficient availability of accurate data). Together, the steel-producing companies included in the Steel Earnings Barometer accounted for 60% of world crude steel output in 2008. Listed by region they are:

Europe

ArcelorMittal (European operations), Tata Steel Group (European operations), Erdemir Group (Turkey), Ruukki (Finland), Salzgitter (Germany), Severstal Lucchini (Italy), SSAB (Sweden), ThyssenKrupp Steel (Germany), voestalpine (Austria), US Steel Europe (Slovakia, Serbia).

CIS

Kazakhstan: ArcelorMittal Temirtau
Russia: Evraz Group, Magnitogorsk (MMK), Mechel, Novolipetsk (NLMK), Severstal (Russian operations)
Ukraine: Alchevsk, Azovstal, Mariupol, Zaporizhstal, ArcelorMittal Kryvyi Rih

North America

Gerdau (North American operations), ArcelorMittal (North American operations, excl. QCM)
Canada: Essar (Algoma), SSAB (Ipsco), Stelco (US Steel)  
Mexico: AHMSA, Ternium Hylsa 
USA: AK Steel, Commercial Metals, Nucor, SDI, Severstal North America, US Steel (US operations), ThyssenKrupp Steel Americas

Central and South America

ArcelorMittal (South American operations), Gerdau (South American operations), Ternium (South American operations incl. Siderar) 
Brazil:  CSN, Usiminas/Cosipa, ThyssenKrupp Steel Americas 

East Asia

China: Anshan, Anyang, Baotou, Benxi, Chongqing, Daye Special Steel, Fushun Special Steel, Gan Su Jiu, Guangzhou, Hang Zhou, Lingyuan, Liuzhou, Handan, Jinan, Laiwu, Maanshan, Nangang, Panzhihua, Shanghai Baosteel, Shaoguan, Shougang, Tangshan, Taiyuan, Valin Steel Group, Wuhan, Xining Special Steel, Xinjiang Ba Yi
Japan: JFE, Kobe Steel, Nippon Steel, Nisshin Steel, Sumitomo, Tokyo Steel 
South Korea: Dongkuk, POSCO, INI Steel 
Taiwan: China Steel Corporation

South Asia

India: Essar Steel (Indian operations), Ispat Industries, RINL, SAIL, Tata Steel Group (Indian operations)

Other World

Australia: Bluescope, OneSteel 
South Africa: ArcelorMittal South Africa

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Which companies are included in the Iron Ore Earnings Barometer ?
  

This index is based on the EBITDA generated from the iron ore mining activities of nine of the top ten players in the iron ore mining sector. Together, these companies accounted for around 75% of seaborne iron ore trade and about 45% of world iron ore production in 2008. The companies included are:

BHP Billiton, Cleveland Cliffs, Vale, Inguletsky, Kumba Iron Ore, Mettaloinvest, LKAB, Rio Tinto and MMX

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Which companies are included in the Automotive Earnings Barometer?
  

This index is based on the EBITDA of the Top-12 automotive OEM's. Together, these companies account for around 90% of world car manufacturing. Companies included are:

BMW Group, DaimlerChrysler, Fiat, Ford, General Motors, Honda, Hyundai, PSA, Renault Nissan, Suzuki Group, Toyota Group and VW Group.

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