IPSCO produces value-added coil products for its own pipe facilities as well as for a wide range of external customers in the United States and Canada.

We attempt to minimize the volatility of our business and maximize earnings through our low-cost platform and flexibility to move finished production between plate, coil and other value-added products based on market trends. Our strength comes from our intrinsic competitive abilities at every link in the value chain, as well as the synergistic combination of our facilities. The benefits of this structure include better service for our customers, good penetration in competitive markets, and a set of alternatives which provides a strong defense in difficult markets. We are vigilant about maintaining low costs in each of our activities and strive to be among the lowest cost producers in the world.

We also operate "steel short," which means we have more outlets for steel product than steel capacity. We purchase additional steel needs from third parties. We plan to continue to increase our value-added mix of products without the need for adding a green-field steel-making facility. We will continue to secure outlets for products through close customer collaboration, partnership, joint venture or acquisition.

OUTLOOK
The end-use market demand for IPSCO's diverse product offering remains strong for both steel and tubular products. Distributor inventory reductions in both product groups are expected to continue through the first quarter of 2007. We will adjust production schedules as required to accommodate order levels from our distributors and focus on end-user sales, increased value-added product mix and maintaining our market share.

We anticipate continued strength in end-use markets overlaid with continuing inventory corrections throughout distribution channels. Although oil and gas prices continue to be volatile, we expect them to remain at levels sufficient to maintain high drilling activity and resultant demand for our Oil Country Tubular Goods (OCTG) products. Large diameter pipe shipments will be strong in 2007, consistent with our full order book. Margins in the first quarter are expected to experience some compression due to increased scrap prices and continued amortization of inventory and other tangible assets fair value increments.

IPSCO has positioned itself as a leader in the markets we serve. The addition of the NS Group to our family will help us deliver continued growth in the energy tubular market as well as the anticipated synergies. We believe our diverse product offering, state-of-the-art production facilities and the strength of our balance sheet will allow us to continue to perform well.