IPSCO Pleased with Announcement of S.201 Investigation

Lisle, Illinois, 26 June 2001, IPSCO (NYSE/TSE:IPS) today congratulated the Administration for taking steps to deal with the proliferation of foreign steel entering the U.S. "By giving the International Trade Commission instructions to commence a safeguard action pursuant to Section 201 the Trade Act, the Administration is taking the first steps towards restoring market forces and free trade in steel products," said Roger Phillips, President and Chief Executive Officer.

"A safeguard action, in conjunction with the two additional parts of the President's three-part program, should be viewed by IPSCO investors and prospective investors as potentially having a positive longer term impact on company performance as opposed to any short lived effect," explained Phillips.

Under a S.201 investigation, the I.T.C. has until late December to investigate the imports of steel to the U.S. and to determine if the imports are causing, or are threatening to cause, serious injury to the industry, and to report its findings to the President. Subsequently, the President normally acts within 60 days from the time of such a determination in imposing the appropriate remedy. Remedies could include quotas on imports of steel or a combination of quotas and tariffs on imports that exceed such quotas. The result of such a remedy could be to substantially reduce the levels of steel being imported to the U.S. "Such a reduction would be expected to improve pricing levels and cash generation for IPSCO. Additionally, IPSCO would be in a position to return to more normal levels of capital investment. In the current environment the squeeze on profits has necessitated substantial restraint. In a capital intensive business it is extremely important to maintain one's equipment as close to the leading edge of technology as practical - if you fall too far behind you end up in a downward spiral where higher costs and poor quality, resulting from obsolete equipment drives profits even lower forcing even further deleterious cut backs in improvement projects," Phillips added.

Concurrently with a safeguard action, it is expected that the Administration will pursue the remaining parts of the comprehensive steel policy initiative and will enter into trade discussions with other steel-producing nations. Such discussions could result in agreements to ensure that global capacity is tailored to meet demand and that trade distorting practices are curtailed. Phillips noted that, "If fruitful, the agreements could have the potential to further improve IPSCO's financial situation."

In the shorter term it is uncertain what countries exporting to the U.S. will do, given the very low prices that have resulted from recent import surges. These surges have led in turn to higher inventory levels. Most recently there has been a decrease in import volumes but this has occurred concurrently with decreasing domestic consumption. The conduct of countries exporting to the U.S. in the period between the announcement of this safeguard action and the recommended remedy is impossible to predict, the company said.

World Trade Organization rules require that for a safeguard action to be fully enforceable the country imposing the safeguard must consider import volumes on a global basis. As a result the Administration's instructions to the I.T.C. do not exclude Canada and Mexico from the investigation. This does not preclude those trading partners' exclusion from the remedy phase if NAFTA imports are found not to have contributed importantly to serious injury.

IPSCO manufactures products in Canada that are ultimately sold into the U.S. and conversely also manufactures products in the U.S. that are sold into Canada. IPSCO makes manufacturing decisions on the basis of using the most appropriate facility based on cost and product capability- not on the basis of the nation from which the order was received. While it is not expected that the U.S. will apply the S. 201 remedy to Canadian shipments the company said, "Any minor inconvenience that would result would more than be offset by the potential for increased profits from our U.S. operations." IPSCO noted that about half of its sales are in the U.S. and with the continuing start up of its Mobile Steelworks this figure could near 75 - 80% in the next few years.

This news release contains forward looking information with respect to IPSCO's operations and beliefs. Actual results may differ from these forward looking statements due to numerous factors including the speed with which the ITC makes its report, the conduct of exporting countries, the Presidential remedy decision, the geographic application of such a remedy, and the demand for steel in the U.S. These and other factors are outlined in IPSCO's regulatory filings with the Securities and Exchange Commission, including those on IPSCO's Annual Report for 2000, its MD&A., particularly as discussed under the heading "Business Risks and Uncertainties", and Form 40-F.

Company Contact: 
Anne Parker
Vice President, Trade Policy and Communications 
Tel. 630-810-4790
Release 01-26

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