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Chinese Stainless Steel Market Potential Growth and Impact

2. Contents. About Nisshin Steel Co., Ltd.World Stainless Production and China - China Market Outlook -Supply

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Chinese Stainless Steel Market Potential Growth and Impact

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    1. 1 Chinese Stainless Steel Market Potential Growth and Impact AMM China Impact & Outlook 24 - 26 October , 2005 Vancouver Fairmont Waterfront Hotel Fumio Oda Managing Executive Officer Nisshin Steel Co., Ltd.

    2. 2 Contents About Nisshin Steel Co., Ltd. World Stainless Production and China - China Market Outlook - Supply & Demand Update Supply & Demand Gap China’s Import & Export Energy, Raw materials & Macro Control Possible Scenarios Nisshin’s Activities

    3. 3 About Nisshin Steel

    4. 4

    5. 5 Nisshin’s Production Volume & Products Mix

    6. 6 World Stainless Steel Production & China

    7. 7 World Production of Stainless Steel (Crude Steel)

    8. 8 China Market Outlook

    9. 9 Supply & Demand Update Capacity Update

    10. 10 Major Production Capacity TISCO (State owned) Baosteel Group (State owned) - Shanghai No.1 (Flat) & No.5 (Long) - Ningbo Baoxin (Nisshin’s Joint Venture) - SKS (TKS’ Joint Venture) - Others (STAL etc) ZPSS & QPSS (POSCO’s Joint Venture) LISCO (YUSCO’s Project)

    11. 11 Capacity (Cold Rolled)

    12. 12 Capacity (Melting)

    13. 13 Supply & Demand Update Demand Update

    14. 14 Demand

    15. 15 Supply & Demand Gap

    16. 16

    17. 17

    18. 18 China’s Import & Export

    19. 19

    20. 20

    21. 21

    22. 22

    23. 23 Energy, Raw materials & Macro Control

    24. 24 Energy Electricity - 70% of Electricity comes from coal-fired power plant. - “Energy Mix Strategy (Increase Nuclear power, Natural gas power)” take effect only in 2020. - 2004 Summer : 30 Million kilo watt shortage - 2005 Summer : 25 Million kilo watt shortage Oil : Turned to be Net Importer - 2004 : Crude oil import reached 117Mil T

    25. 25 Raw Materials Chromium - China changes to net importer. - 2004 FeCr import 277 thousand tons. Nickel - Strong demand from Chinese Melting Shop. - China demand of Nickel reached 140 thousand tons level in 2004.

    26. 26 Macro Control Influence Cool down overheated steel investment. Chinese Central Government restricts new Stainless Steel project license. Restriction for less efficient small mills. EF Below 10MT/Charge:Not allowed. Tight money policy. - Interest increase. - Money supply slow down.

    27. 27 Possible Scenarios

    28. 28 Possible Scenarios Likely As explained in this presentation. 2.Pessimistic Lower Demand Growth & High level production. Market confusion 3.Optimistic Higher Demand Growth & Lower Production. Market will be stabilized.

    29. 29 Possible Scenarios 2.Pessimistic 2-1. Demand growth lower than expected. (Macro Control Influence etc.) 2-2. Chinese mills keep high level production. 2-3. Chinese mills increase export volume. 2-4. Trade Friction may arise. 2-5.Big confusion of World Stainless Steel Market.

    30. 30 Possible Scenarios 3.Optimistic 3-1. Higher demand growth than expected. 3-2. Mills production lower than expected. (e.g. Energy shortage, Insufficient raw materials, Macro Control Influence etc) 3-3. Supply & Demand Gap narrower than expected. 3-4. Price recovers gradually. 3-5. Market will be stabilized.

    31. 31 Nisshin’s Activities

    32. 32 Nisshin’s Activities To prepare for Global Competition, Nisshin will go for High Value added market - such as Special Ferritic & Austenitic Grades. From Commodity products to High Value added products. To meet requirement from Japanese Transplants, Nisshin starts providing special grade hot coils to North American Stainless. They produce finished products on behalf of Nisshin. Similar scheme at Baoxin Stainless in China.

    33. 33 Nisshin’s Overseas Activities(1) 1. Stainless Steel Investment in Steel Mills Acerinox (11.09%) Baoxin (21.9%) (2) Invest in Pipe Mills Nisshin Auto Tubing (USA) (75%) Tubificio Terni (Italy) (3%) (3) Technical Assistance to Mills Acerinox, North American Stainless, Columbus, YUSCO(Taiwan), POSCO (Korea), BNG (Korea), Jindal (India), TISCO (China), Otelinox (Rumania),

    34. 34 Nisshin’s Overseas Activities(2) 2.Coated Steel (1) Invest in Steel Mill Wheeling-Nissin Inc.(64.3%) 3. Coil Centers in China Tianjin Rihua Steel Products (10%) (2) Chang Fu Stainless Center (40.5%)

    35. 35 Nisshin’s Overseas Activities(3)

    36. 36 Nisshin’s Overseas Activities(4)

    37. 37

    38. 38 Thank you for Your attention

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