CONTINUING TO SURPASS THE EFFECTS OF THE ECONOMIC CRISIS, CSN’s 2Q09 SALES INCREASE BY 47%, WITH AN EBITDA MARGIN OF 29%.

São Paulo, Brazil, August 6, 2009

Companhia Siderúrgica Nacional (CSN) (BOVESPA: CSNA3) (NYSE: SID) announces today its results for the second quarter of 2009 (2Q09), in accordance with Brazilian accounting principles and denominated in Brazilian Reais (R$). All comments presented herein refer to the Company’s consolidated results and comparisons refer to the first quarter of 2009 (1Q09), unless otherwise stated. The Real/US Dollar exchange rate was R$1.9516 on June 30, 2009.

• Steel product sales volume totaled 947,000 tonnes, 47% up on the 1Q09;
• Net revenue stood at R$2.5 billion in the 2Q09, 2% higher than the R$2.4 billion recorded in the previous quarter;
• The gross margin was 34% in the 2Q09, 1.0 p.p. up on the 1Q09;
• EBITDA totaled R$728 million in the 2Q09, 7% up on the 1Q09. Despite all the adverse effects of the crisis, CSN proved to be vigorously resilient, achieving an EBITDA margin of 29% in the 2Q09, a 1 p.p. improvement over the 1Q09;
• Earnings before taxes amounted to R$609 million in the 2Q09, 34% up on the 1Q09;
• CSN’s market share of the domestic flat steel market (hot-rolled, cold-rolled, galvanized and tin plate) in the 2Q09 amounted to 40% , 3 p.p. higher on the 1Q09. CSN’s market share by segment were: 24% share of the automotive market, 45% of the construction market, 100% of the packaging market, 43% of the distribution market and 43% of the home appliance/OEM market;
• In 2Q09, consolidated steel product sales volume in the domestic market, where margins are historically higher, accounted for 84% of total sales volume;
• Iron ore sales volume totaled 9.4 million tonnes in the first half of 2009, 22% up on the first six months of 2008;
• CSN began producing and selling cement in the 2Q09 and sales are expected to reach 300,000 tonnes in 2009;
• The programmed maintenance stoppage at Blast Furnace 2 was concluded in the second quarter, absorbing investments of R$93 million. Operations were resumed in June;
• In the 1H09, CSN’s shares appreciated by a substantial 61%, the fourth highest upturn among those companies making up the IBOVESPA index, versus 37% for the IBOVESPA index itself. On the NYSE, CSN’s ADRs increased by a significant 86%, which is especially meaningful given that the Dow Jones index fell by 4% in the same period.

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Brazil

The second quarter was marked by the stabilization of some global economic indicators, improved risk perception of the major international banks, a gradual reduction in interest rates by the Central Bank, the increasing availability of credit and cuts in consumption-related taxes. Nevertheless, the impact of the recession on the real economy could still be felt, which becomes especially apparent if the first-half indicators are compared with the same period last year.

Brazil is one of the most likely candidates to begin the process of economic recovery, also preceding the developed countries. GDP is expected to move up in the coming quarters, albeit modestly, due to increased government spending on programs such as the PAC (growth acceleration program) and domestic demand incentives.

Some of Brazil’s economic indicators are already showing signs of improvement, including higher earnings, stable employment rate and consistent domestic demand throughout the 1H09. Inflation is converging towards the target established by the Central Bank, with the IPCA consumer price index recording 2.57% in the first six months of 2009.

The Central Bank’s Monetary Policy Committee is continuing to reduce interest, having cut the Selic base rate five consecutive times this year. It now stands at 8.75% p.a., the lowest level since the Committee was created.

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The IBGE’s industrial production indicator recorded a 14% year-on-year decline in 2009 through May, while the Central Bank’s Focus report points to a reduction in industrial activity of more than 6% in 2009 as a whole, followed by a potential recovery of 4.5% in 2010.

Macroeconomic Projections

Source: FOCUS - CENTRAL BANK Report Base: July 24, 2009

Sectors

Steel:

The steel market showed signs of improvement, with the numbers indicating a gradual recovery throughout the first half, although sales volume was still less than in the same period last year.

According to the IBS (Brazilian Steel Institute), crude steel production totaled 5.6 million tonnes in the 2Q09, 12% more than the 5.0 million recorded in the previous quarter but still 37% down year-on-year. In the same period, flat steel output jumped by 43% over the 1Q09 to 2.7 million tonnes, but fell by 29% over the 2Q08.

Also in the second quarter, domestic flat steel sales totaled 2.1 million tonnes, 25% up on the 1Q09 and 38% down year-on-year, and exports stood at 495,000 tonnes, 37% more than in the 1Q09.

Although the steel sector scenario remains unpredictable, a gradual sales recovery is expected in the coming months. Government measures, such as the reduction in IPI (federal VAT) and the credit incentives, are pushing up demand for steel products. The second-half export prospects have also improved, thanks to reduced inventories and the gradual recovery of international prices.

As a result, the country’s leading steel manufacturers have reactivated those blast furnaces that were switched off throughout the 1H09.

Segments:

Automotive: As a consequence of the reduction in IPI (federal VAT), the increasing availability of credit and a series of sales promotions, the auto industry is showing signs of growth. According to ANFAVEA (the Brazilian Auto Manufacturers’ Association), 782,000 vehicles were licensed in the 2Q09, 17% more than in the previous quarter. In June alone, the figure stood at more than 300,000 units, an all-time record for Brazil. This upturn is in sharp contrast to flagging demand in the main international markets.

Second-quarter production totaled 807,000 units, 21% up on the 1Q09.

ANFAVEA expects 6.4% growth in new vehicle sales in 2009, another all-time annual record, a significant improvement over the beginning-of-year expectations, which estimated a 3.9% reduction.

Construction: As a result of the continuation of ongoing projects and the government’s efforts to encourage construction activity by reducing interest rates, cutting taxes on building materials inputs and introducing housing incentive programs, such as “My House My Life”, steel product demand from the building industry remained consistent throughout the 2Q09.

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The outlook is positive. According to the CBIC, Brazil’s Construction Industry Federation, the number of real estate launches in 2009 should reach 2006 levels, with 34,000 units in the metropolitan region of São Paulo, while Sinduscon, another building industry association, estimates 5% growth in 2009 and in the years ahead.

Distribution: The performance of the distribution sector has also been improving. Sales volume in the 2Q09 totaled 803,000 tonnes, 10% up on the quarter before, although still 22% down on the same period last year when demand was particularly strong. The most important factors behind this result were the reduction in inventories and increased demand from distribution center clients. Inventories, which reached more than 140 days of consumption at the peak of the crisis, are currently standing at 64 days, very close to the sector’s post-2000 average of 61 days.

Nevertheless, certain important distribution segments, such as industrial machinery and equipment, have not been reacting to the crisis, jeopardizing the sector’s overall performance. According to INDA (the Brazilian Steel Distributors’ Association) sales in 2009 should record a 15% annual downturn over 2008.

Home Appliances / OEM: According to Eletros (the Brasil’s Electric/Electronic Products Manufacturers’ Association), home appliance / OEM sales in the 2Q09 moved up 20% quarter-over-quarter thanks to the reduction in the IPI tax. According to the IBS, in 2008 the home appliance segment accounted for 6% of Brazilian steel consumption.

Mining:

According to IBRAM (Brazilian Mining Institute), iron ore sales in the first six months totaled 129 million tonnes. Only 10% of this total volume went to the domestic market and the rest was shipped abroad, mainly to China, which absorbed more than 70% of Brazilian total exports, versus only 39% in 2008.

Given sluggish global demand (except for China), price negotiations, which are normally brought to a close in April, were extended into the 2Q09. Although the price benchmark has been established for certain countries (Japan and South Korea, for example, with a 28,2% reduction over the 2009 base price of fines), the Chinese market remains undefined, operating with discounts over 2008 and purchases on the spot market.

Chinese iron ore spot prices exceeded US$ 90.00/t in July, an important increase over the last quarter spot price of US$62.00.

Brazilian iron ore output in 2009 is estimated at 290 million tonnes according to IBRAM, representing 19% of the global total production, 20% down on the year before.

Cement:

According to SNIC (the Brazilian Cement Industry Association), cement sales in 2009 are likely to remain flat over the year before. Domestic sales through June dipped by 0.2% year-on-year to 24 million tonnes.

In the same period, export volumes were poor, declining by 94% over the 340,000 tonnes recorded in the first half of 2008, due to shrinking international consumption, in turn pushing Brazil up four spots in the global consumption rankings to 5th place.

International Market

USA:

The world’s biggest economy continues to struggle, although the pace of the deceleration appears to be slowing.

According to Empire Manufacturing, U.S. industrial production in June 2009 was 13.6% down year-on-year and capacity use stood at only 68%. Nevertheless, some indicators were pointing to the possible advent of stabilization in the second half of 2009.

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Unemployment stood at 9.5% in June, exceptionally high for a dynamic economy like the USA’s. Fortunately, the U.S. job market is extremely flexible and is already finding ways of reducing the lay-offs. Working hours have been shortened and salaries lowered. On the other hand, these measures may further jeopardize consumption and GDP, which the IMF expects to fall by 2.6% in 2009.

The good news came from the real estate sector, which moved up by 11% in June, the biggest upturn since November 2008 and the third consecutive month of growth.

According to World Steel, U.S. steel output fell by 52% year-on-year in the first half. In addition, due to the production cuts since the end of last year, the country’s share of global steel production has fallen by 3 p.p., reaching 4% in June.

Also in June, according to MetalBulletin, daily sales of flat steel products averaged 66,000 tonnes, half of the daily volume sold in the same month last year. Nevertheless, local steel manufacturers are imposing rapid price hikes (three increases last month alone), chiefly due to dwindling distributor and consumer inventories and higher scrap prices.

Europe:

European economic projections point to a strong recession in 2009. According to Eurofer (European Confederation of Iron and Steel Industries), GDP looks set to record an annual decline of 4.5%, with industrial production dropping by 16.4%, exports falling by 15% and unemployment climbing to 9.3%, the highest level for the last 10 years. However, some indicators are suggesting that the economy has most likely bottomed out and that an upturn in activity could begin shortly.

Output by such important steel-consuming sectors such as the auto and construction industries fell by around 25% year-on-year in the first half of 2009, accompanied by a reduction in capacity use.

Apparent consumption in the first six months plunged by 43% year-on-year, but a slight improvement is expected in the months ahead, resulting in an average annual downturn of 33%.

According to World Steel, in the 1H09, EU steel production dropped by 43.2% year-on-year, totaling 62 million tonnes, equivalent to 11% of the global steel production.

Asia:

In the 1H09, China recorded GDP growth of 7.1% year-on-year, exceeding some previous market expectations and proof that the country will play a key role in the recovery of the global economy. This performance was chiefly due to the investment package launched at the end of last year, monetary policy and the expansion of credit. The 2009 GDP growth target of 8%, although 1 p.p. down on last year, underlines the Chinese government’s confidence in sustainable economic growth.

The country is a major player in the global steel market. First-half production totaled 267 million tonnes, 1.2% up year-on-year. According to World Steel, in June China was responsible for 49% of global steel production.

Another factor demonstrating the sector’s robust growth in the Chinese economy is the apparent consumption of steel products, which recorded 12-month growth of 10%, an exceptionally impressive figure given that global apparent consumption, excluding China, dropped by 38% in the same period, as figures stated by Macquarie Research.

As for Japan, although productivity has moved up slightly since the beginning of the year, the economic recovery is expected to be move at a slow pace, given that exports are still sluggish and unemployment continues to increase, having reached 5.2%, its highest level for six years. Given this scenario, GDP is expected to shrink by 5.5% in 2009.

In June, Japanese steel production moved up by 6% over May to 6.9 million tones, but dropped by 41% year-on-year in the first half as a whole pulled down by the strong recession.

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The Presidente Vargas Steelworks produced 869,000 tonnes of crude steel in the 2Q09, 20% down on the previous quarter due to the programmed maintenance stoppage at Blast Furnace 2 between April and June. The furnace resumed production on June 18.

However, the Company’s strategy of stockpiling semi-finished products in the two quarters preceding the maintenance has not affected the production of rolled steel, which posted a substantial increase of 54% over the 1Q09, due to increasing domestic demand.

It is worth noting that, by the 2Q09, CSN had already exhausted its inventories of slabs and hot-rolled coils acquired from third parties in 2008, which had a negative impact on production costs.

CSN’s total production costs reduced to R$933 million in the 2Q09, a strong 35% decrease on the 1Q09 figure of R$1,438 million. The quarter-on-quarter reduction of R$505 million was basically due to the following factors: Raw materials – total cost of R$397 million in the 2Q09, R$520 million less than the 1Q09, caused by:

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- Coal: decline of R$95 million due to lower purchase prices and the appreciation of the Real in the 2Q09;
- Coke: reduction of R$325 million in 2Q09 costs, since there was no further use of coke acquired from third parties;
- Iron ore and pellets: reduction of R$32 million due to lower consumption thanks to reduced crude steel output in the 2Q09;
- Scrap and other raw materials: decrease of R$68 million, also due to reduced production in the 2Q09.

Labor - labor costs totaled R$ 109 million in 2Q09, virtually flat when compared to the 1Q09 figure.
General costs – general production costs amounted to R$ 324 million, 5% up on the R$ 308 million recorded in the 1Q09, chiefly due to higher expenses with natural gas, caused by the reduced availability of blast-furnace gases.
Depreciation – remained flat over the 1Q09 at close to R$103 million.

Total Sales Volume

CSN’s flat steel sales volume totaled 947,000 tonnes in the 2Q09, a hefty 47% growth on the previous quarter and 29% down year-on-year.

Domestic Market

Domestic sales came to 795,000 tonnes, 42% up on the 1Q09 and 28% down on the 1.1 million tonnes recorded in the 2Q08. Eighty-four percent of 2Q09 sales volume went to the domestic market. As previously mentioned, certain industrial sectors recorded increased demand in the second quarter, favoring the Company’s positive result.

Exports

Steel product exports totaled 153,000 tonnes in the 2Q09, 84% up on the previous three months and 32% down year-on-year due to shrinking international demand.

Market Share and Product Mix

The Company’s share of the overall domestic flat steel market (hot-rolled, cold-rolled, galvanized and tin plate) stood at 40% in the 2Q09, 3 p.p. higher than in 1Q09, led by tin plate, galvanized, hot-rolled and cold-rolled, where CSN achieved market shares of 100%,46%, 34% and 29%, respectively.

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Also in the 2Q09, CSN reached a 24% share of the automotive market, 45% of the construction market, 100% of the steel packaging market, 43% of the distribution market and a 43% share of the home appliance/OEM market.

Coated products accounted for 48% of the Company’s total sales volume in the 2Q09.

As the effect of reduced prices and lower share of coated items in the product mix, net revenue per tonne averaged R$ 2,069 in the domestic market in the 2Q09, 14% down on the 1Q09 and 1% up year-on-year.

Average net export revenue per tonne in Reais fell by 36% over the 1Q09, chiefly due to reduced prices, different mix and the period exchange variation.

• PRODUCTION

Own iron ore production plus purchases from third parties totaled 7.3 million tonnes in the 2Q09, 5.8 million of which from Casa de Pedra, 0.9 million from Namisa and 0.6 million from third parties. Of own production of 6.7 million tonnes, 5.2 million referred to finished products* and 1.5 million was run-of-mine.

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• Sales

Second-quarter iron-ore sales totaled 4.0 million tones, 1.4 million less than the 1Q09 figure mainly due to the decline in export volume caused by the reduced availability of ships for loading in May and June, which negatively affected CSN’s overseas sales in that period. Exports came to 3.3 million tonnes, accounting for 83% of total sales volume. The domestic market absorbed 0.7 million tonnes, 0.6 million of which run-of-mine.

1H09 ore sales stood at 9.4 million tonnes, 22% up year-on-year. Exports came to 8.3 million tonnes, 36% more year-on-year, and accounted for 87% of total sales in the period, while the domestic market accounted for the remaining 1.1 million tonnes, including 0.8 million of run-of-mine sales.

The Presidente Vargas Steelworks absorbed 1.3 million tonnes in the second quarter and 2.9 million tonnes in the first half of 2009.

• INVENTORIES

Iron ore inventories closed the 2Q09 at around 13.9 million tonnes, 9.6 million of which finished products*.

* Finished products: lump, sinter feed, pellet feed, hematite and mixed hematite.

* CSN’s consolidated sales include 100% of NAMISA’s sales up to November 30, 2008, and 60% as of December 1, 2008, due to the alienation of 40% of NAMISA’s capital to the Japanese-Korean Consortium.

Net revenue totaled R$2.49 billion in the 2Q09, 2% up on the R$2.44 billion recorded in the 1Q09, due to the 47% upturn in steel products sales volume, partially offset by the reduction in average quarterly prices and lower iron ore sales volume.

Selling, general and administrative expenses totaled R$321 million in the 2Q09, R$46 million up on the previous quarter, chiefly due to greater sales efforts and higher provisions for doubtful accounts.

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In the 2Q09, CSN recorded a negative R$103 million in the “Other Revenue and Expenses” line, R$79 million higher than the previous quarter, chiefly due to the reversal of R$72 million in provisions for CPMF (financial transaction tax) occurred in the 1Q09.

In the 1H09, expenses totaled R$128 million, in line with the first six months of 2008.

Second-quarter EBITDA totaled R$728 million, 7% up on the 1Q09, primarily due to the increase in steel product sales volume and the decline in production costs.

1H09 EBITDA stood at R$1.4 billion, 53% down year-on-year, due to the lower demand in the domestic and export markets.

Despite the adverse effects of the crisis, CSN showed strong resilience recording an EBITDA margin of 29% in the 2Q09, 1 p.p. up on the previous three months.

The 2Q09 net financial result was positive by R$204 million, chiefly due to the following factors:
• Provisions for interest on loans and financing totaling R$255 million;
• Monetary restatement of tax provisions in accordance with the SELIC rate, amounting to R$92 million;
• Gains of R$344 million from derivative transactions, including the corresponding exchange variation;
• Monetary and exchange rate variation gain of R$143 million;
• Returns on financial investments, totaling R$55 million.

Consolidated net debt moved up by R$2.1 billion, from R$2.8 billion on March 31 to R$4.9 billion on June 30, 2009, due to the following factors:
• EBITDA of R$0.7 billion in the 2Q09;
• Exchange variation gain of R$0.8 billion in the 2Q09;
• Reduction of R$0.1 billion in the working capital invested in the business;
• Investments of R$0.5 billion;
• Payment of dividends and interest on equity of R$1.8 billion;
• A R$0.7 billion increase in judicial deposits;
• Payment of taxes (income tax + social contribution) totaling R$0.4 billion;
• Effect of R$0.3 billion related to cost of debt allocated to the business.

The net debt/EBITDA ratio, based on EBITDA of R$5.02 billion of the last 12 months, came to 0.97 time at the end of the second quarter, a 0.50 time increase over the 0.47 time recorded at the end of the 1Q09.

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In the 2Q09, income tax and social contribution totaled R$274 million, R$189 million up on the 1Q09, chiefly due to higher taxable income in the quarter and the impact of the appreciation of the Real against the US dollar on income tax and social contribution in the period.
The effective income tax rate in the 1H09 was 34%.

CSN posted a 2Q09 net income of R$335 million, 9% down on the 1Q09, chiefly due to the increase in income tax and social contribution. Pre-tax income totaled R$609 million in the 2Q09, a 34% quarter-over-quarter improvement.

CSN invested R$501 million in the 2Q09, R$405 million of which went to the parent company, mostly to the following projects:

• Expansion of the Casa de Pedra mine: R$179 million;

• Maintenance and repairs: R$80 million;

• Technological improvements: R$77 million;

• Expansion of the Port of Itaguaí: R$11 million;

• Works plan: R$11 million.

Investments in the subsidiaries accounted for the remaining R$96 million, mostly in:

• MRS Logística: R$26 million;

• CSN Cimentos: R$23 million;

• CSN Aços Longos: R$14 million;

• NAMISA: R$10 million;

• Transnordestina Logística: R$9 million;

• CSN LLC: R$7 million.

It is worth noting that after around 90 days of programmed maintenance stoppage at Blast Furnace 2, the equipment resumed operations in June 2009. CSN invested R$93 million in the modernization project, including the remodeling of regenerators. These amounts were booked under technological improvements in the 1H09.

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At the end of the 2Q09, the Company began producing and selling cement under the CSN brand in the recently built plant adjacent to the Presidente Vargas Steelworks in the Volta Redonda complex.

With estimated production and sales of 300,000 tonnes in 2009, the plant marks CSN’s entry into yet another new business that has strong synergies with its existing activities, given that the project’s main advantages lie in its raw materials self-sufficiency and the use of previously existing logistics. The slag used in cement production comes from the Company’s blast furnace and the clinker currently acquired from third parties will shortly be produced in the CSN’s Arcos mine in the state of Minas Gerais. CSN also has its own railway and distribution infrastructure, which is essential for the sales process.

Working capital closed June at R$2.4 billion, R$89 million down on the March 31 figure, mainly thanks to the R$148 million decrease in assets, chiefly pressured by the R$426 downturn in “Inventories” and partially offset by the R$337 million increase in estimated tax payments made during the 2Q09. This effect was partially offset by a R$60 million decline in liabilities, mostly due to the R$469 million decrease in the “Suppliers” account , partially reduced by the increase in Taxes Payable (R$380 million).

The average supplier payment period in June stood at 72 days, 27 days less when compared to March 2009, while the average receivables period shortened from 35 to 30 days. The inventory turnover period averaged 165 days, 24 days down on the previous quarter, mainly due to the reduction in semi-finished product inventories.

Share Performance

CSN’s shares appreciated by a hefty 61% in the 1H09, the fourth highest upturn among those companies making up the IBOVESPA index, versus 37% for the IBOVESPA itself. In the 2Q09 CSN’s shares increased by 28%, while the IBOVESPA climbed by 26% in the same period.

On the NYSE, CSN’s ADRS moved up by an even more substantial 86% in the 1H09, which is especially significant given that the Dow Jones index fell by 4% in the same period. In the 2Q09, CSN’s ADRs appreciated by 52%, versus an 11% upturn by the Dow Jones.

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Second-quarter daily traded volume averaged R$108 million on the BOVESPA, versus R$103 million in the 1Q09, and US$74 million on the NYSE, versus the previous quarter’s US$69 million.

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CSN is pleased to invite you to attend its 2Q09 Earnings Conference Call and Webcast, as follows:

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INCOME STATEMENT

CONSOLIDATED - Corporate Law - In Thousand of R$

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INCOME STATEMENT

PARENT COMPANY - Corporate Law - In Thousand of R$

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BALANCE SHEET

Corporate Law - thousands of R$

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CASH FLOW STATEMENT

CONSOLIDATED - Corporate Law - thounsands of R$

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NET FINANCIAL RESULT

Consolidated - Corporate Law - thousands of R$

NET FINANCIAL RESULT

Parent Company - Corporate Law - thousands of R$

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SALES VOLUME

Consolidated – Thousand t

SALES VOLUME

Parent Company - Thousand t

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NET REVENUE PER UNIT

Consolidated - In R$/t

NET REVENUE PER UNIT

Parent Company - In R$/t

US DOLLAR EXCHANGE RATE

in R$ / US$

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.