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| **         **                           | **ANNUAL** | **        ** |
|                                                        | **INFORMATION** | **       ** |
|                                                   | **FORM** | **        ** |
|                                                   |  | **         ** |
|                                                   | **FEBRUARY 24, 2005** |          |
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| RUSSEL METALS INC., SUITE 210, 1900 MINNESOTA COURT, MISSISSAUGA,ONTARIO             |
| CANADA L5N 3C9                                                                       |
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| **RUSSEL METALS INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|              RusselMetals Inc. (Russel Metals or the Company) is one of the largest metals distribution and processing companies in North Americabased on revenues.  The Company primarily distributes steel products and conducts its distribution business in three principalbusiness segments:  metals service centers, energy tubular products and steel distributors.  For the year ended December31, 2004, Russel Metals had consolidated revenues of $2.4 billion.                                                                                                                                                                                                                                                                                                                                                                              |
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|              The addressof Russel Metals' head office is Suite 210, 1900 Minnesota Court, Mississauga, Ontario L5N 3C9, tel. no. (905) 819-7777, fax no.(905) 819-7409.  Unless the context otherwise requires, references to "Company", "we", "us" or "our" as used herein refers toRussel Metals Inc. and its subsidiaries.  All dollar references are in Canadian dollars unless otherwise stated.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| **HISTORY OF THE COMPANY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              RusselMetals Inc. (the legal entity) is the successor corporation to Federal Grain Limited, which was incorporated under the laws ofCanada in 1929 and subsequently amalgamated with Searle Grain Company Limited on August 1, 1967 to continue under the name FederalGrain Limited.  The name was changed to Federal Industries Ltd. on April 16, 1973 and the Company was continued under the*Canada Business Corporations Act* on May 5, 1980.  On June 1, 1995, the name was changed to Russel Metals Inc.  OnJanuary 1, 2002, Russel Metals Inc. was formed upon the amalgamation of its predecessor of the same name with A. J. Forsyth andCompany Limited, a subsidiary with Canadian service center operations, and three non-operating subsidiaries.                                                                             |
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| **BUSINESS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| **Overview**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                 Webelieve we operate the largest metals service centers operation in Canada based on revenues.  During 2004, we processed anddistributed products to a broad base of approximately 18,000 customers through a network of 57 locations across Canada.  Inaddition, we have four U.S. locations.  Our network of service centers carries a broad line of metal products in a wide rangeof sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainlesssteel and aluminum.  We purchase these products primarily from North American steel producers, and package and sell them toend users in accordance with their specific needs.  Our metals service centers operations accounted for $1,538.2 million, or64%, of our total revenues in 2004. |
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|                 Ourenergy tubular products operations carry a specialized product line focused on the needs of its energy industry customers. These operations distribute oil country tubular goods (OCTG), line pipe, tubes, valves and fittings from five Canadian and two U.S.locations.  We purchase these products either from the pipe processing arms of North American steel mills or from independentmanufacturers of pipe and pipe accessories.  Our energy tubular products operations accounted for $395.3 million, or 16%, ofour total revenues in 2004.                                                                                                                                                                                                                                                                   |
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|                 Oursteel distributors act as master distributors selling steel in large volumes to other steel service centers and equipmentmanufacturers mainly on an ‘as is’ basis.  The main steel products sourced by this segment are carbon steel plate,beams, channel, flat rolled products, rails and pipe products.  Our steel distributors operations accounted for $471.2million, or 20%, of our total revenues in 2004.                                                                                                                                                                                                                                                                                                                                                                                              |
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| **DESCRIPTION OF THE BUSINESS** |
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| **Industry Overview**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|               Metals servicecenters bridge the gap between the capabilities of large metal producers, who manufacture large volumes of steel, aluminum andspecialty metals in standard sizes and configurations and require long lead times, and the specific needs of end users by acquiringlarge volumes of metal from producers and packaging and processing the metal in accordance with end user specifications.  Manyend users purchase metal products from service centers because their requirements are smaller than the minimum order quantitiesavailable from the producers or because such end users require specialized metal processing services, a commitment to reliablejust-in-time delivery and flexibility to meet their changing product and manufacturing requirements that large producers are eitherunwilling or unable to provide.  Service centers also allow end users to reduce their total production cost by shifting theresponsibility for pre-production processing to service centers which, through economies of scale, can achieve greater operationalefficiency from the processing equipment. |
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|                 Weestimate that in 2004, the service center industry in Canada had total sales of approximately $6 billion.  According toindustry sources, comparable statistics for the U.S. industry for 2004 indicate sales of approximately US$47 billion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|             Service centers are the largest category of customers of domestic steel producers in Canada.  The following tableshows Canadian shipments (net of returned shipments) by Canadian steel mills to Canadian service centers and all other net domesticshipments by Canadian steel mills for the years indicated.  These figures do not include metal products other than steel, suchas aluminum, that we also distribute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| **Net Domestic Shipments of Steel Mill Products by Canadian Steel Mills**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **(millions of metric tons)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ** 1995** | ** 1996** | ** 1997 ** | ** 1998** | ** 1999** | ** 2000** | ** 2001** | ** 2002** | ** 2003** | ** 2004****(1)** |
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| Shipments to Cdn.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |       |       |       |       |       |       |       |       |       |
| Service Centers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 3.28 | 3.57 | 3.81  | 3.48 | 3.85 | 3.80 | 4.02 | 4.06 | 3.65 | 3.74 |
| All Other Shipments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 7.03 | 7.57 | 7.92  | 7.87 | 8.22 | 8.20 | 7.53 | 7.59 | 7.69 | 7.68 |
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| Total Shipments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 10.31 | 11.14 | 11.73  | 11.35 | 12.07 | 12.00 | 11.55 | 11.65 | 11.33 | 11.42 |
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| % to Service Centers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 31.8% | 32.0% | 32.5%  | 30.7% | 31.9% | 31.7% | 34.8% | 34.8% | 32.2% | 32.7% |
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| (1)  twelve months ended November 30, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |
| (Source:  Statistics Canada)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|              The metals service center industry is intensely competitive.  Generally, the metals service center industrycompetes on price and the ability to provide customers with value-added services such as product selection, timely delivery,reliability, quality and processing capability.  There has been significant consolidation in the industry in both the UnitedStates and Canada over the past decade.  Many of our competitors are small companies, often owner-operated, with limitedproduct lines, inventory and geographic customer bases.  Many of these small, owner-operated businesses have limited access tocapital for modernization and expansion, have not had a viable exit strategy, and have been left with limited liquidityoptions.                                                                                                                                                                                                                                                                                                                                                        |
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| **Competitive Strengths**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              We believe that the following strengths have enabled us to achieve net earnings in the top decile of our industryand give us a competitive advantage in the metals distribution industry:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|              *Leading Market Position.  *We believe we are the largest service centeroperator in Canada based on revenues and that we represent over 24% of the total service center market in Canada.  We alsobelieve we are the largest service center operator in each of the regions of Canada except for Ontario where we are the secondlargest.  Our 57 Canadian service centers service a broad base of approximately 18,000 customers across all regions ofCanada.  Our geographic presence, large volume and leading market position enable us to successfully source steel atcompetitive prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|              *Strong Supplier Relationships and Unique Market Insight.  *We are among thelargest purchasers of steel in North America and have well-established relationships with North America's largest steel producers,which enable us to ensure multiple sources for steel products and services.  We believe that our steel distributors operationis one of the largest independent steel importers in North America.  Our steel distributors enable us to augment our productlines at our service centers when product is not available or when we can obtain steel competitively by purchasing abroad. Through our steel distributors operations, we regularly purchase from multiple suppliers in 21 countries around the world. This enables us to monitor global steel supply and assess its impact on North American steel demand and pricing trends.  Thistimely access to market information and global outlook allows us to proactively manage inventory levels and prices in our servicecenter operations and make low cost purchases of steel imports when available.                                                                                                                                                                                                                                                                                                                                            |
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|              *Successful Acquisition Track Record.  *Over the last five years, we havesuccessfully integrated a number of acquisitions.  For example, in October 2001, we acquired A.J. Forsyth and Company Limited,the leading service center operation in British Columbia, and in July 2003, we acquired Acier Leroux inc., the leading servicecenter operation in Quebec.  These acquisitions strengthened our Canadian service center market presence and were immediatelyaccretive to Russel Metals.  Once we have completed an acquisition, we rationalize the operations and balance sheet andreinforce the best practices found in our combined operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              *Multiple Business Segments and Diversified Service Center Customer Base.  *Weoperate in three segments of the metals distribution business, each with a distinct customer base and business cycle:  metalsservice centers, energy tubular products and steel distributors.  Our largest segment, metals service centers, has adiversified customer base across a wide variety of industries, including machinery and equipment manufacturing, construction,shipbuilding and natural resources, such as mining and petroleum.  Our focused segments, energy tubular products and steeldistributors, are not significantly dependent on any one customer.  In 2004, our service center average order size was$1,866.  In addition, in 2004, none of our approximately 18,000 service center customers accounted for more than 2% of ourtotal revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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|              *Superior Service and Product Selection.  *We believe that we have areputation for superior and timely service, and diverse product selection.  Each of our metals service centers has the abilityto offer one stop shopping to our customers.  We also provide customized processing services and offer just-in-time deliveryto quickly satisfy end user specifications.  We have developed strong relationships with our customers and are able toidentify their needs early so we can respond to short lead times or just-in-time delivery requirements common in theindustry.  Because local managers have significant operational control, our service centers can react quickly to changes inlocal markets and customer demands.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|              *Prudent Inventory Management.  *We manage our inventory to avoid unnecessarycommitments of working capital while maintaining sufficient supply to respond quickly to customer orders.  We tailor ourinventory and processing services at each service center location to the needs of that particular market.  The negotiation ofpurchase agreements with suppliers is centralized to leverage our buying power and global market insights; however, actual supplyof inventory to each of our locations is determined by the branch management team.  Local monitoring allows us to moreaccurately assess inventory requirements at each service center.  We believe our decentralized inventory management, combinedwith our global market insights, has allowed us to react more quickly than many of our competitors to changing metals prices andcustomer needs, and to optimize our use of working capital.  As a result of our prudent inventory management, our servicecenters turn their inventory 4 to 5 times per year while the industry average is lower. Given the particular importance ofinventory management in the price-sensitive service center business, we believe that this gives us a significant competitiveadvantage.                                                                                                                                                                      |
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|              *Experienced Management Team.  *Our senior executives and other key members ofour management team have an average of 27 years of experience in the metals distribution business.  To facilitate anentrepreneurial culture, our compensation policies, at both senior and local management levels, are based on the profitability andasset utilization of our business units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| **Business Strategy**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|              Our primary goals are to continue to be a leading metals distribution company, increase our market share, expandservices to customers and improve operating profits and cash flows.  Our business strategies, aimed at achieving our goals,consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|              *Managing Capital Utilization.  *We will continue to aggressively manage ourbalance sheet to reduce debt and to enable us to fund acquisitions, capital expenditures and working capital requirements fromexisting bank lines.  We intend to continue to manage inventory based on our expected customer demands rather than speculateon market pricing which will enable us to maximize our inventory turns.  We strive to maintain capital expenditures below ourdepreciation expense.  Over the last 4 years, the ratio of our capital expenditure to depreciation was 82%, excludingexpenditures of $32.4 million on a cut-to-length line and new facility for our B&T Steel division and restructuring offacilities related to the Russel Metals and Acier Leroux merger, which occurred in 2003 and 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|              *Expanding through Select Acquisitions.  *Over the past few years, we havestrengthened our Canadian franchise through acquisitions which we have rationalized and integrated with our existingoperations.  We now have a major presence in all of the Canadian regions.  Management believes that maintaining andgrowing that strong position should be the primary strategic goal of our acquisition policy.  We intend to continue toinvestigate acquisition opportunities that will be immediately accretive to earnings and that will enable us to build on ourCanadian service center presence or extend our product offerings in Canada, such as increasing our share in flat rolled productsand processing.  In our energy tubular products and steel distributors operations, as well as our United States service centeroperations, we will continue to look for strong product niche players or strong regional operations. No significant acquisitionsare currently contemplated.                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|              *Decentralizing Operating Management Combined with Economies of Scale.*  Wecontinue to manage our businesses on a decentralized basis, with local management accountable for day-to-day operations,profitability and growth of the business, which we believe fosters an entrepreneurial culture across our operations.  Ourlocalized operating management allows us to capitalize on name recognition, end user relationships of our businesses, and the localand regional market knowledge of the operations' staff. In addition, management oversight through centralized purchasing,management information systems and cash management enables us to benefit from economies of scale and lower purchasingcosts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| **Acier Leroux Acquisition Update**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|              On July 3, 2003, we purchased Acier Leroux, a company specialized in the processing and distribution of varioussteel products from metals service center locations mainly in Ontario, Quebec and the Maritimes.  We acquired Acier Leroux for$197.6 million, which we funded with $20.0 million in new equity and borrowings of $177.6 million from our credit facility. For the 12 months ended July 3, 2003, Acier Leroux had revenues of approximately $401 million from its Canadian operations andapproximately $70 million from its U.S. operations, which we have discontinued.  The Acier Leroux acquisition has beenaccretive to our net earnings and to cash flow from the first month of the acquisition and has also helped strengthen our marketpositions in Ontario, Quebec and the Maritimes.  We estimate that approximately one quarter of the increase in revenues of theservice centers in 2004 relates to Acier Leroux.  When combined with our existing operations, we have been able tosignificantly reduce Acier Leroux's working capital and increase cash flows principally as a result of operational synergies,rationalization of duplicate inventory and the sale of redundant assets.  In 2004, we incurred restructuring charges of $3.6million related to the acquisition.  The restructuring is complete; however, we will have costs or income from a vacantproperty held for sale. |
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|              One of our business strategies is to combine new acquisitions with our existing operations and then rationalize anyduplication.  Immediately after the Acier Leroux acquisition, the combined Russel and Acier Leroux regional teams evaluatedour existing operations along with the new Acier Leroux operations and developed restructuring plans in order to provide us withthe strongest organization upon completion of the integration of Acier Leroux.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|              In Quebec, the restructuring team determined that all of the Acier Leroux facilities should remain open and theLachine Quebec facility operated by Russel Metals closed at December 31, 2003.  In addition, we have changed the utilizationof one of the two Acier Leroux facilities in Boucherville by transferring to it our non-ferrous business.  This enabled us toput the 212,000 square foot facility in Lachine up for sale.  The rationalization of staff levels in the region has beencompleted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|              In the Maritimes, we have realigned our distribution network with the addition of Acier Leroux's Sackville facility,which has enabled us to allow our Halifax operation to focus more on its immediate territory.  We closed the Acier LerouxDartmouth location in early 2004 and sold it in May 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              In Ontario, during 2004, our Vantage Laser and Burlington plate operations, which were previously in leasedfacilities, have been reconfigured and combined in the vacant 124,000 square foot Acier Leroux Guelph facility.  Therefurbished Guelph facility houses all of our plate processing operations and plate inventory.  Our York Steel operation atMilton has been combined with Ennisteel in Port Robinson.  Both of these consolidations reduced operating costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|              Each regional team determined that converting the Acier Leroux operations to our management information systemswould be of significant benefit to the regional operations.  The conversion to our management information systems for mostoperations in each of Quebec, the Maritimes and Ontario was completed in 2003.  This had a significant advantage in 2004 as itallowed us to manage the consolidated inventory position from one database.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| **Products, Services and Customers**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              **Metals****ServiceCenters**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              Our metals service centers sell plate, flat rolled carbon and other general line carbon steel products, as well assome stainless steel, aluminum and other non-ferrous specialty metal products in a wide range of sizes, shapes andspecifications.  General line steel products consisting of plate, structurals, bars, sheet, pipe, tubing and hollow structuralsteel tubing, are used by end users in a wide variety of industries.  Within Canada, our metals service centers operate underthe names Russel Metals, Métaux Russel, A. J. Forsyth, Acier Leroux, Acier Loubier, B&T Steel, Acier Richler, Ennisteel,Leroux Steel, Mégantic Métal, Russel Leroux, and Vantage Laser.  Our U.S. service center operations areconducted under the names Russel Metals Williams Bahcall and Baldwin International.  The Williams Bahcall operation focusesprimarily on the distribution of general line carbon products through three facilities in Wisconsin. Baldwin Internationaldistributes specialty alloy products through its facility in Ohio. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              Our metals service centers also provide customized processing services to satisfy specifications established by endusers. By providing these services, as well as by offering inventory management and just-in-time delivery, we enable end users toreduce their overall production costs and decrease capital required for raw materials and metals processing equipment.  Ourvalue added processes include, but are not limited to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|              ·**  ** | shearing, slitting and cutting to length:  the cutting of metal into smaller pieces or into narrower coils;                       |
|--------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
|                                                                     |
|              ·**  ** | laser, flame and plasma cutting:  the cutting of metal to produce various shapes or parts according to end user supplieddrawings; |
|                                                                     |
|              ·**  ** | levelling:  the flattening of metal to uniform tolerances for proper machining;                                                   |
|                                                                     |
|              ·**  ** | tee-splitting:  the splitting of metal beams;                                                                                     |
|                                                                     |
|              ·**  ** | edge trimming:  removing a portion of the edges of coiled metal to produce uniform width and round or smooth edges;and            |
|                                                                     |
|              ·**  ** | cambering:  the bending of structural steel to improve load-bearing capabilities.                                                 |
|              In 2004, our metals service centers segment handled an average of approximately 3,297 transactions per day with anaverage revenue of approximately $1,866 per transaction.  Typically, our metals service centers sales are made on anindividual purchase order basis.                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              Our service centers operations provide products and services to end users in a wide variety of industries, includingmachinery and equipment manufacturing, construction, shipbuilding and natural resources, such as mining and petroleum.  During2004, no individual service center customer accounted for more than 2% of our total revenue.                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              **Energy Tubular Products**                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              Our energy tubular products operations distribute oil country tubular goods, line pipe, tubes, valves and fittingsprimarily to the energy industry.  This segment consists of four businesses, each of which sells a distinct line ofproducts.  These businesses include:                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| *Fedmet Tubulars*-- a distributor of oil country tubular goods(which includes casing and tubing), line pipe and related products. Fedmet Tubulars' sales office is located in Calgary,Alberta.                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| *Triumph Tubular & Supply*-- a distributor of oil countrytubular goods. Triumph’s sales office is located in Calgary, Alberta.                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| *Comco Pipe and Supply Company*-- a distributor of pipe, valveand fitting products. Comco Pipe and Supply specializes in the supply and distribution of pipe and fluid handling products to theenergy, construction, manufacturing, pulp and paper and mining industries. These products are distributed through facilities inCalgary and Edmonton, Alberta; Stonewall, Manitoba; and Guelph and Sarnia, Ontario.                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| *Pioneer Pipe --*a distributor and processor of steel pipeproducts to the construction, oil and gas and ski industries in the western United States. Pioneer Pipe has facilities in Aurora,Colorado and Lindon, Utah. These operations include Spartan Steel, headquartered in Evergreen, Colorado.                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              The energy tubular products businesses sell a range of products to end users located primarily in western Canada andthe western United States.  During 2004, no individual energy sector customer accounted for more than 1% of our totalrevenue.                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|              **Steel Distributors**                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|              Our steel distributors act as master distributors selling steel in large volumes to other steel service centers andequipment manufacturers mainly on an ‘as is’ basis.  Our steel distributors source their steel domestically andoff shore.                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|              We source carbon steel, plate, beams, channel, flat rolled products, rail and pipe products.  Sales commitmentsfor a significant portion of these products are obtained prior to their purchase or while the product is in production andtransit.  Products for which sales commitments have not been obtained are held in public warehouses for resale to NorthAmerican service centers and other customers. |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|              Our steel distributors operations is conducted through Wirth Steel located in Canada and the Sunbelt Group locatedin the United States.  Arrow Steel, a division of Sunbelt Group, processes coils.                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|              In 2004, no individual customer of the steel distributors operations accounted for more than 1% of our totalrevenue.                                                                                                                                                                                                                                                                                                    |   |
| **Revenue by Product**                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                             |
|              The following table sets out the revenues by product based on dollar revenues for the fiscal years ended December31, 2004, 2003 and 2002. |
| **Sales by Product Group**                                                              |
|-----------------------------------------------------------------------------------------|
| **     **                                                      | **     ** |
| **      **                                                | **Years Ended December 31,** |
|                                                           |  |
|                                                           |        | **% of** |        | ** % of** |        | ** % of** |
| ****

**(in thousands of dollars except percentages)**                                  | ****

**   2004** | ****

** Total** | ****

**   2003** | ****

**Total** | ****

**   2002** | ****

**Total** |
|                                                                                         |
| **Carbon:**                                                                             |       |       |       |       |       |       |
|     Plate (Discreet & Plate in Coil)                            | **$   730,300** | 30.2% | $   350,082 | 23.2% | $   342,666 | 24.4% |
|     General Line:                                                   |       |       |       |       |       |       |
|        Structurals (WF & I Beam, Angles,         |       |       |       |       |       |       |
|            Channels,HollowTubes) | **576,566** | 23.8% | 347,975 | 23.1% | 256,721 | 18.3% |
|        Bars (Hot Rolled and Cold                     |       |       |       |       |       |       |
|             Finished)       | **194,961** | 8.1% | 135,057 | 9.0% | 120,945 | 8.6% |
|        Tubing/Pipe (Standard, Oil Country            |       |       |       |       |       |       |
|             TubularGoods)   | **460,003** | 19.0% | 335,534 | 22.3% | 346,892 | 24.7% |
|        Grating/Expanded                              | **22,464** | 0.9% | 15,708 | 1.0% | 11,488 | 0.8% |
|     Flat Rolled:                                                    |       |       |       |       |       |       |
|        Sheet, strip & coil                       | **226,998** | 9.4% | 124,623 | 8.3% | 118,392 | 8.5% |
|        Wire Rods / Wire Products/Rails               | **1,983** | 0.1% | 2,404 | 0.2% | - | - |
|        Flanges, Fittings & Valves                | **38,982** | 1.6% | 39,967 | 2.6% | 49,866 | 3.6% |
| ****                                                                                    |
| **Total Carbon**                                                                        | **2,252,257** | 93.1% | 1,351,350 | 89.7% | 1,246,970 | 88.9% |
| **Total Non-Ferrous (Sheet, Extrusion,**                                                |       |       |       |       |       |       |
| **  Tubular Goods, Etc.)**                                                    | **59,239** | 2.5% | 81,648 | 5.4% | 95,512 | 6.8% |
| **Other**                                                                               | **107,128** | 4.4% | 73,985 | 4.9% | 60,793 | 4.3% |
| ****                                                                                    |
| **Total**                                                                               | **$2,418,624** | 100.0% | $1,506,983 | 100.0% | $1,403,275 | 100.0% |
|                                                                                         |
| **Metal Suppliers**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|              North American steel mills are the primary source of supply for our metals service centers.  In addition, wepurchase steel from international sources when steel is either not available or is not priced on a competitive basis in NorthAmerica.  This includes circumstances where the particular product is in short supply or where North American mills do notproduce the particular product.  We have developed an effective coordinated purchasing program that allows us to deriveeconomies of scale through volume purchases, and also allows us to access metal supplies globally.  Substantially all of ourpurchases are made under existing purchase orders and we have no material long-term metal supply contracts.  We believe thatalternate suppliers are available with respect to all of our product lines and our service center operations generally maintainmultiple suppliers for all product lines. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|              Our Canadian service center operations have over 200 suppliers.  Purchases from our four largest suppliersrepresented approximately 46% of the requirements of the Canadian service center operations in 2004.  We believe that we areone of the largest purchasers from most Canadian and many U.S. steel mills.  Our U.S. service center operations have more than50 suppliers and their four largest suppliers represent approximately 40% of their requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|              The primary sources of supply for the energy tubular products sector are the pipe processing arms of North Americansteel mills and independent manufacturers of pipe and accessories.  During 2004, the largest single supplier of the energysector represented approximately 28% of energy tubular products purchases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|              The steel distributors sector deals on a regular basis with multiple suppliers in 21 countries around theworld.  In 2004, the largest single supplier represented approximately 12% of the purchases by the steeldistributors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Competition**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              Our Canadian service centers compete with other service centers that are regional and local in geographic coverageand our U.S. service centers compete with other service centers that are national, regional and local in geographic coverage. The service center industry is highly competitive with competition focused on price, product availability and quality, processingcapability and on-time delivery.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              We believe that our service center operations are favourably positioned with respect to our competitors for severalreasons.  First, the geographic scope and diversity of our Canadian operations and the breadth of our product line allow us toservice national and regional end users throughout Canada.  We believe that we provide our Canadian end users with a widerrange of products and more value-added services than many of our regional or local competitors.  Second, we believe that ouraccess to and contact with international markets through our steel distributors business not only provides us with certainpurchasing and distribution advantages over many of our competitors, but also enables us to better anticipate trends andopportunities in the domestic and international steel markets, allowing us to more proactively manage our inventory. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              The energy tubular products distribution industry is very diverse and is made up of many small private companieseach having a unique product offering.  Generally, companies in this industry are regional in geographic coverage and focus onspecific market niches.  These companies typically carry a broad product line and competition is focused on price, productavailability and quality and on-time delivery.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              Our steel distributors compete with other international steel importers, as well as steel producers in NorthAmerica.  Competition focuses on price, product quality and availability, and terms of shipment (including freight costs,which vary and can be as much as 15% of the landed cost of a product).  The business is highly dependent on global economicconditions and on the relationships we have with our international network of suppliers.                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **PROPERTIES**                                                                                                                                                                                                                                                                                                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                              |
|              We have 69 warehouse facilities, 62 in Canada and 7 in the United States. Our steel distributors operations and twoof our energy tubular products operations distribute goods that are held in public warehouses or yards until sold. |
|                                                                                                                                                                                                                                                         |
|              Set forth below is certain information, as of December 31, 2004, with respect to our principal operatingfacilities. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                       |
|                                                                                                                                                                          | **Number of Facilities** | **Approximate Square Feet** | **     ** |   |
|                                                                                                                                                                          |  |   |
|                                                                                                                                                                          | **Owned** | **Leased** | **Owned** | **Leased** | **Total** |   |
|                                                                                                                                                                                                   |   |
| **Metals Service Centers**                                                                                                                                                                        |   |
|                                                                                                                                                                                                   |       |   |
| **Canada**                                                                                                                                                                                        |   |
|        British Columbia                                                                                                                         | 9 | - | 264,330 | - | 264,330 |   |
|        Alberta                                                                                                                                                 | 4 | 4 | 123,723 | 56,934 | 180,657 |   |
|        Saskatchewan                                                                                                                                            | 3 | - | 52,260 | - | 52,260 |   |
|        Manitoba                                                                                                                                                | 2 | 3 | 199,296 | 79,500 | 278,796 |   |
|        Ontario                                                                                                                                                 | 8 | 5 | 735,549 | 63,797 | 799,346 |   |
|        Quebec                                                                                                                                                  | 14 | - | 927,980 | - | 927,980 |   |
|        New Brunswick                                                                                                                                           | 3 | - | 74,400 | - | 74,400 |   |
|        Nova Scotia                                                                                                                                             | 1 | - | 50,880 | - | 50,880 |   |
|        Newfoundland                                                                                                                                            | 1 | - | 19,200 | - | 19,200 |   |
|                                                                                                                                                                                                   |   |
| **Total**                                                                                                                                                                                         | 45 | 12 | 2,447,618 | 200,231 | 2,647,849 |   |
|                                                                                                                                                                                                   |   |
| **United States**                                                                                                                                                                                 |       |       |       |       |       |   |
|        Wisconsin                                                                                                                                               | 1 | 2 | 30,016 | 183,977 | 213,993 |   |
|        Ohio                                                                                                                                                    | 1 | - | 41,040 | - | 41,040 |   |
|                                                                                                                                                                                                   |   |
| **Total**                                                                                                                                                                                         | 2 | 2 | 71,056 | 183,977 | 255,033 |   |
|                                                                                                                                                                                                   |   |
|                                                                                                                                                 |   |
| **Energy**** Tubular Products**                                                                                                                                                              |   |
|                                                                                                                                                                                                   |       |   |
| **Canada**                                                                                                                                                                                        |   |
|         Alberta                                                                                                                                                | 1 | 1 | 45,000 | 8,100 | 53,100 |   |
|         Manitoba                                                                                                                                               | - | 1 | - | 28,000 | 28,000 |   |
|         Ontario                                                                                                                                                | - | 2 | - | 27,200 | 27,200 |   |
|                                                                                                                                                                                                   |   |
| **Total**                                                                                                                                                                                         | 1 | 4 | 45,000 | 63,300 | 108,300 |   |
|                                                                                                                                                                                                   |   |
| **United States**                                                                                                                                                                                 |       |       |       |       |       |   |
|         Utah                                                                                                                                                   | - | 1 | - | 14,400 | 14,400 |   |
|         Colorado                                                                                                                                               | - | 1 | - | 800 | 800 |   |
|                                                                                                                                                                                                   |   |
| **Total**                                                                                                                                                                                         | - | 2 | - | 15,200 | 15,200 |   |
|                                                                                                                                                                                                   |   |
|                                                                                                                                                 |   |
| **Steel Distributors**                                                                                                                                                                            |   |
|                                                                                                                                                                                                   |       |   |
| **United States**                                                                                                                                                                                 |   |
|         Texas                                                                                                                                                  | 1 | - | 69,440 | - | 69,440 |   |
|                                                                                                                                                                                                   |   |
|                                                                                                                                       |   |
| **Non-Metal Operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              The remaining non-metals operation, Thunder Bay Terminals, covers an area of approximately 290 acres at its locationin Thunder Bay, Ontario.  Most of the property is under long-term leases.  A coal handling system is located at the siteand comprises a number of structures, including structures which trains enter to be unloaded, and ship docking facilities. Coal storage structures and equipment are also located at the site.  All the structures and most of the equipment are owned byThunder Bay Terminals.                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **EMPLOYEES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              As at December 31, 2004, we had approximately 2,680 full-time and full-time equivalent employees. Approximately 260of these employees are located in the United States. We have 37 collective bargaining agreements covering approximately 1,102employees at 41 of our locations, three of which have expired and are currently being negotiated. Through to the end of 2005, thereare 9 other collective bargaining agreements covering approximately 274 employees which we intend to renegotiate prior to theirexpiration. We have maintained generally favourable relations with our employees. Since 2002, we have experienced no work stoppagesat any of our locations and have successfully renegotiated 26 collective agreements in that period. In October 2002, Acier Lerouxexperienced a labour dispute that occurred at its Ennisteel facility where work stopped for a period of two weeks. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **LEGAL PROCEEDINGS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              From time to time, we are involved in legal proceedings relating to claims arising out of our operations in theordinary course of business.  We do not believe that there are any material proceedings, pending or threatened against us orany of our properties other than those discussed in this document under "Environmental regulation."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ENVIRONMENTAL REGULATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|              We are subject to a variety of federal, provincial, territorial, state and local environmental laws and regulationsin Canada and the United States. Such laws and regulations relate to, among other things, the discharge of contaminants into waterand air and into and onto land, the disposal of waste, the handling, storage and transportation of hazardous materials and thestorage of materials in underground tanks. In particular, operations divested between 1991 and 1997 included chrome platingfacilities and the transportation and storage of petroleum products. We could be responsible for clean up of or damages fromreleases of hazardous materials on or emanating from the properties where these operations were conducted. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|              In Canada, while there are federal environmental statutes such as the *Canadian Environmental Protection Act,1999*, the *Fisheries Act,* and the *Transportation of Dangerous Goods Act, 1992* which apply to us, each Canadianprovince and territory and most municipalities in which we operate also enact and enforce their own environmental laws. In theUnited States, the primary federal regulatory laws to which we are subject include the *Resource Conservation and RecoveryAct,* the *Comprehensive Environmental Response, Compensation and Liability Act* and the *Clean Water Act*. We arealso subject to environmental regulation at the state and local levels in the United States.                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|              We believe that our current operating facilities are in material compliance with applicable environmental laws andregulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Present Actions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              The following paragraphs summarize significant environmental litigation, regulatory action and remediation in whichwe are presently involved. The anticipated expenditures on these sites all relate to previously divested or discontinuedoperations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ***Denton, Maryland***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Pursuant to a Consent Order issued by the Maryland Department of the Environment in 1987 and subsequently amended inApril 1993, one of our non-operating subsidiaries is treating groundwater contaminated with volatile organic compounds from aformer manufacturing facility on its property in Denton, Maryland. The 1993 amendment to the Consent Order allows the subsidiary tofocus the remediation project on localized areas of contamination. To date, approximately US$2.4 million has been expended inconnection with the investigation and remediation of groundwater on this site. The recurring annual cost to operate and maintainthe treatment system is approximately US$40,000. In addition, we are incurring an additional expense of approximately US$60,000before the end of 2005 for continued repair and upgrade activities, to restore the system to optimum operatingefficiency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ***Gary, Indiana***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              In 1992, a subsidiary of ours entered into an Agreed Order with the Indiana Department of Environmental Management(“IDEM”) requiring a limited assessment of soil and groundwater at its previously leased property in Gary, Indianawhere the subsidiary, prior to the divestiture of the business, operated a chrome plating facility. The subsidiary has signed afurther Modified Agreed Order that commits it to perform a Groundwater Evaluation Study Plan (the “GESP”) and, ifrequired by IDEM, a Groundwater Remediation Project. The GESP has been completed in stages, with interaction with IDEM at eachstage. The final stage has been submitted to IDEM for its review and comment. IDEM has required certain remediation measures, whichhave been implemented, and monitoring measures, which are ongoing. Monitoring activity is reported to IDEM as required.  Approximately US$2.8 million has been expended to date in connection with the investigation, assessment and remediation of the soiland groundwater at the site. Until IDEM agrees that the Agreed Order may be terminated, additional costs to complete theinvestigation and remediation of the site cannot be estimated with any certainty; however, we believe that such additional costswill continue for an indefinite period and will not likely exceed US$1.0 million. |
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| ***Hamilton, Ontario***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|              Contamination was discovered in 1991 by a subsidiary of ours on its property in Hamilton, Ontario, resulting fromits historic, on-site chrome plating operations. The contamination, which consists primarily of chromium, was reported to theOntario Ministry of Environment (the “MOE”) and the local municipality. The subsidiary retained environmentalconsultants to determine the extent of contamination on the site and on neighboring properties and has developed a plan to dealwith the contamination, which has been reviewed by the MOE. This plan involves the use of a groundwater extraction and treatmentsystem which has been installed and is presently remediating both contamination on site and that caused by the subsidiary onneighboring properties. The subsidiary undertook certain actions, approved by the MOE, to upgrade and improve the remediationsystem, which commenced during 2002 and continued through 2004. To date, approximately $3.1 million has been expended and we expectthat the groundwater extraction and treatment will continue indefinitely at an annual cost including operating and maintenanceexpenses of approximately $150,000.                                                                                                                                                                                          |
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| ***Whitehorse, Yukon and Skagway, Alaska***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|              Certain of our subsidiaries operated a petroleum distribution business in Alaska, Yukon and northern BritishColumbia including a petroleum pipeline between Whitehorse, Yukon and Skagway, Alaska. This business was sold as of June 1, 1995.We continue to own properties in Skagway and in Whitehorse formerly used in connection with that business including petroleum tankfarms. The petroleum tanks and pipelines have been removed from these properties. The surface clean-up of the former Skagway tankfarm was started in 1999 and is now substantially completed. Remedial work for the property in Whitehorse known as the upper tankfarm has also been substantially completed and the results are before the Canadian National Energy Board and the Yukon Territorialgovernment for approval.  We have expended approximately $7.7 million on these two properties.  We do not anticipate anyfurther material costs with respect to either the former Skagway tank farm or the upper tank farm at Whitehorse.                                                                                                                                                                                                                                                                                                                                                                                                                      |
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|              In addition, the purchasers of the petroleum distribution business have filed a complaint in Alaska and a writ inthe Yukon Territory against us relating to environmental contamination at the Whitehorse lower tank farm and a historical barrelwashing pit sold with the petroleum distribution business. The actions relate to petroleum hydrocarbons and also lead, zinc andother contaminants. On October 5, 2000, Orders were issued by the Yukon Territorial government pursuant to the *Environment Act(Yukon)* against us and other responsible parties to investigate, establish a plan of restoration and restore this site. As ofMarch 20, 2002, the Yukon Territorial government vacated these Orders; however, it has advised that it remains of the view thatinvestigation and restoration remain necessary. Consequently, we and some others are continuing the investigation of the propertyand the development of an acceptable restoration plan.  Approximately $1.2 million has been expended to date.  A proposedrisk-based remedial approach is being developed, for consideration by the Yukon Territorial government. Our final costs withrespect to these issues cannot be determined until a remedial approach has been decided, a restoration plan has been approved, andthird party liability, if any, has been taken into account. We cannot assure you that costs with respect to this matter will not bematerial. |
| ***Thunder Bay, Ontario***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|              One of our subsidiaries operated a trucking terminal in Thunder Bay, Ontario.   This property was sold asof December 31, 1992, and the purchasers discovered petroleum contamination in the vicinity of an underground diesel storage tankwithin the time specified in the agreement of purchase and sale for such investigation.  We agreed to undertake remediationand monitoring efforts at the property and these activities took place from 1995 through to 2000.    The purchaserhas notified us that they believe the remediation has not been completed in accordance with the terms of the Agreement of Purchaseand Sale, and that they require further remediation work to be completed.   The purchaser has advised that they believethe total cost to satisfy their demands would be approximately $100,000. |
| **RISKS RELATED TO OUR BUSINESS AND THE METALS DISTRIBUTION INDUSTRY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| ***Volatile metal prices can cause significant fluctuations in our operatingresults.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|              The price we pay for, and availability of, steel and various specialty metals (such as aluminum), and the prices wecan charge for such products, fluctuate due to numerous factors beyond our control, including Canadian, American and internationaleconomic conditions, currency exchange rates, global demand for steel and other metal products, including demand in high-growthmarkets such as China, trade sanctions, tariffs, labor costs, competition and over capacity of steel producers, including pricesurcharges. Substantially all of our revenues are derived from the sale of steel and specialty metals.  As a result,fluctuations in availability and cost of steel and specialty metals and the prices we can charge for our products may materiallyadversely affect our business, financial condition, results of operations and cash flows.  We have no material long-term,fixed-price purchase contracts.   Our commitments for metal purchases are generally at prevailing market prices in effect atthe time that we place our orders.  During periods of rising raw materials pricing, we may be unable to pass such increases,which may include surcharges by our suppliers, on to end users.  To the extent we are not able to pass on to our customers anyincreases, our business, financial condition, results of operations and cash flows will be materially adversely affected. When metal prices decline, end user demands for lower prices and competitors' responses to those demands could result in lower saleprices and, consequently, lower margins as we use existing inventory. |
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| ***Our business may be affected by the cyclicality of the metals industry and theindustries that purchase our products.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|              We operate businesses that are substantially affected by changes in economic cycles and whose revenues and earningsvary with the level of general economic activity in the markets they serve.  Periods of economic slowdown or recession in theUnited States or other countries, or the perception that one may occur, could decrease the demand for our products, affect theavailability and cost of our products and adversely affect our revenues, operating profits and net earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              Some of our customers operate in industries that experience significant fluctuations in demand based on economicconditions, oil and gas prices and other factors, including exchange rate fluctuations, that are beyond our control.  Many ofour customers generate a significant portion of their revenues through exporting goods to the United States.  Thus, astrengthening in the Canadian dollar relative to the U.S. dollar can adversely affect the competitiveness of these customers. From December 31, 2002 to December 31, 2004, the Canadian dollar rose approximately 31.2% relative to the U.S. dollar. If theability of our customers to export their products to the United States is reduced, the demand for our products could decline, whichcould have a material adverse effect on our business, financial conditions, results of operations and cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ***Significant competition could reduce our market share and harm our financialperformance.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              We face significant competition in our metals service centers and energy tubular products operations.  InCanada, our primary competitors are other service centers and energy products distributors which are regional and local ingeographic coverage.  In the United States, we compete with other service centers and energy product distributors, which arenational, regional and local in geographic coverage.  We also compete with steel producers which are larger than we are, thattypically sell to very large end users requiring regular shipments of large volumes of metals.  Competition is based on price,product availability and quality, processing capability and on-time delivery.  Some of our competitors may have lower steelcosts and fewer environmental and government regulations, as well as lower public company regulatory compliance obligations andrelated costs, than we do.  In addition, some of our competitors may be less leveraged than we are and therefore may havegreater financial resources and flexibility than we have.  Increased competition could reduce our profitability by forcing usto lower our prices or to offer increased services at a higher cost to us. |
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|              Our steel distributors compete with other international steel importers and exporters as well as North Americansteel producers in the destination market.  Competition is principally based on price, product quality and availability, andterms of shipment (including freight costs, which vary and can be as much as 15% of the landed cost of a product).  Theimposition of trade sanctions by governments on the import of steel products into such government's jurisdiction may place us at acompetitive disadvantage as compared to domestic steel producers in such jurisdiction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| ***An interruption in sources of metals supply could have a material adverse effect onour results of operations.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|              We purchase our principal inventory, including carbon steel, stainless steel, alloy steel, aluminum and a variety ofother metals on a frequent basis from a number of producers, primarily in North America to keep our inventory levels to aminimum.  We have no long-term contracts to purchase metal.  If, in the future, we are unable to obtain sufficientamounts of steel and other metal products at competitive prices or on a timely basis from our traditional suppliers, we may not beable to obtain such products from alternative sources at competitive prices to meet our delivery schedules, which could materiallyadversely affect our business, financial condition, results of operations and cash flows.  Production time and the cost of ourproducts could increase if we were to lose one of our primary suppliers.  Any interruption or reduction in the supply of anyof these products may make it difficult or impossible to satisfy customers' just-in-time delivery requirements, which couldmaterially adversely affect our business, financial condition, results of operations and cash flows.                                                                                                        |
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| ***Any future acquisitions could be difficult to integrate and could adversely affectour operating results.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              A substantial part of our growth in profitability has come from acquisitions.  For example, in July 2003, weacquired Acier Leroux.  In September 2002, we acquired the operating assets of Williams Steel, a service center in Wisconsin,and in October 2001, we purchased A.J. Forsyth, a Canadian service center operation located in British Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|              As part of our strategy, we expect to continue to pursue complementary acquisitions and investments. Acquisitionsmay involve debt incurrence, operating losses, dilutive issuances of equity securities and significant cash expenditures that couldhave a material adverse effect on our business, financial condition, results of operations and cash flows.  For example, in2003, we had to write-down $2.4 million of goodwill in connection with our acquisition of Williams Steel in September of2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|              Our recent and any future acquisitions involve a number of risks, including:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | our inability to integrate the acquired business; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | diversion of management attention; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | impairment of goodwill adversely affecting our reported net income; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | our inability to retain the management or other key employees of the acquiredbusiness; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | our inability to establish uniform standards, controls, procedures andpolicies; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | our inability to retain customers of our acquired companies; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | exposure to legal claims for activities of the acquired business prior to theacquisition; |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | damage to our reputation as a result of performance or customer satisfaction problemsrelating to an acquired business; and |
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|              ·**  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | the performance of any acquired business could be lower than we anticipated. |
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| ***If we fail to renegotiate any of our collective agreements or if we or our principalcustomers or suppliers experience work stoppages, our financial condition may be harmed.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|              As of December, 2004, we had 37 collective bargaining agreements covering approximately 1,102 employees belonging toa variety of unions at 41 of our locations, three of which have expired and are currently being negotiated.  Through to theend of 2005, 9 other collective bargaining agreements covering approximately 274 employees will expire.  If we fail torenegotiate these contracts, we may face work stoppages.  Even if we do renegotiate these contracts, any renewal of collectivebargaining agreements could result in higher wages or benefits to union members.  We cannot assure you that there will not beany labour disruptions, or higher ongoing labour costs, either of which could materially adversely affect our business, financialcondition, results of operations and cash flows. In addition, many of our customers and suppliers have unionized work forces. If one or more of our customers or suppliers experience a material work stoppage or slow down, it could materially adversely affectour business, financial condition, results of operations and cash flows.                                                                                                                     |
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| ***Environmental liabilities could have a material adverse effect on our results ofoperations and financial position.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|              We are subject to a variety of federal, provincial, territorial, state and local environmental laws and regulationsin Canada and the United States. Such laws and regulations relate to, among other things, the discharge of contaminants into waterand air and into and onto land, the disposal of waste, the handling, storage and transportation of hazardous materials, and thestorage of materials in underground tanks. In particular, our divested non-metal operations included chrome plating facilities andthe transportation and storage of petroleum products and hazardous materials.  We could be responsible for clean up of, ordamages from, releases of hazardous materials on or emanating from the properties where these operations were conducted.  Weare required by environmental laws and regulations to conduct our operations in compliance with permits issued by governmentalauthorities.  The failure to have such permits or to comply with their terms could result in fines or penalties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|              In Canada, there are federal environmental statutes such as the *Canadian Environmental Protection Act, 1999*,the *Fisheries Act,* and the *Transportation of Dangerous Goods Act, 1992*, which apply to us. In addition, each Canadianprovince and territory and most municipalities in which we operate also enact and enforce their own environmental laws. In theUnited States, the primary federal regulatory laws to which we are subject include the *Resource Conservation and RecoveryAct,* the *Comprehensive Environmental Response, Compensation and Liability Act* and the *Clean Water Act*.  Weare also subject to environmental regulation at the state and local levels in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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|              There are currently remediation and/or investigation activities at several former facilities where soil and/orgroundwater contamination is present. Financial costs with respect to those activities cannot be predicted at this time.  See"Business -- Environmental Regulation" for more details about our environmental proceedings. In addition, some of our currentproperties are located in industrial areas with histories of heavy industrial use, which may require us to incur expenditures andto become subject to environmental liabilities for contamination that arises from our current or former operations or from causesother than our operations. Such environmental costs could materially adversely affect our business, financial condition, results ofoperations and cash flows.  We do not carry environmental insurance coverage to offset the effects of such potentiallosses.  We may be required as a matter of law to satisfy, with respect to the government or third parties, the environmentalliabilities related to divested businesses should the acquirers of our divested businesses fail to fulfill any environmentalobligations for events prior to divestiture.  Because of the potential existence of currently unknown environmental issues andfrequent changes to environmental laws and regulations and the interpretation and enforcement of these laws and regulations, therecan be no assurance that compliance with environmental laws, or remediation obligations under such laws, will not have a materialadverse effect on us in the future. |
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| ***Changes in government regulations could have an adverse effect on ourbusiness.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              Our operations are subject to laws and regulations relating to workplace safety and worker health and relatedregulations, which, among other requirements, establish noise, dust and safety standards. While we believe that we are in materialcompliance with currently applicable laws and regulations, future events such as any changes in laws and regulations, may give riseto additional expenditures or liabilities.  We cannot assure you that compliance with such government regulations will notmaterially adversely affect our business, financial condition, results of operations and cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ***We are exposed to currency exchange risk which could have a material adverse effecton our operating results.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|              Although our financial results are reported in Canadian dollars, a portion of our sales and operating costs aredenominated in U.S. dollars.  In addition, we are exposed to currency exchange risk on our debt, including the notes andinterest thereon, and assets denominated in U.S. dollars.  Since we present our financial statements in Canadian dollars, anychange in the value of the Canadian dollar relative to the U.S. dollar during a given financial reporting period would result in aforeign currency loss or gain on the translation of our U.S. dollar denominated debt and assets into Canadian dollars. Consequently, our reported earnings could fluctuate materially as a result of foreign exchange translation gains or losses. While it is not our normal practice to enter into significant hedging arrangements other than in relation to our long-term debt, wemay use futures and forward contracts to partially hedge against short-term fluctuations in currency; however, such activitiesprovide only short-term protection against a limited portion of our currency exposure.  We may, from time to time, hedge aportion of our net exchange rate exposure under the U.S. dollar denominated debt with respect to either or both of principal andinterest by way of one or more swap transactions to Canadian dollars, to the extent our management considers it reasonable to do sohaving regard to the then prevailing levels of our net assets located in the United States and our U.S. dollar revenues, and to theextent available on reasonable terms; however, such activities provide only short-term protection and there can be no assurancethat they will be effective in insulating us against exchange rate fluctuations.  In February 2004,we entered into fixed forfixed cross currency swaps with major banks to manage the foreign currency exposure on the last US $100 million of the SeniorNotes. |
| ***The failure of our key computer-based systems could have a material adverse effecton our business.***                                                                                                                                                                                                                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              We depend to a significant degree on our computer based-systems in the operation of our business, particularly inour inventory management.  The destruction or the failure of any such computer-based systems for any significant period oftime would materially adversely affect our business, financial condition, results of operations and cash flows.                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ***The loss of key individuals could adversely affect our ability to implement ourbusiness strategy.***                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              Our success is dependent in large part on the management and leadership skills of our senior management team,including Edward M. Siegel, Jr., our President and Chief Executive Officer; and Brian R. Hedges, our Chief Financial Officer. If we lose either of these individuals or fail to attract and retain equally qualified personnel, we may not be able to implementour business strategy. |
|                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              In addition, because of our decentralized operating structure, the loss of any senior managers or key employees atregional centers could materially adversely affect our business, financial condition, results of operations and cash flows. We cannot assure you that we will be able to attract and retain equally qualified personnel when needed.                                             |
| **GENERAL DEVELOPMENT OF THE BUSINESS**                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|              EffectiveMarch 1, 2002, the Company purchased the operations of Arrow Steel Processors, a coil processor of customer owned material, locatedat the port in Houston, Texas, for cash consideration of $4.4 million.                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|              EffectiveSeptember 9, 2002, the Company purchased substantially all of the assets of the Milwaukee, Wisconsin service center operationformerly known as Williams Steel for $17.0 million in cash.                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On July 3, 2003,the Company purchased 99.52% of the issued and outstanding Class A shares and 97.53% of the issued and outstanding Class B sharesof Acier Leroux inc. for cash of $48.9 million and 3,546,874 common shares of the Company.  On August 19, 2003, the Company,under the provisions of the Companies Act (Quebec), acquired the remaining shares of Acier Leroux for $1.2 million incash. |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On February 12,2004, the Company issued 5,750,000 common shares at $9.00 per share for net proceeds of $49.2 million.                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On February 20,2004, the Company issued US $175 million 6.375% Senior Notes due March 1, 2014.                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On February 23,2004, the Company repurchased US $95.5 million of its 10% Senior Notes at a premium of US$72.50 per US $1,000 of notes.                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On February 20,2004, the Company issued a redemption notice for its $30 million 8% Debentures for redemption on March 26, 2004 and for its $30million Class II Preferred Shares for redemption on March 22, 2004.                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                          |
|             On June 1, 2004,the Company redeemed the remaining US$20.1 million of 10% Senior Notes at a premium of US$50.00 per US$1,000 of notes.                                                                                                                                                                                                                                                                       |
| **RATINGS**                                                                                                                                                                                                                                                                 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                            |
|              Russel Metals Inc. has received the following credit ratings from each of Standard & Poors Rating Services("S&P") and Moody's Investors Service ("Moody's") (each a "Rating Agency"): |

****
|                                                                                |
|--------------------------------------------------------------------------------|
|               | **S & P** | **Moody’s** |
|                                                                                |
|               |               |               |
| Corporate rating                                                               | BB + Stable | Ba2 Stable |
| Senior unsecured notes                                                         | BB- | Ba3 Stable |
| Canadian Credit Facility                                                       | - | Ba1 Stable |
|                                                                                |
| ***Standard & Poor's Ratings Services***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              S&P's credit ratings are on a long-term debt rating scale that ranges from AAA to D, which represents the rangefrom the highest to lowest quality of such securities rated.   According to S&P, the BB rating is the fifth highest of tenmajor rating categories.  The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to showrelative standing within the major rating categories.                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              In February 2004, S&Passigned its BB- rating to the new senior unsecured notes to be issued in connection with the recapitalization of the Company,which consisted of the issuance of Cdn $45 million in equity and US$175 million in notes to repurchase all public debt andpreferred shares outstanding.  This rating is an upgrade from the prior status of BB- (corporate) and BB+ (unsecurednotes).  At the same time S&P affirmed its BB stable long-term corporate credit rating.  The stable outlook reflectsS&P's expectations that the Company will maintain a fair solid business profile as a major metals distributor with aggressivedebt leverage.                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ***Moody's Investors Service***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Moody's credit ratings are on a long-term debt rating scale that ranges from Aaa to C, which represents the rangefrom highest to lowest quality of such securities rated.  According to Moody's, a rating of Ba is the fifth highest of ninemajor categories and a rating of B is in the sixth highest of the nine major categories.  Moody’s applies numericalmodifiers 1, 2 and 3 in each generic rating classification from Aa to Caa in its corporate bond rating system.  The modifier 1indicates that the issue ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking andthe modifier 3 indicates that the issue ranks in the lower end of its generic rating category. |
| '                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              In February 2004, Moody’s Investors Service ("Moody's") confirmed the Ba3 senior implied rating of RusselMetals and assigned a Ba3 rating to the Company's US$175 million of senior unsecured notes due 2014. This rating is an upgrade fromthe Ba2 rating previously assigned.  The rating outlook for both ratings is stable. Moody's also assigned a Ba1 rating for theCompany's Canadian credit facility, one notch above the senior implied rating, reflecting the benefits of the credit facility'scovenants and security package, which includes trade accounts receivable and inventories of a significant portion of the Company'soperations.                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              We understand that the ratings are based on, among other things, information furnished to the Ratings Agencies by usand information obtained by the ratings agencies from publicly available sources.  The credit ratings given by the ratingagencies are not recommendations to buy, hold or sell any of the securities of the Company since such ratings do not comment as tomarket price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any givenperiod of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future.                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ***What the ratings address***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              UnsecuredDebentures: Credit ratings are the current opinion of the rating agency on creditworthiness of an obligor with respect to aspecific financial obligation and a specific class of financial obligation for a specific financial program.  Ratings takeinto consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takesinto account the currency in which the obligation is denominated.                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Rating:  Rating outlook assesses thepotential direction of a long-term credit rating over the intermediate to longer-term.  In determining a rating outlookconsideration is given to any changes in the economic and fundamental business conditions.  An outlook is not necessarily aprecursor of a rating change.                                                                                                                                                                                                                                                                                                                                                                                                                |
| **MARKET FOR THE SECURITIES OF RUSSEL METALS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                           |
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|              TheCompany's common shares are listed and posted for trading on The Toronto Stock Exchange under the symbol "RUS".  Informationconcerning the trading prices and volumes during fiscal 2004 is set out in the following table:.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                           |
| ***The Toronto Stock Exchange Share Price Trading Range***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                           |
| Month                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | High                                                                           | Low | Close | Share Volume |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                           |
| December 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $15.75                                                                         | $13.55 | $15.50 | 3,629,203 |
| November 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $14.40                                                                         | $13.05 | $14.10 | 5,209,585 |
| October 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $13.95                                                                         | $11.61 | $13.06 | 7,020,021 |
| September 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $13.00                                                                         | $11.34 | $12.90 | 8,681,231 |
| August 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $11.60                                                                         | $10.59 | $11.35 | 2,976,993 |
| July 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $11.94                                                                         | $10.25 | $11.48 | 5,493,483 |
| June 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $11.25                                                                         | $  9.00 | $11.00 | 12,936,747 |
| May 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $  9.70                                                                   | $  8.55 | $  9.20 | 3,649,849 |
| April 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $10.25                                                                         | $  8.55 | $  9.50 | 4,495,729 |
| March 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $  9.15                                                                   | $  8.11 | $  8.99 | 2,873,081 |
| February 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $  9.45                                                                   | $  8.51 | $  9.05 | 2,927,067 |
| January 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $  9.65                                                                   | $  8.01 | $  8.65 | 2,278,168 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |               |               |               |               |
| The transfer agent and registrar for the Company's common shares is CIBC Mellon TrustCompany, 320 Bay Street, P.O. Box 1, Toronto, Ontario M5H 4A6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| **DIVIDEND RECORD**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|              Thefollowing table shows dividends paid on a per share basis on outstanding shares for the periods indicated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **Years Ended December 31,**                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **2004**                                                                       |    | **2003** | **2002** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                      |    |    |      |
| Class II preferred shares, Series C                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $0.509                                                                         |    | $1.875 | $1.875 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                      |    |    |      |
| Common shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $0.505                                                                         |    | $0.290 |   $0.170 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              Dividends on preferred shares were paid quarterly in equal instalments.  The Company redeemed all preferredshares in 2004.  The amount shown in the table for 2004 represents dividends paid in March, including the amount accrued tothe redemption date.  In April 2000, the directors adopted a dividend policy with $0.20 per share as the targeted annual levelof dividend on common shares and authorized the payment of the first quarterly dividend of $0.05 per common share, payable June 15,2000.  Subsequent quarterly dividends were paid at that rate each quarter up to and including December 15, 2001.  TheCompany did not pay a common share dividend during the first quarter of 2002, due to restrictions associated with the SeniorNotes.  The Company resumed payment of its quarterly dividend in the second quarter of 2002.  The Company increased itsquarterly dividend by $0.01 to $0.06 per common share during the third quarter of 2002.  In the first quarter of 2003, theCompany further increased the dividend to $0.07 per common share and in the fourth quarter of 2003, it was again increased $0.01 to$0.08 per share.  The Company increased the dividend level three times in 2004.  In the second quarter of 2004, thedividend was increased to $0.10 per share; in the third quarter of 2004, it was increased to $0.15 per share and in the fourthquarter, it was increased to $0.175 per share. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              The abilityto pay dividends on common shares is impacted by restrictions associated with the Senior Notes due March 1, 2014.  Dividendson common shares in excess of $0.08 per share per quarter and the repurchase of common shares are considered to be restrictedpayments under the Note Indenture.  At December 31, 2004, the Company had $107 million available for restrictedpayments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              The abilityto make restricted payments is adjusted quarterly by 50% of the quarterly net income or loss if the cumulative net income fromDecember 31, 2003 is positive, or 100% of the quarterly net income or loss if the cumulative net income from December 31, 2003 isnegative.  Net income is adjusted for certain exclusions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **MAJOR SUBSIDIARIES**                                                                                                                                                                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |
|              Thefollowing is a list of the major subsidiaries of Russel Metals at December 31, 2004, all of which are wholly owned. |
|                                                                                                                                               |
|                                                                                                                                               | Jurisdiction of incorporation |
|                                                                                                                                               |  |
|          Fedmet Corp.                                                                                                                                   | State of Delaware |
|          Fedmet EnterprisesCorporation                                                                                                                  | State of Delaware |
|          Fedmet InternationalCorporation                                                                                                                | State of Delaware |
|          FIL (US) Inc.                                                                                                                                  | State of Alaska |
|          Pioneer Steel & TubeCorp.                                                                                                                  | State of Delaware |
|          Russel Metals Corp.                                                                                                                            | State of Delaware |
|          Russel Metals Williams BahcallInc.                                                                                                             | State of Delaware |
|          Sunbelt Group L.P.                                                                                                                             | State of Texas |
|          Thunder Bay Terminals Ltd                                                                                                                      | Ontario |
|          Triumph Tubular & SupplyLtd.                                                                                                               | Alberta |
| **DIRECTORS AND EXECUTIVE OFFICERS**                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                         |
|              The following table sets out the name and municipality of residence and position held with the Company and theprincipal occupation of each of the directors of the Company as of December 31, 2004.  Information relating to executiveofficers follows. |
|                                                                                                                                                                                                                                                                                                         |
| **DIRECTORS**                              |
|--------------------------------------------|
|                                            |
| **Name, municipality of**                  |   | **Date Became** |   |         |
| **residence and Position Held**            |   | **Director** |   | **Principal Occupation** |
|                                            |
| PIERRE BRUNET (1)(4)                       |   | July 30, 2004 |   | Consultant for National Bank |
| Montreal, Quebec                           |   |       |   | Financial (banking and |
| Director                                   |   |       |   | investments) |
|         |
| JAMES F. DINNING (1)(2)                    |   | February 17, 2003 |   | Chairman of the Board |
| Calgary, Alberta                           |   |       |   | Western Financial Group |
| Director                                   |   |       |   | (insurance, investment and |
|                                            |   |       |   | banking) |
|         |
| CARL R. FIORA (1)(2)                       |   | **    **May 11, 1994 |   | Corporate Director |
| Middletown, Ohio                           |   |       |   |       |
| Director                                   |   |       |   |       |
|         |
| ANTHONY F. GRIFFITHS (2)(3)                |   | **    **May 14, 1997 |   | Corporate Director |
| Toronto, Ontario                           |   |       |   |       |
| Director; Chairman of the Board            |   |       |   |       |
|         |
| ROBBERT HARTOG (1)(3)                      |   | **    **May 14, 1997 |   | President, Robhar Investments |
| Perkinsfield, Ontario                      |   |       |  | Ltd. (private investment company) |
| Director                                   |   |       |   |       |
|         |
| LISE LACHAPELLE (3)(4)                     |   | **    **May 15,1996 |   | Corporate Director |
| Ile-des-soeurs, Quebec                     |   |       |   |       |
| Director                                   |   |       |   |       |
|         |
| JOHN W. ROBINSON (3)(4)                    |   | **    **May 11, 1995 |   | Corporate Director |
| Greensboro, North Carolina                 |   |       |   |       |
| Director                                   |   |       |   |       |
|         |
| EDWARD M. SIEGEL, JR.                      |   | **    **May 6, 1998 |   | Executive Officer of the Company |
| Westport, Connecticut                      |   |       |   |       |
| Director; President and Chief              |   |       |   |       |
| Executive Officer                          |   |       |   |       |
|         |
|         |
| (1)               | Member of the Audit Committee |
| (2)               | Member of the Nominating and Corporate Governance Committee |
| (3)               | Member of the Management Resources and Compensation Committee |
| (4)               | Member of the Environmental Management and Health & Safety Committee |
|              Mr. Brunet is a consultant for National Bank Financial (banking and investments). From 1999 to 2000, Mr. Brunet wasCo-Chair and Co-Chief Executive Officer of National Bank Financial. From 2002 to 2004 he was Chair of the Canadian Institute ofChartered Accountants and was Vice-Chair from 2000 to 2002. He serves as a director of Transcontinental Inc. and MetroInc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|              Mr. Dinning is Chairman of the Board of Western Financial Group (insurance, investment and banking). From 1997 to2005, Mr. Dinning was Executive Vice President of TransAlta Corporation. Prior to 1997, Mr. Dinning held several key positionsduring his 11 years as a member of the Legislative Assembly in Alberta, culminating as Treasurer of Alberta. M. Dinning is adirector of Finning International Inc., JED Oil Inc., Liquor Stores Income Fund, Oncolytics Biotech Inc., Parkland Income Fund andShaw Communications Inc.                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Mr. Fiora is a Corporate Director. Prior to retiring on November 30, 1990, Mr. Fiora was the President and ChiefExecutive Office of Armco Steel Company L.P., a steel manufacturing company. Mr. Fiora is also a Director of First FinancialBancorp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Mr. Griffiths is a Corporate Director.From 1985 to 1993 Mr. Griffiths served in severalcapacities at Mitel Corporation, including Chief Executive Officer and Chairman.  From 1993 to present, Mr. Griffiths has beenassociated with various companies acting as an independent consultant. Mr. Griffiths is a director of Alliance AtlantisCommunications, Binscarth PVC Ventures Inc., Counsel Corporation, Fairfax Financial Holdings Limited, Hub International Limited,IMI International, Medical Innovations Inc., Leitch Technology Corp., Lindsey Morden Group Inc., Northbridge Financial Corporation,Odyssey Re Holdings Corp. and Vitran Corporation.                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Mr. Hartog is President of Robhar Investments Ltd., a private investment company. He is currently a director ofFairfax Financial Holdings Ltd., Lindsey Morden Group, Inc., Northbridge Financial Holdings Limited, and Odyssey Re HoldingsCorp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Ms. Lachapelle is a Corporate Director.  She was the President and Chief ExecutiveOfficer of The Forest Products Association of Canada from September 1994 to 2001. Prior to September 1994, she was President ofStrategico Inc. for one year and a consultant with Strategico for three years. Ms. Lachapelle is a director of Abitibi-ConsolidatedInc., Industrielle-Alliance, BNP-Paribas (Canada), INNERGEX Power Income Trust and Mirabaud Canada Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Mr. Robinson is a Corporate Director.  He was President and CEO of SMP Steel Corp. (steel distribution) untilretirement in December 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|              Mr. Siegel is an Executive Officer of the Company. Mr. Siegel's career in the metalsindustry began in 1965 when he joined The Titan Industrial Corporation, a steel trading company based in New York.  As SeniorVice President, his primary responsibility was for the tubular products division.  In 1985, Mr. Siegel joined Duferco Inc. asa Vice President, with responsibility for starting a tubular products operation and for augmenting Duferco's trading of steelproducts worldwide.  In February 1987, Mr. Siegel joined Russel Metals as a Vice President with responsibility for the exportof prime and secondary materials from Canadian steel mills and for the import of semi-finished material to Canadian mills. Over the succeeding 13 years, Mr. Siegel assumed various responsibilities eventually becoming President and Chief Executive Officerof Russel Metals Inc. in 1997.  |
| **EXECUTIVE OFFICERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **Name and municipality of**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Position** |   |       |
| **Residence**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | **Held** |   | **Principal Occupation** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| EDWARD M. SIEGEL, JR. Westport, Connecticut                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Director; President and Chief Executive Officer |  | Executive Officer of Russel Metals Inc |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| BRIAN R. HEDGES Toronto, Ontario                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |     | Executive Vice President and Chief Financial Officer |     | Executive Officer of Russel Metals Inc. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| MARION E. BRITTON Mississauga, Ontario                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |     | Vice President, Chief Accounting Officer and Assistant Secretary |     | Executive Officer of Russel Metals Inc. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              Mr. Siegelis a director and executive officer of the Company.  Mr. Siegel’s biography can be found in the paragraph following thedirector’s table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              Mr. Hedges is an executive officer of the Company.  He has been employed with the Company since 1994.  Hisbusiness career encompasses the positions of Chief Financial Officer, President and CEO of Gandalf Technologies, as well as ChiefFinancial Officer of Teleglobe Inc. Both companies were involved in the Canadian international telecommunications industry. During his earlier years at Russel Metals, Mr. Hedges oversaw the divestitures of non-metals operations and the restructuring froma holding company (known as Federal Industries Ltd.) to a metal distribution operating company.  Mr. Hedges has beenresponsible for the financial and support activities of the Company's operations.            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              Ms. Brittonis an executive officer of the Company. In 1984, Ms. Britton joined Marshall Drummond McCall and joinedRussel Metals in 1987 when Drummond McCall was acquired.  From 1987 to 1994, Ms. Britton was responsible for financialmanagement for the Metals Operations.  In 1994, Ms. Britton assumed the role of Vice President and Corporate Controller ofRussel Metals.  In 2004, Ms. Britton's title changed to Vice President and Chief Accounting Officer.  Since 1994, Ms.Britton has been responsible for the financial reporting of the Company.  In addition, she has assisted with debt and equityfinancings and the merging of the Company's three major acquisitions with its current operations. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              During thelast five years, all of the directors and officers have had the principal occupations indicated opposite their respective names,with the exception of Lise Lachapelle and James Dinning whose occupational history is described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|              E. M.Siegel, Jr., the Company's President and Chief Executive Officer, is the only related(1)director.  He was elected a director on May 6, 1998.  None of the other directors hasany material business or professional relationship with the Company.                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              Alldirectors serve one-year terms and are elected at the annual meeting of shareholders of the Company.  The term of office ofeach of the current directors of the Company will expire at the annual meeting of shareholders of Russel Metals to be held in April2005.  The Board of Directors has fixed at eight the number of directors to be elected at such upcoming annual meeting ofshareholders of the Company.  Each of the current directors will stand for re-election as a director at suchmeetings. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **COMMITTEES OF THE BOARD OF DIRECTORS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|              The Board ofDirectors delegates certain of its functions to four committees of the Board to facilitate more detailed consideration of certainissues.  These committees bring recommendations to the Board for consideration and approval as appropriate.  Eachcommittee is comprised entirely of unrelated directors.                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              The AuditCommittee meets quarterly to review the Company's financial statements, management's discussion and analysis and pressreleases.  The Audit Committee monitors the integrity of internal control and management information through discussions withmanagement and regular meetings with the external auditors. In addition, the Committee reviews other public disclosure documents,including the annual information form, the management proxy circular, registrations and prospectuses.                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|              TheNominating and Corporate Governance Committee develops comprehensive written mandates for each of the Board committees, monitorsand evaluates the corporate governance system, recommends candidates for election to the Board and serves as a forum for concernsof directors which may not be appropriate for discussion in full Board meetings.                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              TheManagement Resources and Compensation Committee reviews compensation policies for the  Company's executive officers and isresponsible for succession planning for the most senior members of management.                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|              The Companyhas established an Environmental Management and Health & Safety Committee for the purpose of reviewing compliance policies andprocedures in accordance with legislative and regulatory requirements with regard to environmental and health and safetyissues.                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|              As at thedate hereof, the directors and executive officers of Russel Metals as a group beneficially own, directly or indirectly, or exercisecontrol or direction over 2% of the outstanding common shares.                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |
| (1)The Toronto Stock Exchange Guidelines provide that:  "Anunrelated director is a director who is independent of management and is free from any interest and any business or otherrelationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a viewto the best interests of the corporation, other than interests and relationships arising from shareholding.  A relateddirector is a director who is not an unrelated director".                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |
|              If anydirector of the Company is, or within ten years before the date of this annual information form has been, a director or officer ofany other issuer that, while such director was acting in that capacity, (a) was the subject of a cease trade or similar order, oran order that denied the other issuer access to any exemptions under Canadian securities legislation, for a period of more than 30consecutive days, the Company is required to state that fact and describe the basis on which the order was made and whether theorder is still in effect; or (b) became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or wassubject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trusteeappointed to hold its assets, the Company is required to state that fact.  To the knowledge of the Company, the only directorsof the Company in respect of whom any such disclosure is required to be made are Messrs. P. Brunet and A. F. Griffiths.  Inrelation to part (a), Mr. Griffiths is a director of Brazilian Resources, Inc., which was issued a temporary cease trade order bythe Ontario Securities Commission on June 10, 2001 relating to management and insiders.  This order was rescinded on July 30,2001.  In relation to part (b), Mr. Griffiths was formerly a director of the Confederation Life Insurance Company at the timeit was placed into liquidation (1994), and Consumers Packaging Inc. at the time it was placed into liquidation under the protectionof the CCAA (2001). Messrs Brunet and Griffiths were directors of Slater Steel Inc., which operated under the protection of theCCAA in an orderly wind-down (2003).  Mr. Griffiths was formerly a director of Consumers Packaging Inc. during the protectionperiod under the CCAA (2001) and cease trade orders were issued against management and insiders due to failure to file financialstatements. |
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| **AUDIT COMMITTEE INFORMATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|              The membersof the audit committee of the Company are P. Brunet, C. R. Fiora, J. F. Dinning and R. Hartog (Chair).  The audit committeehas direct communication with the Company's internal finance department to review issues as appropriate and meets directly with theexternal auditors on the Company on a quarterly basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|              Each of themembers of the Audit Committee are independent and financially literate.  Mr. Brunet is a Chartered Accountant and isconsidered to be a "financial expert".  Each member of the Audit Committee has the ability to perform his responsibilities asan Audit Committee member based on their education and/or experience as summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| R. Hartog (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ·**  **·**  **·**  ** | President of Robhar Investments Ltd., a private investment company. Former CEO of Waltec Enterprises Ltd. Current or former Audit Committee member of Georgian College, Huronia District Hospital, IRDI, Atlantic Resources International, Municipal Trust, Dalex Inc., Padinox Inc., Lindsey Morden Group, Fairfax Financial Holding Ltd., Lombard Insurance |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| P. Brunet                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ·  ·  ·  ·   | Chartered Accountant Former Chair and Chief Executive Officer of National Bank Financial Former Chair and Vice-Chair of the Institute of Chartered Accountants Former Audit Committee member of Metro Inc. and Transcontinental Inc. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| J. F. Dinning                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ·  ·  ·  ·   | Former Provincial Treasurer of Alberta Bachelor of Commerce honours degree Current Audit Committee member of JED Oil Inc., Liquor Stores Income Fund, Oncolytics Biotech Inc. and Western Financial Corp. Former Audit Committee member of Shaw Communications Inc. and Finning International Inc. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| C. R. Fiora                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ·**  ******·**  ** | Former President and CEO of Armco Steel LP Member of the Audit Committee of First Financial Bancorp. |
|                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ***Audit Fees***                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                        |
|              The feescharged by Deloitte & Touche LLP for audit services for the year ended December 31, 2004 were $978,000 (2003: $772,000).                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                        |
| ***Audit-Related Fees***                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                        |
|              The fees charged by Deloitte & Touche LLP for the year ended December 31, 2004 for offering documents were$534,000 (2003:  $141,000) for the review of the Sarbanes-Oxley work prepared by the Company were $138,000 (2003:  nil)and for the audits of employee benefit plans were $46,000 (2003: $44,000). |
|                                                                                                                                                                                                                                                                                                                                        |
| ***Tax Fees***                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                        |
|              The fees charged by Deloitte & Touche for U.S. tax compliance and planning work for the fiscal year endedDecember 31, 2004 were $213,000 (2003:  $270,000).                                                                                                                                                 |
| **CHARTER OF**                                                                             |
|--------------------------------------------------------------------------------------------|
|                                                                   |
| **THE AUDIT COMMITTEE**                                                                    |
|                 |
| 1.                                       | **Purpose and Responsibilities** |
|                                |
|                           | The primary purpose of the Committee is to assist Board oversight of: |
|                           |
| (a)                                           | the integrity of Russel's financial statements; |
| (b)                                           | Russel's compliance with legal and regulatory requirements; |
| (c)                                           | the External Auditor's qualifications and independence; and |
| (d)                                           | the performance of Russel's internal audit function and the External Auditor. |
|                 |
| 2.                                  | **Definitions and Interpretation** |
|                 |
| 2.1        * *                                | *Definitions* |
|                 |
|                      | In this Charter: |
|                 |
| (a)                                           | "Board" means the board of directors of Russel; |
| (b)                                           | "Chair" means the chair of the Committee; |
| (c)                                           | "Committee" means the audit committee of the Board; |
| (d)                                           | "Director" means a member of the Board; |
| (e)                                           | "External Auditor" means Russel's independent auditor; and |
| (f)                                      | "Russel" means Russel Metals Inc. |
|                 |
| 2.2                                           | *Interpretation* |
|                 |
|                      | The provisions of this Charter are subject to the provisions of Russel's by-laws and tothe applicable provisions of the *Canada Business Corporations Act* (the "Act"), and any other applicablelegislation. |
|                 |
| 3.                                       | **Establishment and Composition of the Committee** |
|                 |
| 3.1                                           | *Establishment of the Audit Committee* |
|                 |
|                      | The Committee is hereby continued with the constitution, function and responsibilitiesherein set forth. |
|                 |
| 3.2                                           | *Appointment and Removal of Members of the Committee* |
|                 |
| (a)                                           | Board Appoints Members.  The members of the Committee shall be appointed by theBoard, having considered the recommendation of the Nominating and Corporate Governance Committee of the Board. |
|                 |
| (b)                                           | Annual Appointments.  The appointment of members of the Committee shall take placeannually at the first meeting of the Board after a meeting of the shareholders at which Directors are elected, provided that if theappointment of members of the Committee is not so made, the Directors who are then serving as members of the Committee shallcontinue as members of the Committee until their successors are appointed. |
|                 |
| (c)                                           | Vacancies.  The Board may appoint a member to fill a vacancy which occurs in theCommittee between annual elections of Directors. |
|                 |
| (d)                                           | Removal of Member.  Any member of the Committee may be removed from the Committee bya resolution of the Board. |
|                 |
| 3.3                                           | *Number of Members* |
|                 |
|                      | The Committee shall consist of three or more Directors. |
|                 |
| 3.4                                           | *Independence of Members* |
|                 |
|                                | Each member of the Committee shall be independent for the purposes of all applicableregulatory and stock exchange requirements. |
|                 |
| 3.5                                           | *Financial Literacy* |
|                 |
| (a)                                      | Financial Literacy Requirement.  Each member of the Committee shall be financiallyliterate or must become financially literate within a reasonable period of time after his or her appointment to theCommittee. |
|                 |
| (b)                                      | Definition of Financial Literacy.  "Financially literate" means the ability to readand understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generallycomparable to the breadth and complexity of the issues that can reasonably be expected to be raised by Russel's financialstatements. |
|                 |
| 3.6                                           | *Audit Committee Financial Expert* |
|                 |
| (a)                                           | Attributes of an Audit Committee Financial Expert.  To the extent possible, the Boardwill appoint to the Committee at least one Director who has the following attributes: |
|                 |
|         (i)                                             | an understanding of generally accepted accounting principles and financialstatements; |
|        (ii)                                             | ability to assess the general application of such principles in connection with theaccounting for estimates, accruals and reserves; |
|       (iii)                                                  | experience preparing, auditing, analyzing or evaluating financial statements that presenta breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues thatcan reasonably be expected to be raised by Russel's financial statements, or experience actively supervising one or more personsengaged in such activities; |
|       (iv)                                                   | an understanding of internal controls and procedures for financial reporting;and |
|        (v)                                                   | an understanding of audit committee functions. |
|                 |
| (b)                                           | Experience of the Audit Committee Financial Expert.  To the extent possible, theBoard will appoint to the Committee at least one Director who acquired the attributes in (a) above through: |
|                 |
|         (i)                                             | education and experience as a principal financial officer, principal accounting officer,controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions(or such other qualification as the Board interprets such qualification in its business judgment); |
|        (ii)                                             | experience actively supervising a principal financial officer, principal accountingofficer, controller, public accountant, auditor or person performing similar functions; |
|       (iii)                                                  | experience overseeing or assessing the performance of companies or public accountants withrespect to the preparation, auditing or evaluation of financial statements; or |
|       (iv)                                                        | other relevant experience. |
|                 |
| 3.7                                           | *Retirement and Term* |
|                 |
| (a)                                      | Rotation of Membership.  The Nominating and Corporate Governance Committee shallrecommend to the Board a process for ensuring that at least every three years, unless otherwise expressly determined by the Board,at least one member of the Committee will retire from the Committee and at least one new member will be appointed to the Committeewho has not been a member of the Committee for at least three years. |
|                 |
| (b)                                           | Six Year Term Limit.  No person shall serve on the Committee for a period of morethan six consecutive years unless the Board shall, in any particular case, specifically determine to make an exception from suchlimitation. |
|                 |
| 3.8                                           | *Board Approval Required* |
|                 |
|                      | No member of the Committee shall serve on more than three other public company auditcommittees without the approval of the Board. |
|                 |
| 4.                                  | **COMMITTEE CHAIR** |
|                 |
| 4.1                                           | *Board to Appoint Chair* |
|                 |
|                      | The Board shall appoint the Chair from the members of the Committee who are unrelateddirectors (or, if it fails to do so, the members of the Committee shall appoint the Chair of the Committee from among itsmembers). |
|                 |
| 4.2                                           | *Term* |
|                 |
|                      | The position of Chair shall normally be rotated every three years, but the term of anyChair may be extended for a longer term, not to exceed six years. |
|                 |
| 5.                                  | **Committee Meetings** |
|                 |
| 5.1                                           | *Quorum* |
|                 |
|                      | A quorum of the Committee shall be two. |
|                 |
| 5.2                                           | *Secretary* |
|                 |
|                      | The Chair shall designate from time to time a person who may, but need not, be a member ofthe Committee, to be Secretary of the Committee. |
|                 |
| 5.3                                           | *Time and Place of Meetings* |
|                 |
|                      | The time and place of the meetings of the Committee and the calling of meetings and theprocedure in all things at such meetings shall be determined by the Committee; provided, however, the Committee shall meet at leastquarterly. |
| 5.4                                      | *In Camera* *Meetings*                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |
|                      | The Committee shall meet separately, periodically, with each of:                                                                                                                                                                                                                                                                                                                  |
|                 |
| (a)                                      | management;                                                                                                                                                                                                                                                                                                                                                                       |
| (b)                                      | the External Auditor; and                                                                                                                                                                                                                                                                                                                                                         |
| (c)                                      | the internal auditor.                                                                                                                                                                                                                                                                                                                                                             |
|                 |
| 5.5                                           | *Right to Vote*                                                                                                                                                                                                                                                                                                                                                                   |
|                 |
|                      | Each member of the Committee shall have the right to vote on matters that come before theCommittee.                                                                                                                                                                                                                                                                               |
|                 |
| 5.6                                           | *Invitees*                                                                                                                                                                                                                                                                                                                                                                        |
|                 |
|                      | The Committee may invite Directors, officers and employees of Russel or any other personto attend meetings of the Committee to assist in the discussion and examination of the matters under consideration by theCommittee.  The External Auditor shall receive notice of each meeting of the Committee and shall be entitled to attend anysuch meeting at Russel's expense. |
|                 |
| 5.7                                           | *Regular Reporting*                                                                                                                                                                                                                                                                                                                                                               |
|                 |
|                      | The Committee shall report to the Board at the Board's next meeting the proceedings at themeetings of the Committee and all recommendations made by the Committee at such meetings.                                                                                                                                                                                               |
|                 |
| 6.                                       | **Authority of Committee**                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |
| 6.1                                                | *Retaining and Compensating Advisors*                                                                                                                                                                                                                                                                                                                                                |
|                 |
|                      | The Committee shall have the authority to engage independent counsel and other advisors asthe Committee may deem appropriate in its sole discretion and to set and pay the compensation for any advisors employed by theaudit committee.  The Committee shall not be required to obtain the approval of the Board in order to retain or compensatesuch consultants or advisors. |
|                 |
| 6.2                                           | *Other Expenses*                                                                                                                                                                                                                                                                                                                                                                     |
|                 |
|                      | The Committee shall determine, and Russel shall pay, the ordinary expenses of theCommittee that are necessary or appropriate in carrying out their duties.                                                                                                                                                                                                                           |
|                 |
| 6.3                                           | *Recommendations to the Board*                                                                                                                                                                                                                                                                                                                                                       |
|                 |
|                      | The Committee shall have the authority to make recommendations to the Board, but shallhave no decision-making authority other than as specifically contemplated in this Charter.                                                                                                                                                                                                     |
| 7.                                       | **Remuneration of Committee Members**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |
| 7.1                                           | *Remuneration of Committee Members*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                 |
|                           | Members of the Committee and the Chair shall receive such remuneration for their serviceon the Committee as the Board may determine from time to time.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                 |
| 7.2                                           | *Directors' Fees*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                 |
|                           | No member of the Committee may earn fees from Russel or any of its subsidiaries other thandirectors' fees (which fees may include cash and/or shares or options or other in-kind consideration ordinarily available todirectors, as well as all of the regular benefits that other directors receive).  For greater certainty, no member of theCommittee shall accept, directly or indirectly, any consulting, advisory or other compensatory fee from Russel.                                                                                                               |
|                 |
| **SPECIFIC DUTIES AND RESPONSIBILITIES**                                                   |
|                 |
| 8.                                  | **Integrity of Financial Statements**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                 |
| 8.1                                           | *Review and Approval of Financial Information*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                 |
| (a)                                      | Annual Financial Statements.  The Committee shall review and discuss with managementand the External Auditor, Russel's audited annual financial statements and related MD&A together with the report of theExternal Auditor thereon and, if appropriate, recommend to the Board that it approve the audited annual financialstatements.                                                                                                                                                                                                                                  |
|                 |
| (b)                                      | Interim Financial Statements.  The Committee shall review and discuss with managementand the External Auditor if appropriate and approve, Russel's interim unaudited financial statements (including, withoutlimitation, its quarterly unaudited financial statements and any other unaudited special purpose financial statements intended forpublication) and related MD&A.                                                                                                                                                                                            |
|                 |
| (c)                                      | Material Public Financial Disclosure.  The Committee shall discuss with managementand the External Auditor:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                 |
|         (i)                                             | the types of information to be disclosed and the type of presentation to be made inconnection with earnings press releases;                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        (ii)                                             | financial information and earnings guidance (if any) provided to analysts and ratingagencies; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|       (iii)                                                  | press releases containing financial information (paying particular attention to any use of"pro forma" or "adjusted" non-GAAP information).                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                 |
| (d)                                      | Procedures for Review.  The Committee shall be satisfied that adequate procedures arein place for the review of Russel's disclosure of financial information extracted or derived from Russel's financial statements(other than financial statements, MD&A and earnings press releases, which are dealt with elsewhere in this Charter) and shallperiodically assess the adequacy of those procedures.                                                                                                                                                                   |
|                 |
| (e)                                      | Accounting Treatment.  The Committee shall review and discuss with management and theExternal Auditor:                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                 |
|         (i)                                             | major issues regarding accounting principles and financial statement presentation,including any significant changes in Russel's selection or application of accounting principles and major issues as to the adequacyof Russel's internal controls and any special audit steps adopted in light of material control deficiencies;                                                                                                                                                                                                                                                 |
|        (ii)                                             | analyses prepared by management and/or the External Auditor setting forthsignificant  financial reporting issues and judgments made in connection with the preparation of the financial statements,including analyses of the effects of alternative GAAP methods on the financial statements; and                                                                                                                                                                                                                                                                            |
|       (iii)                                                  | the effect of regulatory and accounting initiatives, as well as off-balance sheetstructures on Russel's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                 |
| (f)                                      | The Committee should review and discuss with management and, if appropriate , with theExternal Auditor or legal counsel, the management certifications of the financial statements as required by the *Sarbanes-OxleyAct of 2002*, under applicable securities laws in Canada or otherwise.                                                                                                                                                                                                                                                                                       |
|                 |
| 9.                                  | **External Auditor**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                 |
| 9.1                                           | *External Auditor*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                 |
| (a)                                      | Authority with Respect to External Auditor.  As a representative of Russel'sshareholders, the Committee shall be directly responsible for the appointment, compensation and oversight of the work of theExternal Auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attestservices for Russel.  In the discharge of this responsibility, the Committee shall:                                                                                                                                                 |
|                 |
|         (i)                                             | have sole responsibility for recommending to the Board the person to be proposed toRussel's shareholders for appointment as External Auditor for the above-described purposes as well as the responsibility forrecommending such External Auditor's compensation and determining at any time whether the Board should recommend to Russel'sshareholders whether the incumbent External Auditor should be removed from office;                                                                                                                                                     |
|        (ii)                                             | review the terms of the External Auditor's engagement, discuss the audit fees with theExternal Auditor and be solely responsible for approving such audit fees; and                                                                                                                                                                                                                                                                                                                                                                                                               |
|       (iii)                                                  | require the External Auditor to confirm in its engagement letter each year that theExternal Auditor is accountable to the Board and the Committee as representatives of shareholders.                                                                                                                                                                                                                                                                                                                                                                                             |
|                 |
| (b)                                      | Independence.  The Committee shall satisfy itself as to the independence of theExternal Auditor.  As part of this process the Committee shall:                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                 |
|         (i)                                             | assure the regular rotation of the lead audit partner as required by law and considerwhether, in order to ensure continuing independence of the External Auditor, Russel should rotate periodically, the audit firm thatserves as External Auditor;                                                                                                                                                                                                                                                                                                                               |
|        (ii)                                             | require the External Auditor to submit on a periodic basis to the Committee, a formalwritten statement delineating all relationships between the External Auditor and Russel and that the Committee is responsible foractively engaging in a dialogue with the External Auditor with respect to any disclosed relationships or services that may impactthe objectivity and independence of the External Auditor and for recommending that the Board take appropriate action in response tothe External Auditor's report to satisfy itself of the External Auditor's independence; |
|       (iii)                                                  | unless the Committee adopts pre-approval policies and procedures, approve any non-auditservices provided by the External Auditor and may delegate such approval authority to one or more of its independent members whoshall report promptly to the Committee concerning their exercise of such delegated authority; and                                                                                                                                                                                                                                                          |
|       (iv)                                                   | review and approve the policy setting out the restrictions on Russel hiring partners,employees and former partners and employees of Russel's current or former External Auditor.                                                                                                                                                                                                                                                                                                                                                                                                  |
|                 |
| (c)                                           | Issues Between External Auditor and Management.  The Committee shall:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                 |
|         (i)                                             | review any problems experienced by the External Auditor in conducting the audit, includingany restrictions on the scope of the External Auditor's activities or an access to requested information;                                                                                                                                                                                                                                                                                                                                                                               |
|        (ii)                                             | review any significant disagreements with management and, to the extent possible, resolveany disagreements between management and the External Auditor; and                                                                                                                                                                                                                                                                                                                                                                                                                       |
|       (iii)                                                  | review with the External Auditor:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|           ·**  **       | any accounting adjustments that were proposed by the External Auditor, but were not made by management;                                                                                                                                                                                                                                           |
|--------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           ·**  **       | any communications between the audit team and audit firm's national office respecting auditing or accounting issues presented bythe engagement;                                                                                                                                                                                                   |
|           ·**  **       | any management or internal control letter issued, or proposed to be issued by the External Auditor to Russel; and                                                                                                                                                                                                                                 |
|           ·**  **       | the performance of Russel's internal audit function and internal auditors.                                                                                                                                                                                                                                                                        |
|                 |                                                                                                                                                                                                                                                                                                                                              |
| (d)                                           | Non-Audit Services.                                                                                                                                                                                                                                                                                                                               |   |
|                 |                                                                                                                                                                                                                                                                                                                                              |
|         (i)                                             | The Committee shall either:                                                                                                                                                                                                                                                                                                                       |   |
|                 |
|           ·**  **       | approve any non-audit services provided by the External Auditor or the external auditor of any subsidiary of Russel to Russel(including its subsidiaries); or                                                                                                                                                                                     |
|           ·**  **       | adopt specific policies and procedures for the engagement of non-audit services, provided that such pre-approval policies andprocedures are detailed as to the particular service, the audit committee is informed of each non-audit service and the proceduresdo not include delegation of the audit committee's responsibilities to management. |
|        (ii)                                             | The Committee may delegate to one or more independent members of the Committee theauthority to pre-approve non-audit services in satisfaction of the requirement in the previous section, provided that such memberor members must present any non-audit services so approved to the full audit committee at its first scheduled meeting followingsuch pre-approval. |
|--------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       (iii)                                                  | The Committee shall instruct management to promptly bring to its attention any servicesperformed by the External Auditor which were not recognized by Russel at the time of the engagement as being non-auditservices.                                                                                                                                               |
|                 |
| (e)                                      | Evaluation of External Auditor.  The Committee shall evaluate the External Auditoreach year, and present its conclusions to the Board.  In connection with this evaluation, the Committee shall:                                                                                                                                                           |
|                 |
|         (i)                                             | review and evaluate the performance of the lead partner of the ExternalAuditor;                                                                                                                                                                                                                                                                                      |
|        (ii)                                             | obtain the opinions of management with respect to the performance of the External Auditor;and obtain and review a report by the External Auditor describing                                                                                                                                                                                                          |
|           ·**  ** | the External Auditor's internal quality-control procedures;                                                                                                                                                                                                                                             |
|--------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           ·**  ** | any material issues raised by the most recent internal quality-control review, or peer                                                                                                                                                                                                                  |
|           ·**  ** | review, of the External Auditor's firm or by any inquiry or investigation by governmental or professional authorities, within thepreceding five years, respecting  one or more independent audits carried out by the External Auditor's firm, and any stepstaken to deal with any such issues; and |
|           ·**  ** | all relationships between the External Auditor and Russel (for the purposes assessing the External Auditor'sindependence).                                                                                                                                                                              |
| (f)                                      | Review of Management's Evaluation and Response.  The Committeeshall:                                                                |
|--------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|
|                 |
|         (i)                                             | review management's evaluation of the External Auditor's audit performance;                                                              |
|        (ii)                                             | review the External Auditor's recommendations, and review management's response to andsubsequent follow-up on any identified weaknesses; |
|       (iii)                                                  | review management's response to significant internal control recommendations of theinternal audit staff and the External Auditor;        |
|       (iv)                                                   | receive regular reports from management and receive comments from the External Auditor, ifany, on:                                       |
|           ·**  ** | Russel's principal financial risks;                                              |
|--------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|
|           ·**  ** | the systems implemented to monitor those risks; and                              |
|           ·**  ** | the strategies (including hedging strategies) in place to manage those risks;and |
|        (v)                                                      | recommend to the Board whether any new material strategies presented by management shouldbe considered appropriate and approved.                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |
| 10.                                              | **Internal Control**                                                                                                                                                                                                                                                                        |
|                    |
| 10.1                                                       | *Review by Audit Committee*                                                                                                                                                                                                                                                                 |
|                    |
|                         | The Committee shall review:                                                                                                                                                                                                                                                                 |
|                    |
| (a)                                         | any internal control report prepared by management, including management’sassessment of the effectiveness of Russel’s internal control structure and procedures for financial reporting; and                                                                                    |
|                    |
| (b)                                              | the External Auditor's attestation, and report (if any), on the assessment made bymanagement of the effectiveness of Russel's internal control structure and procedures for financial reporting.                                                                                            |
|                    |
| 11.                                              | **Internal Audit Function**                                                                                                                                                                                                                                                                 |
|                    |
| 11.1                                                       | *Internal Auditor*                                                                                                                                                                                                                                                                          |
|                    |
|                         | In connection with Russel's internal audit function, the Committee shall:                                                                                                                                                                                                                   |
|                    |
| (a)                                         | review the terms of reference of the internal auditor and meet with the internal auditoras the Committee may consider appropriate to discuss any concerns or issues;                                                                                                                        |
|                    |
| (b)                                              | in consultation with the External Auditor and the internal audit group, review theadequacy of Russel's internal control structure and procedures designed to ensure compliance with laws and regulations and anyspecial audit steps adopted in light of material deficiencies and controls; |
|                    |
| (c)                                         | review the periodic reports of activities of the internal auditor; and                                                                                                                                                                                                                      |
|                    |
| (d)                                              | periodically review with the internal auditor any significant difficulties, disagreementswith management or scope restrictions encountered in the course of the work of the internal auditor.                                                                                               |
|                    |
| 12.                                              | **Compliance with Legal and Regulatory Requirements**                                                                                                                                                                                                                                       |
|                    |
| 12.1                                                       | *Risk Assessment and Risk Management*                                                                                                                                                                                                                                                       |
|                    |
|                         | The Committee shall discuss Russel's major financial risk exposures and the stepsmanagement has taken to monitor and control such exposures.                                                                                                                                                |
|                    |
| 12.2                                                       | *Related Party Transactions*                                                                                                                                                                                                                                                                |
|                    |
|                         | The Committee shall review and approve all related party transactions in which Russel isinvolved or which Russel proposes to enter into.                                                                                                                                                    |
|                    |
| 12.3                                                       | *Whistle Blowing*                                                                                                                                                                                                                                                                           |
|                    |
|                         | The Committee shall put in place procedures for:                                                                                                                                                                                                                                            |
|                    |
| (a)                | the receipt, retention and treatment of complaints received by Russel regardingaccounting, internal accounting controls or auditing matters; and                                                                                                                                            |
|                    |
| (b)                | the confidential, anonymous submission by employees of Russel of concerns regardingquestionable accounting or auditing matters.                                                                                                                                                             |
|                    |
| 13.                                              | **Annual Performance Evaluation**                                                                                                                                                                                                                                                           |
|                    |
|                         | On an annual basis, the Committee shall follow the process established by the Board andoverseen by the Nominating and Corporate Governance Committee for assessing the performance of the Committee.                                                                                        |
|                    |
| 14.                                              | **Charter Review**                                                                                                                                                                                                                                                                          |
|                    |
|                         | The Committee shall review and assess the adequacy of this Charter annually and recommendto the Board any changes it deems appropriate.                                                                                                                                                     |
| **ADDITIONAL INFORMATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|              Additionalinformation, including directors' and officers' remuneration, principal holders of Russel Metals' securities, options to purchasesecurities and interest of insiders in material transactions, is contained in the Management Proxy Circular.                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|              Additionalfinancial information is provided in Russel Metals' comparative financial statements for the year ended December 31, 2004 and itsManagement Discussion and Analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|              A copy ofthe foregoing documents together with a copy of this annual information form and any interim financial statements issued by RusselMetals subsequent to December 31, 2004 may be obtained on request to the Assistant Secretary, Russel Metals Inc., Suite 210, 1900Minnesota Court, Mississauga, Ontario L5N 3C9.  These documents are also posted regularly to the Company's investor relationsweb site located at www.russelmetals.com and SEDAR at www.sedar.com.                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|              When thesecurities of Russel Metals are in the course of a distribution pursuant to a short-form prospectus or when a preliminaryshort-form prospectus has been filed in respect of a distribution of Russel Metals' securities, Russel Metals will provide to anyperson, upon request to the Assistant Secretary of Russel Metals at the address noted above, one copy of this annual informationform, the Annual Report of Russel Metals, any interim financial statements, the Management Proxy Circular and any other documentthat is incorporated by reference into the preliminary short form prospectus or the short form prospectus. |