CSC — Investor Presentation 2021

Mar 24, 2021

China Steel Corporation

March 25, 2021

1 3 Company Overview

- 2 6 電動車 Operating Performance 再生能源 Agenda國防產業 產業升級 3 Key Strategies 4 Appendix

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Safe Harbor Statement

This presentation may contains forward-looking statements. All statements other than historical and current fact, without limitation, including business outlook, predictions, estimates, are forward-looking statements.

Such statements are based current beliefs and upon management’s expectations and are subject to various risks, uncertainties and other factors that could cause actual outcomes and results to differ materially.

We caution readers not to place undue reliance on forward-looking statements as these statements speak only as of the date they are made, and we disclaim any obligation to, update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law or regulation.

This cautionary statement is applicable to all forward-looking statements contained in this presentation.

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- Company overview Business snapshot

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• CSC is the leading Taiwanese steel manufacturer with integrated production capabilities. Crude steel capacity of CSC Group reached about 16 mmt.

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with integrated production capabilities. CSC Group domestic market share ( 2020 )
Crude steel capacity of CSC Group reached
about 16 mmt. 86%
 CSC: 9.9 mmt 67% 25%
 DSC: EAF & No.1&2 BF around 6 mmt 17%
30%
81%

Dominant position in the domestic market 53% 59% 56% 50%
 Focus on Leading-edge Steel Mill & 27% 31%
green energy business. Hot- Bar/Rod Electro- Plate Cold-rolled Hot-rolled Electrical
中鋼集團 Galvanized Galvanized Steel
Improve the percentage of high-end and
Steel
high-margin products. CSC Dragon Steel Chung Hung
Industrial Trading and Service and
Steel Engineering
Materials Logistics Investments
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• Gains Investment

• CSC • CSSC

  • CSE

• CSCC

• CHS • China Ecotek

• CSGT

• CHC Resources

• China Steel Security

• DSC • CSMC

  • CSMQ

• CSAC

• CSC Steel Sdn. • Info-Champ Bhd. Systems

• CSMK

• Himag Magnetic

• CPDC

• CSPM

  • CSC Solar

• China Steel Resources

• CSVC • SDMS

• China Steel Power

• CSCI

• KRTC

4

– Company overview Overseas production sites and sales channels

Established southbound overseas production sites and sales channels to breakthrough tariff barriers.

Established southbound overseas production sites and sales channels to breakthrough tariff barriers.

Established southbound overseas production sites and sales channels to breakthrough tariff barriers.

Vietnam CSGT Metals Vietnam Company Vietnam Hanoi Steel Center Co., Thailand Nippon Steel Thai Sumilox Co., Ltd. China PCMI Metal Products (Chongqing) Co., Ltd Italy Ardemagni SpA Thailand NST Coil Center (Thailand) Ltd. Thailand TSK Steel Co., Ltd. India Mahindra Auto Steel Private Limited China Xiamen Chunyuan Precision Mechatronic Co., Ltd China Maruichi Metal Product (Foshan) Co., Ltd

Malaysia CSCSteel Sdn. Bhd. CSC holds 46% of CSHB Capacity: CR 0.48 mmt (CRC 0.24 mmt including PO, GI 0.17 mmt, PPGI 0.07 mmt) Joint Stock Ltd. India China Steel Corporation India Pvt. Ltd. (CSCI) CSC holds 100% of CSCI Capacity: ES 0.2 mmt Vietnam China Steel and Nippon Steel Joint Stock Co. (CSVC) CSC holds 56% of CSVC Capacity: 1.2 mmt (CR 0.5 mmt, GA/GI 0.3 mmt, ES 0.2 mmt, PO 0.2 mmt) China Changzhou China Steel Precision Materials Co., Ltd. CSC holds 70% of the equity interest Capacity: 8,000 metric tones China Qingdao China Steel Precision Metal Co., Ltd CSC directly and indirectly holds 70% stake China China Steel Precision Metals Kunshan Co., Ltd. CSC holds 80% stake

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Overseas Investments of CSC group

Co-invest in coil centers with peers and customers through China Steel Global Trading Co.

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Consolidated Financial Performance

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Latest sales revenue breakdown

Latest sales revenue breakdown	Latest sales revenue breakdown	Latest sales revenue breakdown	Latest sales revenue breakdown	Latest sales revenue breakdown	Latest sales revenue breakdown
Unit：NTD Thousands
	Item	2021.2	2021.1~2	2020.1~2	YoY
1	Steel products	24,538,377	49,197,413	40,149,749	23%
2	Non-steel industry materials	2,420,306	5,229,687	4,601,337	14%
3	Construction	1,274,467	2,845,232	2,014,901	41%
4	Trading and Logistics	1,277,962	2,504,262	2,190,024	14%
5	Services and others	597,158	1,150,064	1,208,024	-5%
Less	Sales returns and allowances	0	0	0
	Total	30,108,270	60,926,658	50,164,035	21%

• Revenues from steel products takes around 80% of the consolidated operating revenues. With steel market warming up in 2021, the price of steel products has increased as compared with last year .

• Revenues from construction in 2021 increases as compared with last year because of the sales of residential building from China Prosperity Development Corporation and new construction projects of China Steel Structure Co., Ltd. 7

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Consolidated Financial Performance

Consolidated Financial Performance	Consolidated Financial Performance	Consolidated Financial Performance	Consolidated Financial Performance	Consolidated Financial Performance	Consolidated Financial Performance	Consolidated Financial Performance
L i l
Amount: NT$ million atest operatng resuts Item 2021.2* 2021.1 MoM 2021.1~2 2020.1~2 YoY Operating Revenue 30,108 30,818 -2% 60,927 50,164 21% Operating Income 3,866 3,235 20% 7,101 (1,681) 523% Operating Income Margin 12.84% 10.50% 11.66% -3.35% Income Before Income Tax 3,851 3,610 7% 7,462 (2,057) 463%
Item	*2021.2	*2021.1	MoM	*2021.1~2	2020.1~2	YoY
Operating Revenue	30,108	30,818	-2%	60,927	50,164	21%
Operating Income	3,866	3,235	20%	7,101	(1,681)	523%
Operating Income Margin	12.84%	10.50%		11.66%	-3.35%
Income Before Income Tax	3,851	3,610	7%	7,462	(2,057)	463%

*preliminary result

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Quarterly profits trend
NT$ million  In 2020H1, the steel price decreased
6.70%
7,000 7.00% because of Covid-19. After that,
6,000 6.00% downstream industries gradually
5,000 5.00%
resumed the production and pushed up
4,000 4.00%
the steel market as countries worldwide
3,000 3.00%
2,000 2.00% lifted restrictions. The profit has turned
1,000 1.00% positive since August.
328 5,867 6,260
- 0.00% 
-1,037 -1,253 -155 CSC has been increasing the monthly
-1,000 -1.00%
-0.20%
and quarterly pricing since Q4. The
-2,000 -1.43% -2.00%
2020.2Q 2020.3Q 2020.4Q
profit grows with the increase of both
Operating Profit Pretax Income Operating Margin sales volume and list price. 8
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Standalone Production / Sales Performance

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Sales analysis

• Steel demand dropped significantly in Q2 & Q3 because of the pandemic. Downstream customers cut down on orders and kept destocking. As a result, CSC adjusted the production level and brought forward the revamping of No.2 blast furnace to Q3 in accordance with the market condition.

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thousand tons
2,639
2,453
2,324
67% 67%
60%
Sales Volume
Domestic Sales
2020.2Q 2020.3Q 2020.4Q
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• The sales volume rebounded significantly from Q4 as global downstream industries resumed production and steel demand recovered. Demand outlook for 2021H1 remains positive.

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2020 Sales value breakdown Production analysis
thousand tons
2,134 2,108 2,188
Billet/Slab,
10% Hot Rolled, 2,245
2,088
Bar, 7% 25%
1,814
Export 33%
Plate, 10%
Domestic 67%
Wire Rod,
15% Cold Rolled, 2020.2Q 2020.3Q 2020.4Q
33%
Crude Steel Production Product Production
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– 2020 Sales Analysis CSC standalone

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2020 sales volume totaled 10.14 million tons – Sales Breakdown

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Hot-Rolled,
29.0%
Cold-Rolled,
15.8%
Billet/Slab, China
14.1% 26.4% Japan 15.1%
Coated Products,
14.0%
Bar/Rod, 17.9% Plate, 9.2%
Export
Wire-rope 0.5% 34.30%
Ship-building 0.7% 3.48 million Others 29.2%
Hand tools 0.7% Domestic
tons
Vehicles 3.4%
Piping 4.5% 65.70%
Trader 4.8% 6.66 million tons
Steel structure 7.2% S.E Asia 29.3%
Coil center 11.5%
Re-rolling 12.7%
Bolts-nuts 13.1%
Direct users 19.7%
Others 21.2%
0% 5% 10% 15% 20% 25% 30%
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- 2020 Sales Analysis CSC & BF products of DSC

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2020 sales volume totaled 13.95 million tons – Sales Breakdown

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Hot-Rolled,
43.2%
Cold-Rolled,
11.5%
China
26.2% Japan 14.8%
Coated Products,
10.2%
Billet/Slab,
15.4%
Plate, 6.7%
Bar/Rod, 13.0% Export
Wire-rope 0.4% 39.01%
Ship-building 0.5% 5.44 million Others 25.4%
Hand tools 0.6% Domestic
tons
Vehicles 2.7%
60.99%
Trader 4.0%
Steel structure 6.0% 8.51 million tons
Piping 6.5% S.E Asia 33.6%
Coil center 10.0%
Bolts-nuts 10.3%
Direct users 15.5%
Re-rolling 18.4%
Others 25.1%
0% 5% 10% 15% 20% 25% 30%
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Consolidated Income Statement

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IFRSs	Units: NT$ millions	Units: NT$ millions	Units: NT$ millions
	2020	2019	YoY
Revenues	314,783	366,241	-14%
Gross profit	15,118	27,828	-46%
Gross margins	4.80%	7.60%
Profit (loss) before tax	2,768	12,802	-78%
Net profit (loss)	2,258	10,330	-78%
Attributable to
Owners of the corporation	886	8,809	-90%
Non-controlling interests	1,372	1,521	-10%
Earnings Per Share(NTD)	$ 0.05	$ 0.57	-91%

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Consolidated Financial Position

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Units: NT$ millions

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111.44%
105.15%
101.15% 100.66%
96.77% 96.86%
678,139 676,122 667,716 674,527 666,632
636,083
52.71% 51.25% 50.29% 49.18% 50.17% 49.20%
357,414
346,542
335,764 331,729 334,417
312,976
39.67%
37.62%
35.71% 34.50%
31.57% 31.95%
269,034 254,390 238,426 212,949 229,965 203,225
12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
Asset Debt Net Debt ＊ Debt/Equity Debt/Asset Net Debt/Asset
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• Cash flows from operating activities remains steady; keep paying back debts and reducing debt ratio.

• Keep reducing financial costs by issuing corporate bonds and paying back US dollardenominated debt in recent years.

• Credit rating: Taiwan Ratings twAA- ; Outlook Negative (2020.04.16) Fitch Ratings AA-(twn);Outlook Stable (2020.12.23)

＊ 2014~2017 ：

Net debt = Interest Bearing Debt – cash & cash equivalents – ( financial assets at fair value through profit or loss-current+ available-for-sale financial assetscurrent +held-to-maturity financial assets-current+ derivative financial assets for hedging-current) ＊ 2018~ ：

Net debt = Interest Bearing Debt – cash & cash equivalents – ( financial assets at fair value through profit or loss-current+ financial assets at fair value through other comprehensive income-current)

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Historical EPS and Dividends Paid

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	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Dividend payout(%)	85	132	86	70	102	82	81	63	88	600
Cash Dividend payout(%)	74	105	67	70	102	82	81	63	88	600

in NTD per share

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2.00
1.00
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cash Dividend Stock Dividend EPS
0.15
0.20
1.01 1.00 1.00
0.10 0.85 0.88
0.70
0.40 0.5
1.36 0.38 1.05 1.43 0.49 1.04 1.09 0.57 0.3
0.5
1.58 0.05
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10 Measures
1. Develop Advanced Premium Steel
2. Establish Excellent Manufacturing Capability
3. Improve Marketing Capability
4. Deepen the Upgrade of Steel-using Industry
5. Introduce the Application of AIoT
6. Build up Highly Efficient Business Systems and Processes
7. Move towards High Productivity 8. Pass on and Enhance Corporate Culture
9. Explore and Cultivate in the Green Industry Business
10. Mitigate Coal Phase-out and Carbon Reduction Pressure
Transform into a high value-added steel mill throughintelligent innovation.
Expand new business opportunity in promising industry through
engagement in thegreen energyfield.	16

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Develop Advanced Premium Steel

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Definition of Advanced Premium Steel

Products with ”High Technical Content, High Profitability, High Industrial Benefit,” creating over 20% gross profit margin.

Focus on 8 items(Meet customers' needs & Follow industry trend)

	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)	Focus on 8 items(Meet customers' needs & Follow industry trend)
High- Quality Forging Steels Superior Hand Tool Steels High Performance Structural Steels Steel for Green Energy Ultra-High Strength and Toughness Steels Advanced Alloy Steels Cross- Generational Automotive Steels Ultra- High Efficiency Electrical Steels Year 2021 2022 2023 2024 2025 Advanced Premium Steel volume target 35.0 46.2 58.5 71.3 85.2 Total sales volume target (Not including leeways, secondary and salvage products, and semi-products) 833 840 848 849 852 Advanced Premium Steel proportion target (%) 4.2% 5.5% 6.9% 8.4% 10.0% ~~(Unit: 10 thousand tons)~~
	High- Quality Forging Steels	Superior Hand Tool Steels	High Performance Structural Steels	Steel for Green Energy	Ultra-High Strength and Toughness Steels	Advanced Alloy Steels	Cross- Generational Automotive Steels	Ultra- High Efficiency Electrical Steels
	Year			2021	2022	2023	2024	2025
	Advanced Premium Steel volume target			35.0	46.2	58.5	71.3	85.2
	Total sales volume target (Not including leeways, secondary and salvage products, and semi-products)			833	840	848	849	852
	Advanced Premium Steel proportion target (%)			4.2%	5.5%	6.9%	8.4%	10.0%

 Sales volume of advanced premium steel to achieve 10% in 2025 and 20% in 2030.

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- Deepen the Upgrade of Steel using Industry

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Cultivating core technologies Integrating the resources from government, academia and research institutes to execute the collaborative programs such as power system of EV.

Facilitating industry 4.0

• Constructing industry cloud to enhance cross-factory efficiency.

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• Introducing AI-based production and marketing.

Promoting industry service teams

EVI-based Concurrent Engineering

Providing multi-program of process technology, quality control, logistics management, etc. to cultivate medium-sized enterprises.

Establishing JRL to proceed overall researches from materials to end products and enhancing the effect of industry chain.

• Promoting Integrated Innovation

• Facilitating Upgrade and Transformation

• Generating Demand and Benefits from Advanced Premium Steel

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Explore and Cultivate in the Green Industry Business

Sing Da Marine Structure Corporation - Substructures

• Officially commenced operation in January, 2020

• Capital: NTD$6.842 billion with equity ratio 50%, CSC holds 100% of shares.

• Progress: Producing the substructures for Orsted - Greater Changhua Offshore Wind Farm Project. The first 100% domestically made substructure will be produced in the 1H of this year.

China Steel Power Corporation - Offshore Wind Farm

• Capacity: Got distribution of 300MW grid capacity for installation.

• Developers: China Steel Corporation and Copenhagen Infrastructure Partners (CIP) jointly established China Steel Power Corporation to develop #29 offshore wind farm. CSC holds 51% of shares.

• Progress: Obtained the establishment permit, signed power purchase agreement (PPA) with Taipower, and passed the 2[nd] environmental impact assessment. The wind farm is expected to connect to the gird in 2024 and generate an estimated 110 million kwh annual output at the rate of TWD 6.2795/kWh and TWD 4.1422/kWh for the first and second 10-year periods of the 20-year PPA, respectively.

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Explore and Cultivate in the Green Industry Business

CSC Solar Corporation

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Shareholding
CSC
10%
CEC
15%
CSCC
55%
20% DSC
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• Invested NTD 4.36 billion in setting up 84.8MW PV panels on the roof of factories in CSC group.

 Continue to deploy the rooftop photovoltaic power station in CSC group related industries, and enter into the ground-mounted PV projects when opportunities arise.

Year	2017	2018	2019	2020	2021	Total
Estimated Capacity Installed (MW)	30	30	20	--	--	80
Actual Capacity Installed (MW)	31.16	30.01	22.04	1.59		84.8
Electricity Output (100m kwh)	0.04	0.47	0.74	1.04	0.17 (until Feb.)	2.46

 As of Feb. 2021, the accumulated electricity output of solar power in CSC group reached 246 million kwh. Revenues from electricity sales reached 1.13 billion. Carbon reduction reached 125 thousand tons , equivalent to the CO2 absorption of 322 Taipei Daan Park. 20 (Estimated based on the 2019 Taipower electricity carbon emission factor, 0.509 kg CO2e/kwh)

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Key ESG actions and performance

Key ESG actions

• Became a TCFD supporter and adopted the TCFD framework.

• Plan to disclose sustainability metrics following SASB standards for iron & steel producers.

• Set up the “Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality” under the Corporate Governance and Sustainability Committee to take practical actions on climate change.

• To invest 44.714 billion in air quality improvement projects from 2020~2026, and to expand the use of reclaimed water.

ESG Performance

• 2020.11 CSC received the highest honor - “Top 10 Domestic Companies Sustainability Model Awards (Manufacturing Industry)” by Taiwan Corporate Sustainability Awards (TCSA).

• 2020.11 CSC won the “Leader in Sustainability Resilience Award” by British Standards Institution (BSI).

• 2020.11 CSC was included in the Emerging Market Index of Dow Jones Sustainability Index (DJSI) for the 9th consecutive year.

• 2020.10 CSC was ranked 50th in the 100 Most Sustainably Managed Companies in the World by Wall Street Journal, and became one of the five Taiwanese companies awarded.

• 2020.08 CSC was selected as one of the Top 50 Large Enterprises (ranking No. 17) of 2020 Excellence in Corporate Social Responsibility Award by CommonWealth Magazine.

• 2020.06 CSC won the 2019 Sustainability Champions of World Steel Association (worldsteel).  2020.04 CSC was ranked top 5% in TWSE listed companies in the 6th (2019) Corporate Governance Evaluation. 21

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Thank you!

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Segment revenues and operating results

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Unit : NTD Thousands

2020	Steel Department	Construction Department	Shipping Department	Others	Adjustment & Elimination	Total
Revenues from external customers	$ 248,698,696	$ 11,517,864	$ 3,147,615	$ 51,419,126	$ -	$ 314,783,301
Inter-segment revenues	74,466,424	11,982,456	12,839,078	22,739,467	( 122,027,425)	-
Segment revenues	$ 323,165,120	$ 23,500,320	$ 15,986,693	$ 74,158,593	($122,027,425)	$ 314,783,301
Segment profit (loss)	($ 1,297,784)	$ 875,449	$ 2,138,395	$ 3,025,326	($ 2,445,149)	$ 2,296,237
Interest income	158,114	75,769	22,983	116,227	( 70,205)	302,888
Financial costs	( 1,987,616)	( 46,273)	( 164,085)	( 437,459)	175,355	( 2,460,078)
Share of the profit (loss) of associates	( 411,996)	764,733	635,106	1,123,563	( 1,528,156)	583,250
Other non-operating income and expenses	2,347,885	49,118	( 13,243)	598,178	( 936,073)	2,045,865
Profit (loss) before income tax	( 1,191,397)	1,718,796	2,619,156	4,425,823	( 4,804,228)	2,768,162
Income tax (benefit)	( 205,580)	352,960	86,363	783,072	( 506,486)	510,329
Net profit (loss) for the period	($ 985,817)	$ 1,365,836	$ 2,532,793	$ 3,642,763	($ 4,297,742)	$ 2,257,833
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