Forward-Looking Statements:

The following discussion of the financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto. The following discussion contains forward-looking statements. General Steel Holdings, Inc. is referred to herein as "we" or "our." The words or phrases "would be," "will allow," "expect to", "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," or similar expressions are intended to identify forward-looking statements. Such statements include those concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether we are able to manage our planned growth efficiently and operate profitable operations, including whether our management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations; and (d) whether we are able to successfully fulfill our primary requirements for cash which are explained below under "Liquidity and Capital Resources. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

Management Comments

Third quarter total revenues increased 19.1% year over year to $411.5 million and first nine months total revenues increased 116.2% year over year to $1.1 billion.

Third quarter 2008 has been a challenging period for our operations. China is experiencing economic slowdown which has noticeably impacted the real estate market. Deutsche Bank estimates that Chinese real estate property sales have declined by more than 15% since the first of the year. Real estate is an important demand driver for our Longmen facility (Longmen comprises 87% of our turnover).

The result of the real estate slowdown has been a decline in selling price for construction steel across China.

Raw material input costs have also started to decline from the second quarter, but the rate of decline is slower than the decline selling prices have experienced. Steel companies of all sizes have been impacted. Steel Guru, a leading steel industry information website, reports that many Chinese small and medium steel companies have shut down due to the low selling prices and many large size steel companies have reduced output. Notably, the top 4 steel producers in China have jointly agreed to reduce output by 20%.

This is the typical "boom bust" cycle for commodity products such as steel. When selling prices are low, steel producers cut or stop production altogether. This reduces supply and inventories are consumed. As supply dwindles, eventually demand becomes greater than supply and selling prices increase once again.

Management is being proactive in managing the business through the current economic slowdown. We are taking the following steps.
- Completed 2 new Blast Furnaces with greater efficiencies at our Longmen facility which will reduce our Cost of Goods on a per ton basis

- Working with suppliers to lower input costs

- Reducing headcount to improve our cost structure

- Adjusting production in line with market conditions

- Reducing inventory levels to take advantage of dropping raw material prices

- Working to increase gross margins by expanding our product mix

In our 20 year operating history, we have been through multiple "boom bust" cycles and are confident in our ability to manage the company through this slowdown and position ourselves for the economic recovery.

While the economic slowdown is a difficult environment for operations, it presents many attractive mergers & acquisition (the "M&A") prospects which is a key component of our growth strategy.

Third quarter 2008 highlights of actions by management to benefit our shareholders:

- Completion of 2 X 1280 cubic meter blast furnaces at our Longmen JV. The new blast furnaces will effectively double our pig iron production capacity and increase earnings potential. The new blast furnaces are more efficient using less energy, less coke and labor to produce iron. The first blast furnace is being prepped for operation and we anticipate it to be on line in late November with the other furnace to follow at a later date. The new more efficient furnaces gives us an important advantage against many of our competitors who are dealing with higher input costs due to their reliance on outdated and inefficient production processes and technology. It is important to note we have funded this large capital expenditure locally (USD 146.7 million YTD). This reallocation of working capital to the construction of this important income-producing asset has caused pressure on our current financial results. We believe that the long term future benefits of the blast furnaces outweigh the short term impact on our current results.

- Completion of a debt restructuring for our Maoming subsidiary resulting in a RMB 50 million debt waiver. This debt waiver immediately increases the Net Asset Value of our Maoming subsidiary by RMB 50 million.

- Negotiated a price compensation refund from a key supplier which will lower our cost of goods. This benefit will show up in our fourth quarter results.

- Signed Letter of Intent with Yantai Steel Pipe Co. Ltd. which upon completion of the joint venture will move General Steel into a higher margin product segment.

Although the present market conditions are challenging, we would like to highlight the following important market dynamics.

- The China national government is concerned about the current economic slowdown and announced a $586 billion economic stimulus program on November 8, 2008 aiming to bolster domestic demand. The plan includes spending in housing, infrastructure, agriculture, health care and social welfare.

- We anticipate the continued decrease in the cost of input raw materials.

- Our pipeline of M&A targets is growing including companies with higher gross margin product lines

- Our sales are focused primarily on the China domestic market where a large demand driver is government infrastructure spending.

o Our Longmen facility is supplying reinforcing steel to a double ringed subway system project in Xian (180km from our facility).

o The Bei Shan Ling Port district where our Maoming facility is located started a large infrastructure project building 76 deep water docking terminals.

We remain positive on the long term development of China. Steel is a basic building material and the Chinese steel industry along with General Steel Holdings Inc. is closely linked to China's development.

Company Overview

General Steel Holdings, Inc. ("General Steel"), headquartered in Beijing China, operates a diverse portfolio of Chinese steel companies. Our companies serve various industries and produce a variety of steel products including: reinforced bars (rebar), hot-rolled carbon and silicon sheets, spiral-weld pipes and high-speed wire. Our aggregate production capacity of steel products is 4.8 million tons, of which the majority is rebar. Individual industry segments have unique demand drivers, such as rural income, infrastructure construction and energy consumption. Domestic economic conditions are an overall driver for all our products.

Our vision is to become one of the largest non-government owned steel companies in China.

Our mission is to acquire Chinese steel companies and increase their profitability and efficiencies with the infusion of applied western management practices, advanced production technologies and capital resources.

Our strategy is to grow through aggressive mergers, joint ventures and acquisitions targeting state-owned enterprise steel companies and selected entities with outstanding potential. We have executed this strategy and consummated controlling interest positions in three joint ventures. We are actively pursuing a plan to acquire additional assets.

We presently have controlling interest in four steel subsidiary companies:

· Tianjin Daqiuzhuang Metal Sheet Co., Ltd. (Daqiuzhuang Metal);
· Baotou Steel - General Steel Special Steel Pipe Joint Venture Co., Ltd. (Baotou Steel Pipe Joint Venture);
· Shaanxi Longmen Iron and Steel Co., Ltd. (Longmen Joint Venture); and
· Maoming Hengda Steel Group Limited (Maoming).

Steel Operating Companies

· Tianjin Daqiuzhuang Metal Sheet Co., Ltd. ("Daqiuzhuang Metal")

Tianjin Daqiuzhuang Metal Sheet Co., Ltd. ("Daqiuzhuang Metal"), started its operation in 1988. Daqiuzhuang Metal's core business is the manufacturing of high quality hot-rolled carbon and silicon steel sheets which are mainly used in the production of small agricultural vehicles and other specialty markets.

Daqiuzhuang Metal has ten steel sheet production lines capable of processing approximately 400,000 tons of 0.75-2.0 mm hot-rolled carbon steel sheets per year. Products are sold through a nation-wide network of 35 distributors and 3 regional sales offices.

Daqiuzhuang Metal uses a traditional rolling mill production sequence, such as heating, rolling, cutting, annealing, and flattening to process and cut coil segments into steel sheets. The sheet sizes are approximately 2,000 mm (length)
x 1,000 mm (width) x 0.75 to 2.0 mm (thickness). Limited size adjustments can be made to meet order requirements. Products sell under the registered "Qiu Steel" brand name.

· Baotou Steel - General Steel Special Steel Pipe Joint Venture Co., Ltd.
("Baotou Steel Pipe Joint Venture")

On April 27, 2007, Daqiuzhuang Metal and Baotou Iron and Steel Group Co., Ltd. ("Baotou Steel") entered into an Amended and Restated Joint Venture Agreement (the "Agreement"), amending the Joint Venture Agreement entered into on September 28, 2005 ("Original Joint Venture Agreement"). The Amended and Restated Joint Venture Agreement increased Daqiuzhuang Metal's ownership interest in the Joint Venture to 80%. The joint venture company's name is Baotou Steel - General Steel Special Steel Pipe Joint Venture Company Limited ("Baotou Steel Pipe Joint Venture"). Baotou Steel is required to contribute RMB 10,000,000, or approximately $1,270,000 taking a 20% ownership interest in the Baotou Steel Pipe Joint Venture. Daqiuzhuang Metal is required to contribute RMB 40,000,000, or approximately $5,130,000 taking an 80% ownership interest in the Baotou Steel Pipe Joint Venture.

We have invested $1.56 million cash into this joint venture with the rest of the required registered capital to be invested within two years. The remainder of the investment will come from Daqiuzhuang Metal.

Baotou Steel Pipe Joint Venture received its business license approval on May 25, 2007. It has four production lines capable of producing 100,000 tons of double spiral-weld pipes. These pipes are used in the energy sector to transport natural gas, oil and steam. Pipes produced at the mill have a diameter ranging from 219-1240 mm; a wall thickness ranging from 6-13 mm; and a length ranging from 6-12 m. Final production capacity at the mill will reach 600,000 tons in 2009. Additional products may also be added. Presently, Baotou Steel Pipe Joint Venture sells its products using an internal sales force to customers in the Inner Mongolia Autonomous Region and the northwest region of China.

This joint venture started production and testing operations in the second quarter 2007 and began to generate revenue in the third quarter 2007.

· Shaanxi Longmen Iron and Steel Co., Ltd. ("Longmen Joint Venture")

Effective June 1, 2007, through two subsidiaries, Daqiuzhuang Metal and Tianjin Qiu Steel Investment Co., Ltd., we entered into a joint venture agreement with Shaanxi Longmen Iron & Steel Group Co., Ltd. ("Long Steel Group") to form Shaanxi Longmen Iron and Steel Co., Ltd. ("Longmen Joint Venture"). Through our two subsidiaries, we invested approximately $39 million cash and collectively hold approximately 60% of the Longmen Joint Venture.

Long Steel Group, located in Hancheng city, Shaanxi province, in China's central region, was founded in 1958 and incorporated in 2002.

Long Steel Group operates as a fully-integrated steel production facility, which means it is capable of taking iron ore and other raw materials, processing them into crude steel and then processing the crude steel into finished steel products. Less than 10% of steel companies in China have fully-integrated steel production capacity.

Our Longmen Joint Venture, assumed existing operating units of the Long Steel Group. The Long Steel Group contributed most of its working assets to the Longmen Joint Venture.

Currently, the Longmen Joint Venture has 4 branch offices, 7 subsidiaries under direct control and 8 entities in which we have indirect control interest.

Longmen Joint Venture employs approximately 6,000 full-time and 2,000 part-time workers.

The current annual capacity at Longmen Joint Venture is 2.5 million tons of crude steel. It is the largest steel producer in Shaanxi province. Approximately 94% of its total production is devoted to reinforced bar steel (rebar - a commodity grade steel product used to reinforce the concrete), with the remainder being roundbar, wire rod and related products. These products are primarily used in building and infrastructure construction.

We completed 2 new blast furnaces and supporting facilities. The first blast furnace will come on line in late November 2008 with the second to follow at a later date. The new blast furnace each has a volume of 1,280 cubic meters. The new blast furnaces and support facilities will increase our crude steel producing capacity to approximately 4 million tons annually.

In addition to increased output, the new blast furnaces will create greater production efficiencies through reduced energy, raw material inputs and labor costs.

Longmen Joint Venture's products are categorized within the steel industry as "longs" (referencing their shape). Rebar is generally considered a regional product because its size, weight and dimension make it ill-suited for cost-effective long-haul ground transportation. By our estimates, the provincial market demand for rebar is 6 - 8 million tons. Slightly more than half of the province demand radiates from Xi'an, the province capital, located 180 km from the Longmen Joint Venture main site. We estimate in Xi'an we have a 72% market share.

An established regional network of 24 agents and 2 sales offices sell the Longemn Joint Venture's products. All products sell under the registered brand name of "Yulong" which enjoys strong regional recognition and awareness. Rebar and billet products carry ISO 9001 and 9002 certification and many other products have won national quality awards. Products produced at the facility have been used in the construction of the Yangtze River Three Gorges Dam, Xi'an International Airport, the Xi Han, Xi Tong and Xi Da provincial expressways, and are currently being used in the construction of the Xi'an city subway system.

On September 24, 2007, Longmen Joint Venture acquired controlling interest in two subsidiaries of Long Steel Group: Longmen Iron and Steel Group Co., Ltd. Environmental Protection Industry Development Co., Ltd. and Longmen Iron and Steel Group Co., Ltd. Hualong Fire Retardant Materials Co., Ltd.

The Longmen Joint Venture entered into an equity transfer agreement with Long Steel Group to acquire its 74.92% ownership interest in its subsidiary, Longmen Iron and Steel Group Co., Ltd. Environmental Protection Industry Development Co., Ltd. ("EPID"). The Joint Venture paid $2.4 million (RMB 18,080,930) in exchange for the ownership interest. The facility utilizes solid waste generated from the steel making process to produce products such as construction materials, building blocks, and landscape tiles, curb tops, ornamental tiles, etc.

At the same time, the Longmen Joint Venture also entered into a second equity agreement with the Long Steel Group to acquire its 36% ownership interest in its subsidiary, Longmen Iron and Steel Group Co., Ltd. Hualong Fire Retardant Materials Co., Ltd. ("Hualong"). The Joint Venture paid $430,000 (RMB 3,287,980) in exchange for the ownership interest. The Joint Venture is the largest shareholder in the company. The facility produces fire-retardant materials used in various processes in the production of steel.

On January 11, 2008, Longmen Joint Venture completed its acquisition of a controlling interest in Hancheng Tongxing Metallurgy Co., Ltd. ("Tongxing"). Longmen Joint Venture contributed its land use right of 217,487 square meters (approximately 53 acres) with an appraised value of approximately $4.1 million (RMB 30,227,333). Pursuant to the agreement, the land will be converted into shares valued at approximately $3.1 million (RMB 22,744,419), providing the Joint Venture a stake of 22.76% ownership in Tongxing and making it Tongxing's largest and controlling shareholder. Tongxing has two core operating areas:
coking coal production and rebar processing. Its coking coal operations have an annual production capacity of 300,000 tons. Its rebar processing facility has an annualized rolling capacity of 300,000 tons.

· Maoming Hengda Steel Group Limited (Maoming)

On June 25, 2008, through our subsidiary Tianjin Qiu Steel Investment, we acquired 99% of Maoming Hengda Steel Group, Limited ("Maoming") for RMB 50 million (approximately USD 7.3 million). Maoming's core business is the production of high-speed wire and rebar, products used in the construction industry. Located on 140 hectares (approximately 346 acres) in Maoming city, Guangdong province, the facility has two production lines capable of producing 1.8 million tons of 5.5mm to 16mm diameter high-speed wire and 12mm to 38mm diameter rebar each year. The products are sold through 9 distributors targeting customers in Guangxi province and the western region of Guangdong province.

We paid RMB 50 million ($7.3 million) for the facility. The facility had been operating at approximately 10% of capacity due to, we believe, a redirected corporate focus of the previous owners.

After many rounds of difficult negotiations, on September 27, 2008 we completed a RMB 50 million ($ 7.8 million) debt waiver agreement which increased our net asset value of the subsidiary by an equivalent amount.

Operating Information Summary by Subsidiaries

                                       Baotou Steel Pipe   Longmen Joint    Maoming
                   Daqiuzhuang Metal   Joint Venture       Venture          Heng Da
Annual             400,000             100,000             2.5 million      1.8 million
Production
Capacity (ton)
Main Products      Carbon/Silicon      Spiral-weld pipe    Rebar            High-speed
                   Sheet                                                    wire
Main Application   Light               Energy transport    Infrastructure   Infrastructure
                   Agricultural                            and              and
                   Vehicles                                Construction     Construction

Stock listing

We obtained listing approval from American Stock Exchange (the "AMEX") on September 28, 2007. The stock officially started to trade on AMEX on October 3, 2007 under the ticker symbol "GSI". On March 6, 2008, we migrated from the AMEX to the NYSE Arca and officially started to trade under the same ticker symbol "GSI".

On July 25, 2008 we received authorization to list our common stock on the NYSE. On August 8, 2008, we officially migrated from the NYSE Arca to the NYSE and officially started to trade under the same ticker symbol "GSI".

Factors affecting our operating results

Demand for our products

Overall, domestic economic growth is an important demand driver for our products. Currently, China is experiencing an economic downturn from its past eight years of record growth. Never-the-less, according to estimates by Deutsche Bank, China's economy will still grow by approximately 9.9% in 2008, well above many western developed economies. Industry demand drivers for our products include construction and infrastructure growth, rural income growth and energy demand.

At Longmen Joint Venture, growth in regional construction and infrastructure projects drives demand for our products. According to the 11th Five-Year National Economic and Social Development Plan (the "NESDP")(2006-2010), development of China's western region is one of the top-five economic priorities of the nation. Shaanxi, the province where Longmen Joint Venture is located, has been designated as the bridgehead for development into the western region, and Xi'an, the provincial capital, has been designated as the focal point for this development. Our Longmen Joint Venture is 180 km from Xi'an and does not have another major competitor within a 250 km radius. According to a Shaanxi provincial government report issued on January 16, 2008, there are 150 construction and infrastructure projects scheduled to begin in the province in 2008. Major projects include six new highways, one new airport, the expansion of the Xi'an airport, a new ring subway system and three new dams. We see strong demand for our products driven by these and many other construction and infrastructure projects. We believe that there will be sustained regional demand for several years ahead as the government continues to strengthen its western region development efforts.

At Daqiuzhuang Metal, rural income growth drives demand for our hot-rolled carbon sheets. According to the Asian Development Bank statistics, well over 60% of the nation's 1.3 billion total population is comprised of low-income, rural farmers. Our steel sheets are used in the construction of light agricultural vehicles targeted for sale to low-income, rural farmers. We believe our sheets are lighter and of greater ductility than those of our competitors and are preferred by manufacturers of light agricultural vehicles. According to the 11th Five-Year NESDP (2006-2010), raising the level of rural income is a top economic and social goal for the country. Many government initiatives, including removal of certain agricultural and local product taxes, have been implemented to spur rural income development. The government expects annual rural income to grow between 5% and 10% through 2010. Transportation asset growth slightly lags behind the growth in rural net income, so we anticipate demand for light agricultural vehicles to continue to grow between 4.7% and 9.6% throughout 2010.

At Baotou Steel Pipe Joint Venture, the need to transport oil and steam drives demand for spiral-weld steel pipe. The West-East pipeline that will bring oil and natural gas from the Xinjiang Uyghur Autonomous Region to large eastern coastal cities will be the largest single demand driver for our pipes. This pipeline starts in China's far western Xinjiang Uyghur Autonomous Region and stretches 4000 km through ten regions, provinces and municipalities before it ends in Zhejiang province. Construction on the pipeline commenced in the first quarter of 2008. Lesser demand is fueled by smaller pipeline projects and municipal energy infrastructure projects.

At Maoming, infrastructure growth and business development are demand drivers for our construction steel products. Guangdong province serves as an export hub to Southeast Asia and abroad for many products produced in China, and is one of China's most economically advanced provinces. According to a National Development and Reform Commission Industrial Update issued June 23, 2008 projected annual demand for steel products in Guangdong will reach 50 million tons by the end of 2010. On June 3, 2008, the Guangdong provincial government announced plans within the Bei Shan Ling Port District, the area in which our facility is located, to build 76 new shipping terminals with an aggregate throughput of 350 million tons annually. These construction projects and other infrastructure projects in the region will be demand drivers for our products.

Supply of raw materials

Iron ore
Our primary raw materials consist of iron ore, coke, hot-rolled steel coil and steel billets. Daqiuzhuang Metal and Baotou Steel Pipe Joint Venture use hot-rolled steel coil as their main raw material. Longmen Joint Venture uses iron ore and coke as its main raw material. Maoming uses steel billets as it's raw material. Iron ore is the main raw material used to produce hot-rolled steel coil and steel billets. As a result, the price of iron ore and coke are the primary raw material cost driver for our products.

Longmen Joint Venture represents 2.5 million tons of our aggregate 4.8 million ton annual production capacity. At Longmen Joint Venture, approximately 90% of the production costs are attributable to the purchase of raw materials, with iron ore being the largest component of the purchase.

According to the China Iron and Steel Association, approximately 60% of the China domestic steel industry demand for iron ore will have to be filled by imports. At our Longmen Joint Venture, we purchase iron ore from four primary sources: the Mulonggou mine (owned by the Longmen Joint Venture), the Daxigou mine (owned by our joint venture partner), domestic sources and from imports. The Daxigou mine has 300 million tons of proven iron ore reserves, of which only less than one million tons have been excavated. According to the terms of our Joint Venture agreement with the strategic partner, we have first rights of refusal for sales and development from this mine.

We currently source approximately 80,000 tons per month of our iron ore from the Mulonggou and Daxigou mines, 70%-75% from domestic mines and remaining amount of our iron ore from imports. The Longmen JV sources iron ore from the Mulonggou and Daxigou mines below market prices due to it's shareholding relationships. In 2008, we aim to increase the quantity of iron ore sourced from Mulonggou and Daxigou mines to approximately 100,000 tons per month. We anticipate this will increase our gross margin. We believe gaining greater direct control over our key raw material supply is important for margin and secured source protection.

Coke
After iron ore, coke is our second most largely consumed raw material. It takes approximately 550 kg to 600 kg of coke to make 1 ton of pig-iron.

Our Longmen facility has the benefit of being located in the center of China's coal belt. All coke used at Longmen Joint Venture is sourced locally from the . . .