Signing of the Agreement Concerning Hot Rolled Steel Sheet Supply， Further Strengthening of Collabor

Nippon Steel Corporation (Principal place of business: Chiyoda-ku， Tokyo， President: Akira CHIHAYA) (”Nippon Steel”) and Sumitomo Metal Industries， Ltd. (Principal place of business: Chuo-ku， Osaka， President: Hiroshi SHIMOZUMA) (”Sumitomo Metals”) agreed in February of this year to pursue collaboration to improve their respective competitiveness and， till now， have been discussing specific collaboration measures.

Sumitomo Metals has been conducting studies on the structural reform of the flat products manufacturing process of its Wakayama Works for the purpose of increasing the competitiveness of its steel business.

As a result， Sumitomo Metals has decided to cease the operation of the hot rolling mill and tandem cold rolling mill at Wakayama Works by the end of March 2005 and to concentrate the manufacturing of mass-produced flat products at Kashima Works， while concentrating the manufacturing of high-class flat products at the reversing cold rolling mill， CGL and electrical steel production line at Wakayama Works， all in an effort to achieve a more efficient flat products production.

Furthermore， in connection with the effective utilization of iron-making and steelmaking processes at Wakayama， Sumitomo Metals and China Steel Corporation (”CSC”) have agreed that slab supplies to the CSC group be expanded from the present level of 600，000 tons a year to about 1.8 million tons by fiscal 2005 and that both companies start discussions about the operation of the iron-making and steelmaking processes at Wakayama as a joint venture.

Nippon Steel and Sumitomo Metals have agreed that Nippon Steel supply to Sumitomo Metals hot rolled steel sheet which becomes necessary resulting from the stoppage of the hot rolling mill at Wakayama. Kobe Steel， Ltd. will be also supplying part of the shortage.

At the same time， Nippon Steel and Sumitomo Metals will energetically accelerate the implementation of such collaboration measures as (1) mutual cooperation for cost reduction between Kimitsu Works and Kashima Works， (2) mutual supply of iron， steel and downstream products during blast furnace refurbishment and in an emergency， and (3) mutual cooperation in the areas of raw materials， machinery and materials procurement and steel products transportation， which have been under study between both companies. Studies on tie-up measures among the two companies’ respective affiliates will also be newly undertaken.

Further， for ensuring these collaboration measures， Nippon Steel and Sumitomo Metals have signed an agreement concerning cross share holding (about 5，000 million each).

The integration of the stainless steel business， which has been discussed by the two companies， is now scheduled for October 2003.


For more information， please contact:
Nippon Steel Corporation
Public Relations Center， Corporate Secretariat Div.
Tel 81-3-3275-5022
Sumitomo Metal Industries， Ltd.
Public Relations Group， PR & IR Div.
Tel 81-3-4416-6115