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									Steel Success Strategies XXI
           (2006)

           Panel I


       Presentation by

        Masato Mori
      President & CEO
   Nippon Steel U.S.A., Inc.
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                                                                                1950           1.9
                                                                                1951             2.1
                                                                                1952               2.2
                                                                                1953                  2.4
                                                                                1954                2.3
                                                                                1955                        2.7
                                                                                1956                          2.9
                                                                                1957                            3.0
                                                                                1958                         2.8
                                                                                                                                                                                                                                                                             (Hundred Million MT)




                                                                                1959                             3.1
                                                                                1960                                   3.4
                                                                                1961                                    3.5
                                                                                1962                                      3.6
                                                                                1963                                            3.9
                                                                                1964                                                  4.4
                                                                                1965                                                    4.6
                                                                                1966                                                      4.7
                                                                                1967                                                            5.0
                                                                                1968                                                                  5.3
                                                                                                                                                                                                                           P ost - Wa r G r owt h P e r i od




                                                                                1969                                                                        5.8
                                                                                1970                                                                           6.0
                                                                                1971                                                                        5.8
                                                                                1972                                                                                 6.3
                                                                                1973                                                                                           7.0
                                                                                1974                                                                                            7.1
                                                                                1975                                                                                   6.5
                                                                                1976                                                                                         6.8
                                                                                1977                                                                                         6.8
                                                                                1978                                                                                                7.2
                                                                                1979                                                                                                      7.5
                                                                                                                                                                                    7.2




Source: “Iron & Steel Statistical Directory” by Japan Iron & Steel Federation
                                                                                1980
                                                                                1981                                                                                               7.1
                                                                                                                                                                      6.4
                                                                                                                                                                                                                                                                                                    Changes in World Crude Steel Production




                                                                                1982
                                                                                1983                                                                                    6.6
                                                                                1984                                                                                               7.1
                                                                                1985                                                                                                7.2
                                                                                1986                                                                                                7.2
                                                                                1987                                                                                                  7.3
                                                                                1988                                                                                                         7.8
                                                                                1989                                                                                                          7.9
                                                                                1990                                                                                                        7.7
                                                                                1991                                                                                                 7.3
                                                                                1992                                                                                                7.2
                                                                                1993                                                                                                 7.3
                                                                                                                                                                                                                           " 7 0 0 Mi l l i on Ton s" P e r i od




                                                                                1994                                                                                                 7.3
                                                                                1995                                                                                                    7.5
                                                                                1996                                                                                                    7.5
                                                                                1997                                                                                                               8.0
                                                                                1998                                                                                                            7.8
                                                                                1999                                                                                                             7.9
                                                                                2000                                                                                                                     8.5
                                                                                2001                                                                                                                     8.5
                                                                                                                                                                                                                                                                          N ew




                                                                                2002                                                                                                                           9.0
                                                                                                                                                                                                                     9.7
                                                                                                                                                                                                                                                                          Pe ri o d




                                                                                2003
                                                                                                                                                                                                                                                                          Gro w th




                                                                                2004                                                                                                                                                                               10.7
                                                                                                                                                                                                                                                                                                                               Chart 1
                                                                                                             Chart 2
  Crude Steel Production of Major Countries

       (Million MT)
             300
                                                                                                              China, 272.5
              250


              200

                                                                      USSR
              150

                                                                                                              Japan, 112.7
              100                                                                                             U.S.A., 99.7
                                                                                                      USSR/Russia, 65.6
                                                                                           Russia
               50                                                                                            Germany, 46.4
                                                                                                              S.Korea, 47.5
                                                                                                              India, 32.6
                                                                                                               Brazil, 32.9
                 0
                     1950
                     1952
                     1954
                     1956
                     1958
                     1960
                     1962
                     1964
                     1966
                     1968
                     1970
                     1972
                     1974
                     1976
                     1978
                     1980
                     1982
                     1984
                     1986
                     1988
                     1990
                     1992
                     1994
                     1996
                     1998
                     2000
                     2002
                     2004
      Japan            China           U.S.A.          Germany             USSR/Russia   India      Brazil         S.Korea
Source: “Iron & Steel Statistical Directory” by Japan Iron & Steel Federation
   GDP Growth and Steel Consumption                                                                             Chart 3



   Correlation between GDP per capita and                              World top 10 countries in population
   apparent consumption of crude steel (2002)                                                            (hundred million people)

                                                                       CY1950                  CY2000                 CY2050
<Consumption per person>
kg, annual                                                       1. China        5.54 China         12.75 India            15.31
1,200                                                            2. India        3.57 India         10.16 China            13.95
                    Taiwan
                                                                 3. U.S.A.       1.57 U.S.A.            2.85 U.S.A.            4.08
1,000          Korea
                                                                 4. Russia       1.02 Indonesia         2.11 Pakistan          3.48
 800
                                                                 5. Japan        0.83 Brazil            1.71 Indonesia         2.93
                                             Japan
 600                                                             6. Indonesia    0.79 Russia            1.45 Nigeria           2.58
                                  Germany
                                                                 7. Germany      0.68 Pakistan          1.42 Bangladesh        2.54
 400
                                               USA               8. Brazil       0.53 Bangladesh        1.37 Brazil            2.33
China
 200                                      France                 9. U.K.         0.49 Japan             1.27 Ethiopia          1.70
India                                                           10. Italy        0.47 Nigeria           1.14 Congo             1.51
   0
        0   5,000   10,000 15,000 20,000 25,000 30,000 35,000
                                              $US, annual                                               ( Source: United Nations)
                                          <GDP per capita>
                                                                              : Asian Countries
                                                                              : African Countries
International Comparison of Energy Efficiency in
                                                                                                                      Chart 4
Integrated Steel Mills (2003)


                                                                                                               150
     150
     140
                                                                                                      130
     130                                                                             125
                                                                    120
     120
                                                  110
     110                        105
              100
     100
      90
                                                                                                      Key All
                                                                                                    producers
             Japan             Korea             EU                USA               Russia            China
    Source: JISF (2003)
    Note: Estimate based on IISI data and bilateral communications between JISF and its counterparts, such as Korea
                 Iron and Steel Association, China Iron and Steel Association etc.
Reduction in Energy Unit Consumption of Japanese                                                                     Chart 5
Steel Industry (Base Year: FY 1990)

     102.0
              100.0
              (100.0)
     100.0

                                                  97.6                                  ▼7.3%
                                                                               7.3% Reduction
      98.0                                     (107.4)

                                                                                    95.2
      96.0                                                                          (98.1)
                                                                                                  93.9
                                                                                                  (95.0)
      94.0                                                                            94.8
                                                                                     (100.1)
                                                                                                  93.1
      92.0
                                                                                                  (94.9)     92.7
                                                                                                             (94.5)

      90.0
                90 (年度)                             95                              2000   2001    2002    2003   2004


    Notes: Unit consumption of energy = energy consumption/crude steel production
             The figures are corrected by production conditions in FY 1990.
Reduction of SOx, NOx and Dioxin Emissions                         Chart 6
(Case of A Japanese Steel Company)


                        (Unit:106Nm3)                         (Unit:106Nm3)

60                                      40
              ● SO x Emissions                      ● NO x Emissions

40                86% Reduction                        42% Reduction
                                        20

20


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● Dioxin   Emissions: 95% Reduction / FY 1997 8135g-TEQ → FY 2003 404g-TEQ
  Japanese Steel Industry Investments in Energy Saving                                                                      Chart 7
  and Environmental Preservation
     \ 3 trillion (FY 1971 ~ FY 1989)
    \ 1.5 trillion (FY 1990 ~ FY 2004)
                    20% Energy Saving Achieved                                   10% Energy Saving Targeted
 (\100 million)
  ( 億円)                                                                                                                         ( 億円)
    3,500                                                                                                             45,000
                                                                                                                      40,000
    3,000
                                                                                                                      35,000
    2,500
                                                                                                                      30,000
    2,000                                                                                                             25,000

    1,500                                                                                                             20,000
                                                                                                                      15,000
    1,000
                                                                                                                      10,000
      500
                                                                                                                      5,000
         0                                                                                                            0
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                                                                                                                    ( 年度)

        Energy               省エネ
                          Environ.          環境       環境・省エネ
                                            Environ/Energy                 投資額累計(右目盛)
                                                                         Cumulative Total Investments (Right Scale-¥100 million)

Sources: Through FY 2001- “Capital Spending Plans of Major Industries” FY 2002 and later years-“Capital Spending Survey” in Japan
Note: Due to a change in the sources, the definitions of survey items changed in FY 2002 and subsequent years, making them incompatible
      with previous years.
Japan China Exchange Conference (July 2005)                                               Chart 8


The Japan China Steel Industries Conference on Exchange of Advanced Technologies on
Environmental Preservation and Energy Saving.
(Co-sponsored by the Japan Iron and Steel Federation and the China Iron and Steel Association)




          Memorandum (Main Points Agreed Upon)
          ・Recognize the importance of continuing to promote exchanges concerning
           environmental preservation and energy saving from the standpoint of more
           effective use of resources and the preservation of the global environment.
          ・Carry out exchanges of information and experts on environmental
           preservation and energy saving on a continual basis.
Energy Savings Achieved in Asia through Technology Transfer                                 Chart 9
from Japanese Steel Industry (Converted to CO2 Reduction)
 ■ NEDO Energy-saving model projects (13 cases) implemented through 2003 have resulted in
   reduction of approximately 500,000 tons-CO2 per year.
 ■ Other projects by Japanese steel industry (7 cases) produced reduction of
   approximately 900,000 tons-CO2 per year.

         NEDO Projects (13)
          Other Projects (7)

                                                                   58
                                          29           31

                                                                   Korea
                                               China


                   2       India




                                   Thailand
                                                  7
                                                                   Malaysia
                  (Unit:10,000 ton-CO2)                     10
Nippon Steel’s Product Development for Automotive                                                                       Chart 10



                                                  Body, Suspension and Wheel
                                                                                                    Sn-Zn Coated Sheet for Fuel Tank
                                                                    Body                            Zn-Ni Coated Sheet for Fuel Tank

                                                                                                              440 HSS for Exposed
                                                                                                                    Panel
 Bakehardenable Steel
 BH Steel for Export
                                                                                                              Phase Controlled GA


                                                                                                              L-Treatment GA
           TRIP HSS
                                                                                                        1470 HSS Pipe
            DP HSS

                                                                                                        HSS for Induction Hardening
     980, 1180 Ultra-HSS
                                                                                                   Aluminized Sheet for Hot Stamping

                                                                  Power Train
     780 High Stretch Flangability HSS
                                                                                                    Electrical Sheet for Hybrid Vehicle

                                Suspension
                                                                                780 HSS for Wheel Rim

    NSC commercialized the products in hatch ahead of
    competitors and is maintaining top share in Japan.                          DP HSS for Wheel Disc
                                                          Wheel
Top Market Share for High Value-Added Products in Japan                                                  Chart 11


Differentiates from competitors by providing wide range of high value-added products

 Specialized thin steel sheets        Galvanized steel sheets
                                          ブリキ
        特殊鋼薄板                            for automobiles
                                                                                All products
 (High tensile strength steel)

                                                                                          Nippon Steel
                                                                                          approx. 25%
              Nippon Steel                      Nippon Steel
              approx. 50%                       approx. 40%




                                                                                             Heavy plates
         Rails
          軌条                            電磁鋼板
                                     Electrical steel           Tin &TFS                    For shipbuilding




                                                                     Nippon Steel                     Nippon Steel
                                                 Nippon Steel                                         approx. 35%
                                                 approx. 50%         approx. 40%

         Nippon Steel
         approx. 65%



                    (Source: Order Inflow Statistics, 2004)     * Note: Market share based on non-consolidated account
   Asian Market Growth Potential in High Value-Added                                                                                  Chart 12
   Products
       Increased production by Asian users of high                            Growth of Auto Production in Asia (03⇒08)
      value-added steel (exc. Japan) ( FY 02⇒FY 05)
                                                                            (10,000 Units)
           Containers                                                                               2003         2008          03→08         Change
                                           Refrigerators
              9%
                                           27→34million units +26%          Asia                (35%) 2,125 (39%) 2,831       (+4%)706         +33%
Cargo Containers          Home                                              U.S.A./Europe               3,499     3,828              329        +9%
                                           Washing machine
   /rails 9%            appliances                                          Others                       504          581             77       +15%
                                           24→35million units +46%
                          21%
 Precision                                                                  World Total                 6,128     7,240          1,112         +18%
equipment                                  Air conditioners
                         Automotive
   11%                                     34→40million units +18%                        Growth of Shipbuilding in Asia
                            19%
                                           Automobile
  Energy         Shipbuilding                                                       (10,000 Units)
                                           8→12million units +50%           5,000
   13%               18%                                                                                                                            Other
   (Estimate, 2003)                        Shipbuilding
                                           17→23million GT +35%             4,000
                                                                                                                                       China

       Production share in East Asia (%, 2003)                              3,000

             9                                             10   Other
                                                                                                                                                     Asia
                                 67                                         2,000

                                                                East Asia                                                     Korea
            91                                             90
                                                                            1,000
                                 33
                                                                                                                              Japan
      Air Conditioner         Automobile             Shipbuilding              0
                                               (Index; Worldwide=100%)              '70   '75     '80     '85   '90     '95    '00     '05    '10
                                                                                                                                   Chart 13
World Crude Steel Production (2005)

           Production by country                                                       Production by company
 (million metric tons)                                                                        Crude Steel Output Ranking (million metric tons)

                                                                        1        Mittal Steel (Netherlands)                         63.0*
        Worldwide total ; 1,132 (2005)
                                                                        2           Arcelor (Luxemburg)                             46.7
                Others
                                                                        3            Nippon Steel (Japan)                           32.0
                                                     2005
        Russia,C 96                                                     4                POSCO (Korea)                              30.5
          IS                                         Asia
          111                   China                 567               5               JFE Steel (Japan)                           29.9
                                 China
                                  349               (51%)               6       Shanghai BaoSteel (China)                           23.8
                                   349
                                (31%)
    America                      (31%)
                                                                        7                  US Steel (US)                            19.3
     172
                                                                        8                    Nucor (US)                             18.4
                                 Japan
                             Japan
                               112 112               2004               9                    Corus (UK)                             18.2
        Europe(                  (10%)
                             (10%)
                    Asia-    Korea                   Asia              10                    Riva (Italy)                           17.5
        EU25)18            Korea
           6
                    Others
                            50 50
                                                      485
                      56                            (47%)             Total:                                                   1, 131.8




                  (Source: International Iron and Steel Institute)   * Converted to annual base number, including ISG, Krivorizhstal and Valin.
Overseas Strategic Business Alliance Network and Key JVs                                                                       Chart 14


                                                                                                       Manufacture JV of Cold-rolled
                                               Strategic Alliance Extended for
                                                                                                       sheets in north America
                                               Another 5 Years (2006-2010)
         Joint Research                      Joint Research                                                        I/N Tek
                                                                                                                                    JV Partner
(steel sheets for automobiles) (technology for steel steel making process)                                         CR 1,650

                                                                                                 40%
          Arcelor                                        POSCO                                                  I/N Kote           Mittal Steel
                                                                                                                                     U.S.A.
                                                                                                 50%          CG 500, EG 400
                                                                  3%
                      JV with Bao steel                                                                Manufacture and sales JV of Coated
                       (from Apr.2005)                                                                  sheets for Auto in North America
                        CR 1,760, CG 800                 38%       Nippon Steel
Manufacture and sales JV of cold-rolled and
                                                                                                                              JV Partner
 hot-dip galvanized steel sheets in China
                                                          61%            36%
                                                                                                        21%
                                                                                                                              UNIGAL
                      Siam Nippon Steel Pipe                      Siam United Steel
                                                                                                                               CG 400
                       Electric resistance welded pipe                 CR 1,000
                  Manufacture and sales JV of                                                                     Manufacture JV of Hot-dip
                                                                Manufacture and sales JV of
                  Pipe for machinery in Thailand                                                                  galvanized sheets for Auto
                                                                Cold rolled sheets in Thailand
                   Jan.07, start up subsidiary to increase                                                            in South America
                     production capacity in Indonesia

           Strategic alliance                                              Capturing growth opportunities as well as
           JV with Nippon Steel
           (% of capital investment)
                                                                              delivering technology innovations
                                                                                                                   (Unit: thousand tons)

								
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