Steel is one of the most important and versatile materials in use today, and it is an integral part of commercial and industrial development around the world. In 2004, global crude steel production increased by 7.3% compared with the previous year, reaching 1.04 billion tons. The growing demand for steel is driven by a number of factors, including overall global economic growth, as well as increased demand in key end-markets such as construction, transportation, automobiles, appliances and other industrial markets and applications.

During 2004, global economic growth as calculated by the International Monetary Fund was 5.1%, reflecting a general recovery in international business. In the United States, growth reached 4.2%, mainly due to significant increases in consumption and capital investment in machinery and equipment. Canada and Mexico benefited from the sustained U.S. recovery with growth rates of 2.9% and 4.4%, respectively. In Asia, economic growth remained high throughout 2004 despite a slight slowdown during the fourth quarter of the year. Asian results were mainly fuelled by the Chinese and Indian economies, which experienced GDP growth rates of 9.5% and 7.3%, respectively. In South and Central America, the positive economic trend also continued in 2004. GDP grew at a rate of 4.9% in Brazil and 9.0% in Argentina, where industrial production also increased significantly.

The steel industry operates predominantly on a regional basis, with large industry participants selling the bulk of their steel production in their home countries or regions, where they have natural advantages and are able to more effectively market value-added products and provide additional customized services. Despite the limitations associated with significant transportation costs, as well as the restrictive effects of protective tariffs and other trade restrictions, steel exports have generally increased in the last decade as production has shifted towards low-cost production regions such as China and Southeast Asia.

Slabs are semi-finished steel forms that are used as inputs for the production of flat steel products such as hot rolled coils, cold rolled coils, and the coated and tailor-made products described below. Hot rolled products are used by a variety of industrial consumers in applications such as the manufacturing of wheels, auto parts, pipes, gas cylinders and containers. Cold rolled products are sold mainly to the automotive, home appliance and capital goods sectors, as well as to galvanizers, drummers, distributors and service centers. Cold rolled coils are sold as coils or cut into sheets or blanks to meet customers’ needs.

Given its resistance to corrosion and its mechanical and chemical characteristics, tin plate is mainly sold to the packaging industry for food, sprays and paint containers. The construction industry is the main market for hot dipped galvanized products. Hot dipped galvanized sheets are produced by adding a layer of zinc to cold rolled coils, which are afterwards cut into sheets. Electro-galvanized and pre-painted sheets are sold not only to customers in the automotive and home appliance industries, but also to clients working in the construction of road-defenses, sewage systems, bridges and other infrastructure projects

Billets are semi-finished steel forms that are used as inputs in the production of long steel products such as bars, channels or other structural shapes. Rods are round, thin, semi-finished steel lengths that are rolled from a billet and coiled for further processing. Rods are commonly drawn into wire products or used to make bolts and nails. Bars are long steel products that are rolled from billets. Two of the most common types of bars produced are merchant bars and reinforcing bars (rebar).

Welded steel pipe is typically used for the transport of water, air, gas and other liquids. Tubular products include galvanized pipes for liquid conduction, structural and industrial applications and light structural shapes which can be used for a variety of applications including the transport of other forms of gas and liquids under high pressure and pipe for electrical cable conduit and also for oil and gas applications.

Total cost of sales increased by 137.2%, from $382.0 million in the six months ended June 30, 2004 to $905.9 million the six months ended June 30, 2005.

Operating income totaled $728.9 million, or 39.9% of net sales, for the six months ended June 30, 2005, compared to $229.6 million, or 34.2% of net sales, for the same period of 2004.

Financial results for the six months ended June 30, 2005 showed a net financial loss of $102.7 million, compared to a net gain of $88.7 million in the the six months ended June 30, 2004.

Net income attributable to minority interest for the six-month period ended June 30, 2005 increased to $250.3 million from $131.9 million in the six-month period ended June 30, 2004.