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.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization 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 'apples and apples' 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.

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.

  Which companies are included in the Steel Earnings Barometer ?   

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

Kazakhstan: Arcelor Mittal (CIS operations)
Russia: Evrazholding, Magnitogorsk (MMK), Mechel, Novolipetsk (NLMK), Severstal (Russian operations)
Ukraine: Alchevsk, Azovstal, Mariupol, Zaporizhstal

Arcelor (South American operations), Gerdau (South American operations), Ternium (South American operations incl. Siderar and Sidor)
Brazil: Cosipa, CSN, Usiminas
Trinidad and Tobago: Arcelor Mittal Point Lisas

China: Anshan, Anyang, Baotou, Benxi, Handan, Jinan, Laiwu, Maanshan, Nangang, Panzhihua, Shanghai Baosteel, Shaoguan, Shougang, Tangshan, Taiyuan, Valin Steel Group, Wuhan
Japan: JFE, Kobe Steel, Nippon Steel, Nisshin Steel, Sumitomo, Tokyo Steel
South Korea: Dongkuk, INI Steel, POSCO
Taiwan: China Steel

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

Australia: Bluescope, OneSteel

South Africa: Arcelor Mittal South Africa

Top-77 steel producing companies excluded from the Steel Earnings Barometer are: Duferco, Celsa and RIVA Acciao (Europe), Dneprovsk and Urals Steels (CIS), Sugang and Tianjin Tiantie (China), Kyoei and Lion Group (East Asia), Ezz Industries, Hadeed and Imidro (Other World).

This index is based on the EBITDA generated from the iron ore mining activities of 11 of the Top-12 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 2005. The companies included are:

BHP Billiton, Cleveland Cliffs, CVRD, Inguletsky, Kumba Resources, Lebedinsky GOK, LKAB, Mikhailovsky GOK, Quebec Cartier Mining (owned by Arcelor Mittal), Rio Tinto and MMX.

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.