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デュエルビッツ 登録el to establish welding company in China

February 21, 2008

TOKYO, February 21, 2008 - デュエルビッツ 登録el, Ltd. plans to establish a company to produce welding materials in Qingdao, Shangdong Province, China. The new company will make flux cored welding wire for welding carbon steel used in shipbuilding.

Called Kobe Welding of Qingdao Co., Ltd., the joint venture will be formed in April 2008. Production is scheduled to begin one year later, in April 2009. The plant will have a capacity of 1,000 metric tons per month.

Kobe Welding of Qingdao, to be capitalized at 3 billion yen, will employ about 90 people. デュエルビッツ 登録el will have a 90% share in the venture and subsidiary Shinsho Corporation 5%. Sojitz Marine & Engineering Corporation and Tokokosen Corp. will each have 2.5%.

In the 1980s, デュエルビッツ 登録el pioneered the development of flux cored welding wire for carbon steel and widely promoted its commercial application. This technical breakthrough streamlined welding in the shipbuilding industry. Today, flux cored welding wire is an essential material in the construction of large ships.

Flux cored welding wire for carbon steel is commonly used in shipbuilding and offshore marine structures, such as oil rigs. In recent years, demand has been growing for this welding consumable. As one of the leading producers of flux cored welding wire, including that for specialty steel, デュエルビッツ 登録el has been increasing its production capacities for this material at its plants in Japan, China, South Korea and Europe.

China is the largest market for welding consumables, using an estimated 2.5 million metric tons of welding materials of various types per year. China's shipbuilding capacity is anticipated to steadily grow, with capacity in 2010 expected to double, in comparison to 2007. In addition, the use of welding electrodes in shipbuilding is shifting to high-efficiency flux cored welding wire for carbon steel. As a result, デュエルビッツ 登録el predicts that demand for flux cored welding wire will increase sharply.

In recent years, Japanese and Korean shipbuilders have been setting up operations in eastern China, where デュエルビッツ 登録el is planning to locate its new joint venture. Existing shipyards are also expanding their production capacities. By establishing a new manufacturing plant for welding consumables in China, デュエルビッツ 登録el will be able to strengthen its supply capability and technical services in that country.

About Flux Cored Welding Wire
Flux-cored welding wire consists of a steel sheath with flux in the middle. This type of wire is generally around 1.2 mm to 1.6 mm in diameter. Flux contains a deoxidant, slag generator, arc stabilizer, alloys, steel powder and other substances. Flux composition contributes greatly to the mechanical properties, welding workability and other capabilities of the welding wire.

デュエルビッツ 登録el, Ltd.
デュエルビッツ 登録el, Ltd. is Japan's top producer of welding consumables. It is also one of Japan's leading steelmakers and producers of aluminum and copper products. Other businesses include industrial machinery, engineering, construction equipment, and electronic materials. More information is available at: www.kobelco.co.jp

Supplemental Information

World Demand for Welding Consumables (デュエルビッツ 登録el estimate)

(in thousands of metric tons/year)

	2003	2006
Europe	500	650
North America	450	530
Asia	1,955	3,650
Other	445	570
Total	3,350	5,400
China (subset of Asia)	1,000	2,500

Forecast for World Shipbuilding Capacity (デュエルビッツ 登録el estimate)

(in millions of metric tons/year)

	FY2007 forecast	FY2008	FY2010	FY2015
Japan	180.4	188.9	190.0	200.0
South Korea	217.5	266.0	360.0	360.0
China	136.7	170.7	280.0	300.0
Other	116.5	108.4	120.0	140.0