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September 28th, 2011INSG, Statistics CommitteeLisbon, Portugal

September 28th, 2011INSG, Statistics CommitteeLisbon, Portugal

The Japanese Stainless Steel IndustryThe Japanese Stainless Steel Industry

Mitsui owns approximately 44,000 hectares of forest area in 73 locations across Japan. We are committed to the preservation of this invaluable natural resource through the ownership of forests.

Katsuhito (Kazu) MiyajimaGeneral Manager, Nickel DepartmentNew Metals Division,Mitsui & Co., Ltd.

Katsuhito (Kazu) MiyajimaGeneral Manager, Nickel DepartmentNew Metals Division,Mitsui & Co., Ltd.

Mitsui & Co., Ltd. in Nickel Business

• Involved in nickel business for long time

• Handles nickel trading volume of approx. 80,000 Ni MT in JFY2011 (through Domestic in Japan Export from Japan Import to Japan) (through Domestic in Japan, Export from Japan, Import to Japan) for Nickel Ore, FeNi, Nickel Metal (Cathode, Briquette, Pellet), Nickel Oxide Sinter, Nickel Powder, Nickel Chemical Products ;

Sumitomo Metal Mining (SMM), Vale, Eramet, BHPB, Impala, Jinchuan, Xstrata, Votorantim, Antam, Empress

• Investments with equity share;

- Hyuga, Japan (FeNi) : 15% since 1961 (SMM 60% NSSC 25%)

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- Coral Bay, Philippine (MS) : 18% (SMM 54% Sojitz 18% Rio Tuba 10%)- Taganito, Philippine (MS) : 15% (SMM 62.5% NAC 22.5%)- Goro, New Caledonia (NOS) : 10% (Vale 74% SMM 11% NC Govt. 5%)- Vale : 5%, through Valepar

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Current Situation (1)

300 Series Ratio with Stainless Production and LME Nickel Price

68.5% 68.0% 67.6%69.4%

3,698 3,816 3,8803,422

3,7273,6213,3573,497 3,440 3,567

2,60265.0%

70.0%

75.0%

3,0003,5004,0004,5005,000

200 Series Prouction (Right) 300 Series Production (Right)400 Series Production (Right) 300 Series Ratio (Left)

(300 series ratio, %) (Production, kM T)

Ni Series Production by Shape Cr Series Production by Shape

1,600 250 Strip

64.8%

62.0%63.1%

53.0%

58.7%52.6%51.6%

50.0%

55.0%

60.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201005001,0001,5002,0002,500,

LME NiPrice Ave

(Strip, kMT) (Others, kMT)1,600 250 Strip

(Others, kMT)(Strip, kMT)

3.92 $/lb 2.70 $/lb 3.07 $/lb 4.37 $/lb 6.27 $/lb 6.69 $/lb 11.00 $/lb 16.89 $/lb 9.58 $/lb 6.67 $/lb 9.89 $/lb

8,642 $/MT 5,952 $/MT 6,768 $/MT 9,634 $/MT 13,823 $/MT 14,749 $/MT 24,251 $/MT 37,236 $/MT 21,120 $/MT 14,705 $/MT 21,804 $/MT

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Source : Mitsui’s Estimate

0 200 400 600 800

1,000 1,200 1,400

2004 2005 2006 2007 2008 2009 20100

50

100

150

200

p

Sheetsand PlatesWire Rods

Rounds forTubesFlat

Bar

Shapes 0 200 400 600 800

1,000 1,200 1,400

2004 2005 2006 2007 2008 2009 20100

50

100

150

200

p

Sheetsand PlatesWire Rods

Rounds forTubesFlat

Bar

Shapes

Current Situation (2)Japanese Stainless Export and Import Balance by Shape (Estimated)

Strip Bar and Shapes Flat Bars Plates and Sheets Wire Rod Tubes Rounds Total

Production (2009)①

1,874,000 128,000 20,800 178,700 180,500 220,000 2,602,000

Export (2009)②

700,000 35,100 8,800 86,800 74,500 159,700 1,064,800

Import (2009)③

88,100 7,500 1,900 12,500 26,400 5,400 141,700

ApparentConsumption①-②+③

1,262,100 100,400 13,900 104,400 132,400 65,700 1,678,900

Export Ratio②÷①

37% 27% 42% 49% 41% 73% 41%

South KoreaChi Th il d

ChinaH K

China USAChi

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Source : Trade Statistics of Japan, Mitsui’s Estimate

Export toChina Taiwan Thailand Vietnam

Thailand China

Thailand China South Korea

Hong Kong Taiwan Thailand Italy

Taiwan South Korea Malaysia

China Norway Thailand UK

Import from South Korea Taiwan China

South Korea Taiwan Spain

South Korea Taiwan

South Korea Sweden China

South Korea China Taiwan

China South Korea

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Strategy of Stainless MillsStrategy of Major Japanese Stainless Mills

AICHII%

Others1%

Sanyo2%

Capacity1,200KMT

Growth Strategy304 strip → Ni free strip called FW 2（16Cr、0.3Sn、Low C・N）Duplex(23Cr, 5Ni, 3Mo, 0.15N) / High Nickel contained Plate or Wire Rods.

（Stainless division spun off from NSC and SMI into NSSC in 2003)

Capacity1,000kMT

Growth StrategyFocused on Cr series stainless instead of Ni series. Cr series stainless is mainly for Automobile industry.

Capacity700kMT

Growth StrategyInvested in Acerinox (Spain) by 15%. Bahru Stainless (J/V with Acerinox) in Malaysia plans to expand its rolling capacity up to 400kMT in 2013, aiming to have 1 mil MT melting facility in the future.

Production Share(2010)

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NSSC29%

NYK10%

Nisshin18%

SMI5%

2%

DAIDO5%

JFE19%

NMI9% 3,422kM T

(C apa:4,110kM T)

NIPPON METAL INDUSTRY

Capacity400kMT

Growth Strategy304 strip → D series stainless(Ni2.5-4.5%, Cr17.5%, Mn6%, Cu2.5%)

Capacity350kMT

Growth StrategyIncreasing high nickel alloy sales.

Source : Mitsui’s Estimate

Current Alliance

Current Alliance among Japanese Stainless Mills

Nisshin SteelNSC(80%)

1,200KMT

Share（9.17%)NSSC

1,100kMT(700k+400k)

Alliance

SMI(20%)

Share(1.03%)

Share(5.48%)

Alliance

Nisshin can order NMI to roll Hot Rolled Coilto optimize production line.

To optimize mother coil in tight situation.NSSC → Nisshin Cr Series StainlessNisshin → NSSC Ni Series Stainless. NIPPON METAL INDUSTRY

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(1,000k+350k)Nippon Yakin KogyoJFE Steel

Alliance

1,350kMT

JFE(NYK) only produce Cr(Ni) series Stainelss, sowhen Ni(Cr) order comes, they order NYK(JFE)each other.

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Nickel Demand in Japan

Nickel Demand in Japan

250 250Nickel PowderNickel Oxide Sinter/TonimetNickel MetalFeNi

(kMT, Ni basis) (kMT, Ni basis)

94

58

75

90 8885

8584

76 85

27

26

28

28 3029

2726

24

12

19

11

8

10

8 109

99

8

5

6

187

145

173

193199

186194

183

161

105

161

100

150

200

100

150

200

FeNi

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Source :Trade Statistics of Japan, Mitsui’s Estimate

55 53 60 67 71 63 73 6453

3853

50

0

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

50

Scrap Price Trend (vs. LME Nickel Price)

Scrap Price Trend (vs. LME Nickel Price)Japanese Stainless Scrap has price competitiveness, in stable manner

120% 120%Japanese Yearly Average Chinese Stainless Scrap

J St i l S NPI i

80%

90%

100%

110%

80%

90%

100%

110%

Japanese Stainless Scrap NPI price

90%87%

80% 80%

93% 94%

85%

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Source : Mitsui’s Estimate

50%

60%

70%

Jan-05

Apr-05

Jul-05

Oct-05

Jan-06

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

50%

60%

70%

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Thank you for your attention!

For contact:

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Nickels Department, Metals Division,

Mitsui & Co., Ltd.

E-mail: tkhpa@dg.mitsui.com