Shed Repainting

This is a picture of the exterior of my shed out back. I'm replacing the 2x4's (in brown) and I need to address the siding (Pictured in white. What is this?!) I'm not sure what this stuff is? Nor am I sure how to recondition it? I was planning on taking a random orbital with 60 grit to it, stripping it down and smoothing it up a hair; primining; painting it?


Is this right? Step by steps?