DERICHEBOURG - Universal registration document 2018-2019

1

CSR report (serving as statement of extra-financial performance) Overview of businesses and business model

In million tons

In euros/tons

11

300

280

10

260

9

240

220

8

200

7

180

160

6

140

5

120

100

4

oct-18

oct-17

jun-19

oct-16

jun-18

jun-17

jun-16

feb-19

apr-19

feb-18

apr-18

feb-17

apr-17

feb-16

apr-16

dec-18

dec-17

dec-16

dec-15

aug-19

aug-18

aug-17

aug-16

Chinese steel exports (rolling 6 months)

Ferrous scrap E40

Source: Derichebourg.

Turkey is the world’s largest importer of ferrous scrap metal. It produces 37 Mt of steel, 69% of which comes from electric mills, with insufficient local raw materials, and imports about 20 Mt/year of ferrous scrap metal (20% of the global trade). Unlike domestic markets, where price negotiations with steel mills occur monthly, the Turkish spot market buys ships (up to 40,000 t). This means that changes in Turkish prices have an effect on the supply regions of the United States and Europe, which have a surplus of ferrous scrap metals. The economic situation in Turkey is also a factor that influences the ferrous scrap metal market. In recent decades, globalization and the liberalization of international trade resulted in the virtual disappearance of customs tariffs. Consequently, it was marginal demand that influenced world prices. Since the spring of 2018, the situation has changed, with the introduction of customs tariffs by the United States on the majority of steel imports. The ferrous scrap metal recycling market is perceived as relatively volatile, insomuch as price and volume trends often compound: increased ferrous scrap metal demand by steelmakers will result in scarcity of the additional tons sought and put upward pressure on prices. If demand falls, the opposite happens.

The table below summarizes the price changes in shredded ferrous scrap metal (E40) in recent years:

€330

€280

€230

€180

€130

jul.16

jul.17

jul.18

jul.19

jan.16

jan.17

jan.18

jan.19

oct.15

oct.16

oct.17

oct.18

apr.16

apr.17

apr.18

apr.19

E40 ex 33 (shredding product)

Source: Derichebourg.

DERICHEBOURG p 2018/2019 Universal Registration Document 17