Pnc's Metals Industry Update

FIRST QUARTER 2020

PNC’S METALS INDUSTRY UPDATE Issue 27

IN THIS ISSUE Welcome to Issue #27 of PNC’s Metals Industry Update.

Weak Demand Growth I think all of us are happy to have turned the calendar into 2020. In this issue, we will and Oversupply Keep Metal try to set the stage for market conditions in the coming year. Our cover story from Prices Warm in 2020 1 PNC Economist Abbey Omodunbi presents a picture of slower GDP growth, weakening Metals Pricing 4 global manufacturing and sustained excess supply. This may make it difficult to sustain the Pricing for Public Notes level of price increases experienced by many carbon steel products in the fourth quarter. and Bonds 5 The balance of the issue will be our recurring sections on pricing, the bond market and Syndicated Bank the syndicated loan market. Loan Market 7 Our goal is to provide clear and concise information that you can use in your everyday business activity. We appreciate any questions or comments that will help us achieve that goal.

FOR MORE INFORMATION WEAK DEMAND GROWTH AND OVERSUPPLY KEEP METAL

Contact PNC’s Metals Group: PRICES WARM IN 2020 The metals industry enters 2020 with a somber outlook after a David B. Gookin Summary: Executive Vice President challenging 2019. Steel (hot-rolled band) prices sunk to a 3-year Metals Group–Diversified Ind. • U.S. real GDP growth low ($557 per metric ton) in November 2019, and aluminum The PNC Financial Services Group will cool to 1.7% in (U.S. Midwest aluminum ingot premium) reached an all-time 2020 from 2.3% in 2019. One North Franklin Street low ($12.6 per pound) in December 2019. A weakening global Suite 2500 • Excess global Chicago, Illinois 60606 manufacturing sector (Chart 1), global oversupply, geopolitical Office: 312-384-4610 oversupply remains pressures and weak global demand kept metal prices under the dominant theme in Cell: 412-418-1970 pressure in 2019. Global economic growth slowed in 2019 the steel industry. Email: [email protected] mainly due to trade tensions between the U.S. and China, Brexit • Metals demand is Alex Mack uncertainties in the U.K., weak consumer demand in India, and expected to grow Vice President increased social unrest in Latin America. PNC expects continued slowly in 2020. Metals Group–Diversified Ind. slow global economic growth in the first half of 2020, with a The PNC Financial Services Group The Tower at PNC Plaza pickup in growth in the second half of the year. 300 Fifth Avenue The lukewarm trend in the metals industry should continue in 2020 with global steel demand Pittsburgh, Pennsylvania 15222 expected to grow by only 1.7% compared to a 3.9% growth in 2019, according to the World Steel Office: 412-762-4299 Cell: 412-721-0755 Association. Domestically, continued, albeit slower, economic growth should provide some Email: [email protected] support to U.S. metal unit sales in 2020.

pnc.com/metalsandmining PNC’S METALS INDUSTRY UPDATE 2

WEAK DEMAND GROWTH AND OVERSUPPLY KEEP METAL PRICES WARM IN 2020 (Continued) PNC expects the U.S. economy to grow at a Despite a forecast for modestly higher demand, moderate rate of 1.7% in 2020. In the short- to mid- excess global supply is expected to be the dominant term, an increase in U.S. homebuilding (Chart 2) price driver in 2020. The U.S. steel capacity and an expanding real estate sector in China should utilization reached an all-time high at 83.1% in March support the construction sectors in both countries, 2019 (Chart 4), as imports as a share of the domestic putting upward pressure on U.S. and global metal market reached a 10-year low (Chart 3), then pulled prices, respectively. Falling mortgage rates have back. They will likely head lower still: The inventory- improved home affordability in the U.S., while to-sales ratio for wholesalers of metals and other continued urbanization in China continues to support non-petroleum mineral products rose to the 96th growth of that nation’s real estate sector. percentile of its 1992-to-2019 range in October 2019. Prices for steel inputs such as iron ore are Global events represent uncertainty but also upside expected to drift lower in 2020, putting downward risk to metal prices. Middle East tensions could pressure on prices. Global iron ore inventories are raise oil prices, spurring energy investment and expected to increase as Brazil continues its recovery increasing metal demand. PNC forecasts a weaker from the mine tailing dam disaster in January dollar in 2020, which also would support metal 2019. Global steelmaking capacity is expected to prices (Chart 5). And the approval of the United increase by 4–5% between 2019 and 2021, creating States-Mexico-Canada Agreement (USMCA) by the additional capacity ranging from 88 to 110 million House of Representatives in 2019, and its expected tons, according to the Organisation for Economic approval in the Senate in 2020, will provide upward Co-operation and Development (OECD). Both pressure on U.S. metal prices by requiring more of Bloomberg consensus forecasts and futures pricing an automobile’s value to be sourced from within the expect modest price decreases for hot-rolled coil U.S.-Mexico-Canada region. The U.S.-China Phase steel in 2020 (Chart 6). One trade deal might provide relief for the global manufacturing industry, although uncertainties remain as many previously imposed tariffs are still in place; PNC does not expect a substantive U.S.- China trade deal before late 2020.

pnc.com/metalsandmining 35% Steel imports, share 35% of domestic market, % 30% Steel imports, share of domestic market, %

30% 25% PNC’S METALS INDUSTRY UPDATE 3 25% 20%

WEAK DEMAND GROWTH AND OVERSUPPLY20% KEEP METAL PRICES WARM IN 2020 (Continued) 15% Jan-14Source:Jan-15 AmericanJan-16 Iron and SteelJan-17 InstituteJan-18 Jan-19 Steel Imports Monitoring and Analysis (SIMA) data CHART 1: GLOBAL MANUFACTURING SLUMP CONTINUES 15%CHART 4: CAPACITY UTILIZATION RATE NEAR AN ALL-TIME HIGH CHARTJan-14 4: CAPACITYJan-15 Jan-16 UTILIZATIONJan-17 RATEJan-18 NEARJan-19 AN ALL-TIME HIGH 65 15 85% PMIs (U.S., China) Business Climate Indicator (EU) U.S. Steel Capacity Utilization Rate, % CHART 4: CAPACITY UTILIZATION RATE NEAR AN ALL-TIME HIGH Values over 50 indicate record-high 65 manufacturing sector growth 1510 80%85% 60 PMIs (U.S., China) Business Climate Indicator (EU) U.S. Steel Capacity Utilization Rate, % Values over 50 indicate record-high manufacturing sector growth 105 75%80% 60 55 USA 5 0 70%75% 55 50 USA China 0 -5 65%70%

50 European Union 45China -5-10 60%65% Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 2012 2013 2014 2015 2016 2017 2018 2019 European Union Sources: CFLP, ISM, EU EcFin Sources: Sources:AISI, WSA, AISI, Bloomberg WSA, Bloomberg 45 -10 60% CHARTJan-15 2: INCREASEDJan-16 Jan-17 HOUSINGJan-18 STARTSJan-19 WILL SUPPORT DEMANDCHART 5: WEAKER DOLLAR TO SUPPORT METAL PRICES 120 2012 2013 2014 2015 2016 2017 2018 2019 1.6 U.S. dollar broad index, Jan. 1997 = 100 CHARTCHART 2: 2: INCREASEDINCREASED HOUSING HOUSING STARTS STARTS WILL SUPPORT WILL DEMANDSUPPORT DEMAND118CHART 5: WEAKER DOLLAR TO SUPPORT METAL PRICES 1.4 CHART 5: WEAKER DOLLAR TO SUPPORT METAL PRICES 1.6 Forecast 120 116 U.S. dollar broad index, Jan. 1997 = 100 1.2 1.4 118 114 1.0 Forecast 1.2 116 PNC Forecast 112 0.8 1.0 114 110 0.6 0.8 PNC Forecast Housing starts: Total privately owned, (Ths. #, SAAR) 108112 0.4 0.6 110 Housing starts: Total privately owned, (Ths. #, SAAR) 106 0.2 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 0.4 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 108

0.2 106 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21

Sources: Moody’s Analytics, PNC Economics baseline forecast Source: Federal Reserve, PNC FX Forecasts January 2020

CHART 3: STEEL IMPORTS AT 10-YEAR LOW CHARTCHART 6:6: FORECASTERS FORECASTERS AND FUTURES AND FUTURES PREDICT LOWER PREDICT STEEL LOWER PRICES STEEL PRICES

35% $1,200 Hot-rolled band, $ per metric ton Steel imports, share USA of domestic market, % CHART$1,000 6: FORECASTERS AND FUTURES PREDICT LOWER STEEL PRICES 30%

$800 Consensus forecast CHART 3: STEEL IMPORTS AT 10-YEAR LOW Western Europe 25% $600 Futures pricing World exports CHART 3: STEEL IMPORTS AT 10-YEAR LOW $400 China 20% $200

15% $0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 2017 2018 2019 2020

CHARTSource: American 4: CAPACITY Iron and Steel Institute UTILIZATION Steel Import Monitoring RATE andNEAR Analysis AN (SIMA) ALL data-TIME Sources: HIGH Steel Benchmarker™, Bloomberg, CME 85% Visit pnc.com/economicreports to view the full listing of economic reports published by PNC’s Visit pnc.com/economicreportsU.S. Steel Capacity Utilization Rate, to view % the full listing of economic reportseconomists. published by PNC’s economists. The material presented is of a general nature and does not constitute the provision of investment or economic advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy.record Opinions-high and forecasts expressed herein are subject to change without notice. Relevant 80% information was obtained from sources deemed reliable. Such information is not guaranteed as toThe its materialaccuracy. You presented should seek is ofthe a advice general of an nature investment and does not constitute the provision of investment or economic advice to any person, professional to tailor a financial plan to your particular needs. ©2020 The PNC Financial Servicesor Group.a recommendation to buy or sell any security or adopt any investment strategy. Opinions and forecasts expressed herein are pnc.com/metalsandmining subject to change without notice. Relevant information was obtained from sources deemed reliable. Such information is not 75% guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs. ©2020 The PNC Financial Services Group.

70% METALS PRICING

65% Product price movements during the fourth quarter were more influenced by micro issues unique to specific end markets than macro trends impacting the entire economy. Carbon steel products, which are sold into multiple end markets, generally increased during the quarter 60% 2012 2013 2014 2015 2016 2017 2018 2019 under the influence of rising scrap prices. However, carbon steel products with more specific end markets such as sbq, plate, wfb, or OCTG pipe saw prices move lower. The non-ferrous

prices that we track also moved down during the quarter, with the exception of copper, which CHART 5: WEAKER DOLLAR TO SUPPORT METAL PRICES 120 increased 3% from October levels. For those who believe the 232 Tariffs are the solution for U.S. dollar broad index, Jan. 1997 = 100 U.S. steel mills, December 2019 prices for the carbon flat roll products that we track are down 118 $75 per ton from December 2017, when the broad industry had very limited expectations of 232 Tariff support. It does not take long for supply chains to adjust. Please see the table below for 116 individual price levels. 114 PNC Forecast See separate Excel file (4Q19 Price Tables). Please format tables as they were in the last issue 112 of the newsletter, including the Sector 3 logo and language following the pricing tables.

110 PRICING FOR PUBLIC NOTES AND BONDS 108 METALS BOND UPDATE: NEW ISSUE VOLUME REMAINED STRONG IN 4Q19 106 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 The investment grade (IG) and high-yield (HY) bond markets remained strong in the fourth

quarter of 2019, as issuers continued to take advantage of the favorable all-in yield environment and investor demand. After reaching a year-to-date low of 1.45% in early September, the 10- year U.S. treasury yield remained range bound between 1.65% and 1.95% in the fourth quarter of 2019. During the same period, the IG spread index tightened approximately 20 basis points (currently at +96 basis points) as the global search for yield and duration continued to push positive fund inflows into the U.S. market. CHART 6: FORECASTERS AND FUTURES PREDICT LOWER STEEL PRICES The IG bond market priced $226 billion in the fourth quarter of 2019, up 7.2% from the fourth quarter of 2018. Transactions performed well, with strong oversubscription levels leading to negligible new issue concessions of 1.6 basis points on average. Looking specifically at the PNC PNC’S METALS INDUSTRY UPDATE 4 METALS PRICING Product price movements during the fourth quarter were more influenced by micro issues unique to specific end markets than macro trends impacting the entire economy. Carbon steel products, which are sold into multiple end markets, generally increased during the quarter under the influence of rising scrap prices. However, carbon steel products with more specific end markets such as SBQ, plate, WFB, or OCTG pipe saw prices move lower. The non-ferrous prices that we track also moved down during the quarter, with the exception of copper, which increased 3% from October levels. For those who believe the 232 tariffs are the solution for U.S. steel mills, December 2019 prices for the carbon flat-roll products that we track are down $75 per ton from December 2017, when the broad industry had very limited expectations of 232 tariff support. It does not take long for supply chains to adjust. Please see the tables below for individual price levels.

Carbon Flat-Rolled Steel $/NT Pipe & Tube $/NT October–December 2019 October–December 2019 Product October November December Product October November December Hot-Rolled 470–490 520–540 555–565 OCTG J55 1,000 980 980 Cold-Rolled 670–690 720–740 745–765 Linepipe, ERW 980 950 950 Galvanized 740–770 780–800 815–825 Aluminum $/lb Discrete Plate $/NT October–December 2019 October–December 2019 Alloy October November PNC METALSDecember INDUSTRY UPDATE 5 Product October November December 3003 1.65 1.62 1.55 METALS PRICING A36 640 580 620 Stainless $/lb – Cold-Rolled Coil A514 1,000 960 1,000 Carbon Flat-Rolled Steel $/NT SBQ $/CWT—1" round October–December 2019 April–June 2014 April–June 2014 AR400 1,020 980 1,020 Product April May June Grade April May June Grade October November December Hot-Rolled 670 690 690 HR 4140 Q&T 79.00 79.50 81.50 Wide Flange Beam $/cwt. 304 1.39 1.39 Cold-Rolled1.33 800 820 820 Galvanized 850 870 870 Pipe & Tube $/NT October–December 2019 April–June 2014 Copper $/lb Product April May June Size October November December Discrete Plate $/NT October–December 2019 April–June 2014 OTCG J55 1,050 1,045 1,045 24"x12¾" 33.00 33.00 33.75 October November ProductDecember April May June Linepipe, ERW 950 960 960 18"x6" 31.50 31.50 32.50 A36 820 820 835 Comex Avg. 2.61 2.65 2.69 A514 1,000 1,000 1,050 Aluminum $/lb April–June 2014 MBQ $/cwt. AR400 1,020 1,020 1,070 Ferrous Scrap $/GT Midwest Alloy April May June October–December 2019 3003 1.39 1.41 1.39 October–December 2019 Wide Flange Beam $/CWT Shape October November December April–June 2014 Grade October November Size December April May June Stainless $/lb—cold-rolled coil 1" 1018 round 31.50 31.50 32.75 April–June 2014 24"x12¾" 41.25 41.75 41.75 No. 1 HMS 195 210 245 Grade April May June 18"x6" 40.00 40.50 40.50 304 1.24 1.33 1.47 Rebar $/cwt. – Grade 60 Shredded 218 238 278 MBQ $/CWT October–December 2019 Copper $/lb April–June 2014 Nickel $/lb April–June 2014 Size October November December Shape April May June October–December 2019 April May June 1" 1018 round 41.05 41.05 41.05 16 mm – #5 29.50 29.00 30.00 Comex Avg. 3.07 3.11 3.07 October November December Rebar $/CWT—Grade 60 Ferrous Scrap Prices $/GT Midwest LME Avg. 7.76 6.89 6.23 April–June 2014 SBQ $/cwt. – 1" round April–June 2014 Size April May June October–December 2019 GRADE April May June 16 mm - #5 32.00 32.00 32.00 Grade October November December No. 1 HMS 375 365 360 Shredded 405 390 380 HR 4140 Q&T 65.70 63.70 64.65

The metals market price guide is courtesy of Sector3 Appraisals, Inc., provider of asset valuation The metals market price guide is courtesy of Sector3 Appraisals, Inc., provider of asset valuation and advisory services for ABL lenders, specializing in metals, chemicals and commodities. For more information, contact: and advisory services for asset-based lending (ABL) lenders, specializing in metals, chemicals and commodities. Michael Dawson For more information, contact Michael Dawson – Editor, Market Research at [email protected] Editor, Market Research [email protected]

pnc.com pnc.com/metalsandmining PNC’S METALS INDUSTRY UPDATE 5

PRICING FOR PUBLIC NOTES AND BONDS

METALS BOND UPDATE: NEW ISSUE VOLUME REMAINED STRONG IN 4Q19 The investment grade (IG) and high-yield (HY) bond markets remained strong in the fourth quarter of 2019, as issuers continued to take advantage of the favorable all-in yield environment and investor demand. After reaching a year-to-date low of 1.45% in early September, the 10-year U.S. Treasury yield remained range-bound between 1.65% and 1.95% in the fourth quarter of 2019. During the same period, the IG spread index tightened approximately 20 basis points (currently at +96 basis points) as the global search for yield and duration continued to push positive fund inflows into the U.S. market.

The IG bond market priced $226 billion in the fourth quarter of 2019, up 7.2% from the fourth quarter of 2018. Transactions performed well, with strong oversubscription levels leading to negligible new issue concessions of 1.6 basis points on average. Looking specifically at the PNC IG Metals Bond Index, we can see spreads tightened by approximately 40 basis points. Steel Dynamics came to market in December with its inaugural IG issuance, pricing $400 million 5-Year Senior Notes and $600 million 10-Year Senior Notes at T+115 basis points and T+165 basis points, respectively. Arconic, Carpenter and Precision Castparts have upcoming maturities of approximately $2.0 billion in the next 2 years.

After shutting down entirely in the latter part of the fourth quarter of 2018, the U.S. HY market showed strength in the fourth quarter of 2019 with a volume of $82 billion, exceeding expectations and growing approximately 385% year-over-year. Compared to the previous quarter, average spreads of companies in the PNC HY Metals Bond Index tightened by approximately 30 basis points. In the fourth quarter of 2019, Allegheny Technologies Inc. (B2/B) priced $350 million 5.875% notes due December 2027, and Kaiser Aluminum (Ba3/BB+) priced $500 million 4.625% notes due March 2028. AK Steel has the only maturity in the next 2 years. It is expected that when the acquisition by Cleveland Cliffs is complete, the AK Steel bonds will be exchanged with Cleveland Cliffs as the new issuer.

METALS BOND INDEX*

PNC IG Metals Bond Index PNC HY Metals Bond Index As of Date 1/10/2020 10/10/2019 Change 1/10/2020 10/10/2019 Change Effective Maturity (Years) 8.22 8.47 -0.25 5.54 5.33 0.21 Composite Rating BBB+ BBB+ – BB- BB- – Weighted Average Coupon 4.72% 4.82% -0.10% 6.82% 6.69% 0.13% Yield to Worst 2.79% 3.21% -0.42% 4.28% 4.82% -0.54% Option Adjusted Spread to Treasuries (bps) 108.3 149.8 -41.55 234.89 252.9 -18.05

*Index members are market-value weighted. Note: PNC IG Metals Bond Index excludes bonds of less than $300 million. Source: Bloomberg

pnc.com/metalsandmining PNC’S METALS INDUSTRY UPDATE 6 METALS BOND UPDATE As of 1/10/2020 Since 10/10/2019 Amount Issuance As of 1/10/2020 1/12 Since 10/10/2019 Amount Issuance 1/12 Issuance Outstanding Moody’s S&P Coupon Price at Spread over Yield to Interp. Spread Interp. in Spread %Δ in Issuance Outstanding Moody's S&P Coupon Price at Spread over Yield to Interp. Spread Interp. ΔΔ in Spread %Δ in Date Issuer ($MM) Structure Rating Rating Maturity Rate Issuance Treasury Worst (G-Spread) Spread (bps) Spread Date Issuer ($MM) Structure Rating Rating Maturity Rate Issuance Treasury Worst (G-Spread) Spread (bps) Spread

Steel Mills 9/16/2014 AK Steel Corp $406.2 Sr Unsecured B3 B- 10/1/2021 7.625% 99.33 551 bps n/a -228 bps 664 bps -893 bps -134.4% 6/20/2016 AK Steel Corp $380.0 1st lien B1 BB- 7/15/2023 7.500% 100.00 609 bps 1.139% 151 bps 462 bps -311 bps -67.3% 8/9/2017 AK Steel Corp $270.2 Sr Unsecured B3 B- 10/15/2025 6.375% 100.00 419 bps 6.529% 490 bps 874 bps -384 bps -43.9% 3/23/2017 AK Steel Corp $391.6 Sr Unsecured B3 B- 3/15/2027 7.000% 100.00 447 bps 7.062% 534 bps 867 bps -332 bps -38.3% 2/28/2012 ArcelorMittal SA $659.2 Sr Unsecured Baa3 BBB- 2/25/2022 6.250% 99.28 435 bps 2.455% 92 bps 117 bps -25 bps -21.1% 7/16/2019 ArcelorMittal SA $750.0 Sr Unsecured Baa3 BBB- 7/16/2024 3.600% 99.86 175 bps 2.948% 134 bps 169 bps -35 bps -20.6% 6/1/2015 ArcelorMittal SA $500.0 Sr Unsecured Baa3 BBB- 6/1/2025 6.125% 100.00 399 bps 3.072% 144 bps 183 bps -40 bps -21.7% 3/11/2019 ArcelorMittal SA $750.0 Sr Unsecured Baa3 BBB- 3/11/2026 4.550% 99.72 200 bps 3.288% 161 bps 188 bps -28 bps -14.7% 7/16/2019 ArcelorMittal SA $500.0 Sr Unsecured Baa3 BBB- 7/16/2029 4.250% 99.00 225 bps 3.624% 182 bps 230 bps -47 bps -20.6% 3/7/2011 ArcelorMittal SA $434.4 Sr Unsecured Baa3 BBB- 3/1/2041 6.750% 99.18 230 bps 5.078% 302 bps 316 bps -13 bps -4.2% 5/20/2013 Commercial Metals Co $330.0 Sr Unsecured Ba2 BB+ 5/15/2023 4.875% 100.00 311 bps 3.171% 167 bps 233 bps -65 bps -28.1% 5/3/2018 Commercial Metals Co $350.0 Sr Unsecured Ba2 BB+ 4/15/2026 5.750% 100.00 285 bps 3.558% 208 bps 433 bps -225 bps -51.9% 7/11/2017 Commercial Metals Co $300.0 Sr Unsecured Ba2 BB+ 7/15/2027 5.375% 100.00 311 bps 3.996% 251 bps 321 bps -70 bps -21.9% 4/29/2014 GTL Trade Finance Inc $875.5 Sr Unsecured Ba1 BBB- 4/29/2024 5.893% 100.00 n/a 2.943% 136 bps 170 bps -33 bps -19.7% 4/16/2014 GTL Trade Finance Inc $500.0 Sr Unsecured Ba1 BBB- 4/16/2044 7.250% 100.00 368 bps 5.122% 299 bps 325 bps -26 bps -7.9% 9/21/2010 Nucor Corp $600.0 Sr Unsecured Baa1 A- 9/15/2022 4.125% 99.83 140 bps 1.989% 45 bps 54 bps -9 bps -17.4% 7/29/2013 Nucor Corp $500.0 Sr Unsecured Baa1 A- 8/1/2023 4.000% 99.93 140 bps 2.175% 62 bps 60 bps 2 bps 3.5% 4/26/2018 Nucor Corp $500.0 Sr Unsecured Baa1 A- 5/1/2028 3.950% 99.85 100 bps 2.645% 89 bps 86 bps 3 bps 3.1% 12/3/2007 Nucor Corp $650.0 Sr Unsecured Baa1 A- 12/1/2037 6.400% 99.62 190 bps 3.549% 157 bps 172 bps -14 bps -8.3% 7/29/2013 Nucor Corp $500.0 Sr Unsecured Baa1 A- 8/1/2043 5.200% 99.89 155 bps 3.548% 144 bps 165 bps -20 bps -12.3% 4/26/2018 Nucor Corp $500.0 Sr Unsecured Baa1 A- 5/1/2048 4.400% 99.29 130 bps 3.528% 132 bps 143 bps -11 bps -7.7% 3/26/2013 Steel Dynamics Inc $400.0 Sr Unsecured Baa3 BBB- 4/15/2023 5.250% 100.00 323 bps 4.518% 102 bps 170 bps -68 bps -40.1% 9/9/2014 Steel Dynamics Inc $500.0 Sr Unsecured Baa3 BBB- 10/1/2024 5.500% 100.00 305 bps 4.730% 45 bps 135 bps -90 bps -66.7% 12/11/2019 Steel Dynamics Inc $400.0 Sr Unsecured Baa3 BBB- 12/15/2024 2.800% 99.93 115 bps 4.730% 45 bps - - n/a 9/13/2017 Steel Dynamics Inc $350.0 Sr Unsecured Baa3 BBB- 9/15/2025 4.125% 100.00 211 bps 4.040% 119 bps 186 bps -67 bps -36.0% 12/6/2016 Steel Dynamics Inc $399.8 Sr Unsecured Baa3 BBB- 12/15/2026 5.000% 100.00 266 bps 4.040% 99 bps 150 bps -52 bps -34.4% 12/11/2019 Steel Dynamics Inc $600.0 Sr Unsecured Baa3 BBB- 4/15/2030 3.450% 99.74 165 bps 4.798% 313 bps - - n/a 8/4/2017 United States Steel Corp $750.0 Sr Unsecured B3 B 8/15/2025 6.875% 100.00 471 bps 8.340% 673 bps 599 bps 74 bps 12.4% 3/15/2018 United States Steel Corp $650.0 Sr Unsecured B3 B 3/15/2026 6.250% 100.00 343 bps 9.044% 740 bps 645 bps 95 bps 14.8% 5/21/2007 United States Steel Corp $350.0 Sr Unsecured B3 B 6/1/2037 6.650% 99.41 180 bps 8.896% 693 bps 633 bps 61 bps 9.6%

Distribution 4/12/2013 Reliance Steel & Aluminum Co $500.0 Sr Unsecured Baa3 BBB 4/15/2023 4.500% 99.59 280 bps 2.389% 86 bps 128 bps -43 bps -33.2% 11/20/2006 Reliance Steel & Aluminum Co $250.0 Sr Unsecured Baa3 BBB 11/15/2036 6.850% 99.43 220 bps 4.683% 275 bps 295 bps -20 bps -6.9% 5/24/2016 Joseph T Ryerson & Son Inc $587.9 1st lien B3 B 5/15/2022 11.000% 100.00 959 bps 2.424% 113 bps 483 bps -370 bps -76.7% 4/15/2014 Worthington Industries Inc $250.0 Sr Unsecured Baa3 BBB 4/15/2026 4.550% 99.79 195 bps 3.177% 158 bps 194 bps -36 bps -18.8% 7/28/2017 Worthington Industries Inc $200.0 Sr Unsecured Baa3 BBB 8/1/2032 4.300% 99.90 200 bps 3.861% 202 bps 204 bps -2 bps -0.9%

Specialty 4/21/2011 Arconic Inc $1,250.0 Sr Unsecured Ba2 BBB- 4/15/2021 5.400% 99.85 195 bps 2.268% 90 bps 112 bps -21 bps -19.1% 2/23/2007 Arconic Inc/PA $627.2 Sr Unsecured Ba2 BBB- 2/23/2022 5.870% n/a n/a 2.586% 107 bps 140 bps -33 bps -23.5% 9/22/2014 Arconic Inc $1,250.0 Sr Unsecured Ba2 BBB- 10/1/2024 5.125% 100.00 255 bps 2.917% 133 bps 201 bps -68 bps -33.8% 1/25/2007 Arconic Inc $625.0 Sr Unsecured Ba2 BBB- 2/1/2037 5.950% 99.62 113 bps 4.958% 299 bps 325 bps -26 bps -7.9% 9/27/2016 Alcoa Nederland Holding BV $750.0 Sr Unsecured Ba1 BB+ 9/30/2024 6.750% 100.00 523 bps 2.371% 236 bps 200 bps 36 bps 18.3% 9/27/2016 Alcoa Nederland Holding BV $500.0 Sr Unsecured Ba1 BB+ 9/30/2026 7.000% 100.00 255 bps 3.111% 161 bps 289 bps -127 bps -44.2% 5/17/2018 Alcoa Nederland Holding BV $500.0 Sr Unsecured Ba1 BB+ 5/15/2028 6.125% 100.00 314 bps 4.234% 267 bps 315 bps -48 bps -15.2% 7/12/2013 Allegheny Technologies Inc $500.0 Sr Unsecured B2 B 8/15/2023 7.875% 99.99 325 bps 3.809% 225 bps 377 bps -152 bps -40.2% 11/22/2019 Allegheny Technologies Inc $350.0 Sr Unsecured B2 B 12/1/2027 5.875% 100.00 255 bps 4.997% 338 bps - - n/a 8/23/2017 Big River Steel LLC / BRS Finance Corp $600.0 Secured B3 B 9/1/2025 7.250% 100.00 507 bps 3.587% 227 bps 231 bps -4 bps -1.9% 6/30/2011 Carpenter Technology Corp $250.0 Sr Unsecured Ba1 BBB- 7/15/2021 5.200% 99.84 230 bps 2.487% 124 bps 173 bps -49 bps -28.2% 2/26/2013 Carpenter Technology Corp $300.0 Sr Unsecured Ba1 BBB- 3/1/2023 4.450% 99.85 250 bps 2.993% 153 bps 206 bps -54 bps -26.0% 6/4/2013 Century Aluminum Co $250.0 2nd lien Caa1 B 6/1/2021 7.500% 98.53 616 bps 8.743% 733 bps 616 bps 117 bps 19.0% 5/31/2018 JW Aluminum Continuous $285.0 Secured B3 B- 6/1/2026 10.250% 100.00 718 bps 8.922% 745 bps 687 bps 58 bps 8.4% 11/26/2019 Kaiser Aluminum Corp $500.0 Sr Unsecured Ba3 BB+ 3/1/2028 4.625% 100.00 289 bps 4.004% 238 bps - - n/a 6/10/2015 Precision Castparts Corp $550.0 Sr Unsecured A2 AA- 6/15/2020 2.250% 99.99 70 bps 1.788% 31 bps 29 bps 2 bps 8.4% 12/20/2012 Precision Castparts Corp $1,000.0 Sr Unsecured A2 AA- 1/15/2023 2.500% 99.43 80 bps 1.825% 29 bps 47 bps -18 bps -38.7% 6/10/2015 Precision Castparts Corp $850.0 Sr Unsecured A2 AA- 6/15/2025 3.250% 99.80 110 bps 2.105% 49 bps 63 bps -14 bps -22.7% 6/10/2015 Precision Castparts Corp $275.0 Sr Unsecured A2 AA- 6/15/2035 4.200% 99.40 130 bps 3.252% 133 bps 135 bps -2 bps -1.3% 12/20/2012 Precision Castparts Corp $500.0 Sr Unsecured A2 AA- 1/15/2043 3.900% 99.38 100 bps 3.287% 122 bps 117 bps 4 bps 3.6% 6/10/2015 Precision Castparts Corp $325.0 Sr Unsecured A2 AA- 6/15/2045 4.375% 99.67 145 bps 3.373% 122 bps 117 bps 5 bps 4.4% 6/3/2014 Triumph Group Inc $300.0 Sr Unsecured Caa2 *- CCC 6/1/2022 5.250% 100.00 297 bps 5.174% 376 bps 417 bps -41 bps -9.9% 9/23/2019 Triumph Group Inc $525.0 2nd lien B3 *- B+ 9/15/2024 6.250% 100.00 476 bps 2.652% 121 bps - - -

Pipe & Tube 8/29/2016 Novelis Corp $1,150.0 Sr Unsecured B2 B+ 8/15/2024 6.250% 100.00 836 bps 3.172% 268 bps 245 bps 22 bps 9.1% 9/14/2016 Novelis Corp $1,500.0 Sr Unsecured B2 B+ 9/30/2026 5.875% 100.00 836 bps 3.745% 226 bps 309 bps -84 bps -27.0% 6/14/2016 Zekelman Industries Inc $150.0 Secured B2 B *+ 6/15/2023 9.875% 100.00 836 bps -0.856% -105 bps 418 bps -523 bps -125.2%

Denotes new issuance since 10/10/19 Metals Bond Update Denotes bond that matures in the next two years *+/*- Indicates ratings currently on review for upgrade/downgrade Source: Bloomberg Source: Bloomberg

pnc.com/metalsandmining PNC’S METALS INDUSTRY UPDATE 7

SYNDICATED BANK LOAN MARKET

Despite solid activity during the fourth quarter, 2019 posted Year $ Volume (billions) # Deals Vs. Prior Year the weakest results in the syndicated bank loan market in the 9.70 26 Down 61% past 5 years. We do think the uncertain market conditions that 2019 have characterized most of 2019 have contributed to this lull. 2018 24.60 35 Up 39% However, we expect 2020 will be more robust. The first half of 2017 17.68 42 Up 38% the year will bring at least two big deals: the AK Steel/Cleveland 2016 12.80 30 Down 26.5% Cliffs Revolver and the Arconic Separation Financing. The chart at right shows activity levels during the past 5 years. 2015 17.40 33

Q4 activity totaled $6.7 billion based on 11 completed transactions. This is more than twice the volume for the entire rest of the year, bringing volumes for 2019 to 26 deals totaling $9.7 billion. The largest transaction was U.S. Steel’s $2 billion ABL Revolver. This Revolver was increased by $500 million to take advantage of the company’s available borrowing base and to help fund its $700 million minority investment in Big River Steel. Also in the quarter, Steel Dynamics completed a $1.2 billion Revolver, its first unsecured credit facility as a result of being upgraded to investment grade by Moody’s and Standard & Poor’s. Other notable financings include Ta Chen refinancing $975 million in multiple facilities, TimkenSteel upsizing its ABL Revolver to $400 million, and Kaiser Aluminum putting in place a new $375 million ABL Revolver. More details on these facilities can be found in the table on the following page. Market conditions remain favorable for borrowers. Please contact your PNC representative if you would like to check the terms of your existing bank facility versus current market conditions.

pnc.com/metalsandmining PNC’S METALS INDUSTRY UPDATE 8

SYNDICATED BANK LOAN MARKET (Continued)

Ta Chen International, Inc. Steel Dynamics, Inc. Kaiser Aluminum TimkenSteel United States Steel

Date May-17 / December-19 December-19 October-19 October-19 October-19 Deal Size ($ in MM) $875.0 / $100.0 $1,200.0 $375.0 $400.0 $1,850.0 / $150.0 Facility Type ABL Revolver / FILO Revolver ABL Revolver ABL Revolver ABL Revolver / FILO Tenor 5 years / 5 years1 5 years 5 years1 5 years 5 years / 5 years Accordion ($ in MM) Not Disclosed $500.0 $200.0 $130.01 $500.01 Purpose Corporate Purposes Corporate Purposes Corporate Purposes Corporate Purposes Corporate Purposes Ratings

S&P NR BBB- BB+ NR B

Moody’s NR Baa3 Ba2 NR B2

Amortization - - - - - Pricing at close (bps)

All-in Spread 175.0 / 300.0 125.0 125.0 150.0 150.0 / 250.0

LIBOR Margin 175.0 / 300.0 125.0 125.0 150.0 150.0 / 250.0

Commitment Fee 25.0 / - 17.5 25.0 25.0 25.0 / - Average Average Average Revolver FILO Avgerage Debt Net Lev. LIBOR Comm. LIBOR Comm. LIBOR Comm. Comm. Excess Excess Excess LIBOR LIBOR Excess Pricing Detail (bps) Rating Ratio1 Spread Fee Spread Fee Spread Fee Fee Availability Availability Availability Spread Spread Availability

BBB+ / 40% 125.0 25.0 > 50% 150.0 25.0 Baa1 < 1.00x 112.5 15.0 ≥ ≥ 30% 125.0 225.0 < 66.67% 25.0

BBB / Baa2 < 1.75x 125.0 17.5 < 40% 150.0 25.0 > 25% 175.0 25.0 < 30% 150.0 250.0 ≥ 66.67% 30.0 Not Disclosed BBB- / Baa3 < 2.50x 137.5 20.0 ≤ 25% 200.0 25.0

BB+ / Ba1 < 3.25x 150.0 25.0

BB / Ba2 ≥ 3.25x 175.0 27.5

Financial Covenants

Fixed Charge Coverage Ratio - 1.00x2 1.10x2 1.00x2

Interest Coverage Ratio Not Disclosed 2.50x - - -

Debt-Cap Ratio 0.60x - - -

Convertible Note Prin. + Minimum Liquidity - - - 12.5% of Borrowing Base3,4

Secured Yes No Yes Yes No

1Facilities mature May-2022 in 1Net of up to $600,000,000 of 1Earlier of (i) 2/15/24, if the 1$100,000,000 available in 1$37,500,000 available as an incremental FILO tranche, accordance with original 2017 unrestricted cash maturity of Kaiser’s 5.875% senior incremental revolver borrowings included with the $500,000,000 aggregate accordion agreement; December amendment notes due 2024 has not been and $30,000,000 separately 2Springs when availability is less than the greater of reflects facility upsize. extended to a date at least 90 days available as an incremental (i) 10% of the total Aggregate Commitments and (ii) after 10/30/24, or (ii) 10/30/24 FILO tranche $200,000,000 2Springs when excess availability 2Springs when availability is less is the less than the greater of than the greater of (i) 10% of the (i) 10% of the Line Cap and (ii) lesser of the Borrowing Base and $30,000,000 the Aggregate Commitment, and (ii) $30,000,000 3For the quarter starting 3/31/2021 so long as existing convertible notes remain outstanding 4Does not apply if (i) Borrower has made arrangement for the Sources: LPC LoanConnector, S&P CapitalIQ, S&P, Moody’s repayment / refinancing in full of the convertible notes on or prior to the maturity date or (ii) all but 10,000,000 or less of the convertible notes have been converted to equity

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