© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
5401: JPNSSMY: ADR (US)
October 27th, 2017
• ‘NIPPON STEEL & SUMITOMO METAL CORPORATION’ is abbreviated as ‘NSSMC’• All volume figures are presented in metric tons• Unless otherwise noted, all financial figures are on a consolidated basis
Notes on this presentation material
Second Quarter FY2017Earnings Summary
Katsuhiro MiyamotoManaging Executive Officer
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Agenda 2
1. FY2017 1H Results & Full Year Forecast
2. Progress in Mid-Term Management Plan
3. Appendix
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
3
1. FY2017 1H Results & Full Year Forecast
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Overview: FY2017 1H Results & Full Year Forecast 4
Business Environment
Topics
Financial Highlights
Domestic: Economy is expected to maintain a moderate recovery, supported by stable private consumption and capital investment, despite some restraint in business activities caused by labor shortages. Demand for steel will stay firm, led principally by demand in the automotive sector.
Overseas: Overall moderate conditions will continue, supported by favorable business conditionsin USA and Europe, sustained firm conditions in China, and ongoing gradual economic recovery in developing countries.
Commodity Price: Prices of commodities such as alloy and scrap have surged this year to date. Sales price: Keep negotiating to improve the metal margin for sustainable reproduction.Technological superiority: Japanese Ministry of Trade, Economy and Industry honors NSSMC with award for
Yawata works’ newly-developed Eco-friendly stainless steel manufacturing process. This process enabled 100% recycle of stainless steel scraps generated in Yawata works.
Application of IT: NS Solutions launched the Artificial Intelligence R&D center in its Systems R&D center . Asset compression: Sellout of SUMCO shares. Ownership ratio 13.42→7.92%. Sales 27.8 bn¥. (Oct,17)
FY2017 1H FY2017 (E)Ordinary Profit (bn ¥) 157.6 (ROS 5.7%) 300.0 (ROS 5.4%)
Net Profit (bn ¥) *1 99.1 (¥112.3/share) 170.0 (¥193.0/share)
Profit attributable to owners of parent*1
Interim dividend: ¥30.00/share(+¥5.0 from the prev. forecast as of Jul.28)
Consolidated payout ratio: 26.7%
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
11.0
119.999.1
70.9
0.8%
8.6% 6.6%
16/1H 16/2H 17/1H 17/2H(E)
28.0
146.5157.6 142.41.3%
5.9% 5.7% 5.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
16/1H 16/2H 17/1H 17/2H(E)
2,160.7 2,472.0 2,745.0 2,855.068.0
77.183.5 85
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
16/1H 16/2H 17/1H 17/2H(E)
107 110 111
21.51 21.11
20.09
21.50
19.68 20.09
18.72
20.30
16/1H 16/2H 17/1H 17/2H(E)
*1
FOREX$・¥
Key Indicators: FY2017 1H Results & Full Year Forecast 5
ROS
Ordinary Profit Net ProfitROE(annualized)
Profit attribute to owners of parent
bn¥
bn¥
MMT
Avr. Steel Selling Price
Crude Steel Production
Steel Shipments
Volume Sales
bn¥
MMT k¥/t
*2*1 Non-consolidated+Nippon Steel & Sumikin Koutetsu Wakayama Co.
*2
110
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1,808
2,891
2,511
2,933
1,904
3,430
2,259
3,198
1,920
3,0002,780
3,300
1Q 2Q 3Q 4Q1,000
1,500
2,000
2,500
3,000
3,500
4,000 2015 2016 2017
* *1.10
1.23
1.14
1.47
1.08
1.23 1.19
1.58
1.20 1.25 1.20
1.43
1Q 2Q 3Q 4Q1.00
1.20
1.40
1.60
1.80
2015 2016 2017
* *
Key Indicators of Domestic Steel Demand 6
Finished Auto Production (million units) Non-Residential Construction Starts (million m2)
Auto Sales (million units) Public Works Orders (¥ in bn)
*
2.17
2.28
2.35 2.39
2.11
2.31
2.40
2.55
2.30 2.39 2.43
2.49
1Q 2Q 3Q 4Q2.00
2.10
2.20
2.30
2.40
2.50
2.602015 2016 2017
* *
13.68
12.80
12.02
11.49
13.59 13.20
12.47 12.07
13.90 13.25 13.25
12.50
1Q 2Q 3Q 4Q10.00
11.00
12.00
13.00
14.00
15.002015 2016 2017
**
Figures as of the end of August*
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
12.3Q-12.4Q
13.1Q
13.2Q
13.3Q
13.4Q14.1Q
14.2Q
14.3Q
14.4Q
15.1Q15.2Q
15.3Q
15.4Q
16.1Q ’16.2Q’16.3Q
‘16.4Q
17.1Q
‘17.Jul.-Aug.
-6
-4
-2
2
4
6
8
-8 -6 -4 -2 0 2 4 6
0.5 0.50.4
0.50.6
0.50.5 0.5 0.5 0.5 0.5 0.6 0.5
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H Jul. Aug.
CY2012 CY2013 CY2014 CY2015 CY2016 CY2017
Domestic Steel Supply-Demand 7
3.92
4.32 4.26 4.18 4.03
3.91
4.05 4.08
4.01 3.95
4.14
0.0
0.5
1.0
1.5
3.00
4.00
5.00
'13/
03 06 09 12
'14/
03 06 09 12
'15/
03 06 09 12
'16/
03 06 09 12
'17/
03 06 08
Rolled sheets inventory (Left axis)Ordinary steel products inventory turnover ratio (Right axis)
Rolled Sheets Inventory*2(MMT)
Steel Imports by Region (MMT/Month) Steel Inventory Cycle
RecoveryAdjustment
Increase↑
DomesticOrdinary
SteelInventory
(YoY increase(%))
↓Decrease
Decrease← Ordinary steel shipped domestically →Increase(YoY increase (%))
Excessive Accumulation
Decrease
Steel Consumption (MMT)
China
Korea
Taiwan
Hot-rolled, Cold-rolled and Coated sheets*2
(Times)
15.2 15.4 15.4 15.0
14.8
15.5 16.0
15.6 15.3 15.616.0
15.6
1Q 2Q 3Q 4Q12
13
14
15
16
172015 2016 2017
*1
Figures as of the end of August*1
*1
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
2013 2014 2015 2016 20170%
5%
10%
15%
20%
25%
30%
Key Indicators of Steel Demand Overseas 8
Rig Counts
997
1,094 1,167
1,234 1,296
1,337 1,167
955 948 1,089
1,546
1,875 1,919 1,761 1,862
977 510
859
249 249 395 324 326 354
205 126 221
0
500
1,000
1,500
2,000
2,500
CY2009
CY2010
CY2011
CY2012
CY2013
CY2014
CY2015
CY2016
足下('17/9)
International (excluding U.S., Russia, China)U.S.Deep Well (included in U.S. total)
latest(Sep.’17)
Fixed Asset Investment in China(ratio of growth over the previous year)*
Construction Spending in USA (bn$/Y)
Fixed Asset Investment
(PrivateInvestment)
(Real EstateInvestment)
(GovernmentInvestment)
(Source: National Bureau of Statistics of China)
(Sep.’17)
(Source: Baker Hughes)Calculated by using cumulative figures from Jan. in each year
*
( ): included in Fixed Asset Investment
Manufacturers' New Orders in USANondefense Capital Goods Excluding Aircraft (bn$/M)
2013 2014 2015 2016 201759
61
63
65
67
69
71
2013 2014 2015 2016 2017280
330
380
430
480
530
Residential
Non-residential
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Crude Steel Production: Sharp increase since Spring 2017. Stable domestic demand and substitutional production foreliminated illegal induction furnaces which were out of statistics.
Inventory: Restocking in preparation for strong demand in fall and production cut in winter. Export: Downtrend since 2016. Jan. - Sep., 2017 vs. the same period of 2016 : -31% . Market Prices: Mar. - Aug, 2017: Upward trend. Early Sep.: Soft patch after one-off surge by Benxi BF trouble.
After National Day holiday(1-8th Oct.): Rebound & uptrend.
China’s Steel Supply-Demand & Market Trend 9
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
2.3
2.4
2.5
0.0
0.5
1.0
1.5
2.0
2.5
1 5 9 1 5 9 1 5 9 1 5 9 1 5 9
CY13 CY14 CY15 CY16 CY17
Long Product Inventory(left axis)
Flat Product Inventory(left axis)
(MMT)Ave. Daily Crude Steel Production
(right axis)
4.7
5.2 5.2 5.0
6.0
7.3 7.9
9.3
8.4 8.7
10.0 9.6 9.1
9.6 9.2
7.7
6.8 6.6
6.8 6.3
5.0
0
2
4
6
8
10
1-3
7-9
1-3
7-9
1-3
7-9
1-3
7-9
1-3 7 9
CY13 CY14 CY15 CY16 CY17
Pipe
Long ProductExport
Flat Product Export
(MMT/month)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
100
200
300
400
500
600
700
800
10 1 4 7 10 1 4 7 10 1 4 7
2014 2015 2016 2017
China HC(right axis)
China DB(right axis)
East Asia HC(left axis)
Raw Material Cost /t INDEX*
($/t) (CNY/t)
China’s Export by Product Hot Rolled Sheets Prices by Region
Calculated by Iron Ore Market Price x 1.7 + Coal Market Price x 0.9*(Source: Japan Steel Association, SteelHome, CISA, MYSTEEL, NSSMC, etc.)
(MMT/day)
Crude Steel Production & Channel Inventories in China
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
World Steel Demand Forecasts 10
WSA World Steel Demand Short Range Outlook
1,515
1,535 1,548
1,578
1,6221,648
2016 2017(E) 2018(E)
as of Apr.17
Estimatesas of Oct.17
Estimatesillegal induction furnaces
+44MMT
+26MMT
+13MMT+20
MMT
398.7401.5
406.2398.8
408.1412.0
2016 2017(E) 2018(E)
+9.3MMT
+3.9MMT
+4.7MMT
+2.8MMT
681.0 681.0 667.4
743.4
765.7 765.7
2016 2017(E) 2018(E)
Illegal induction furnaces 62.4MMT
+22.3MMT
+0.0MMT
▼13.6MMT
+0.0MMT
435.3
452.7
474.9
436.0448.2
470.4
2016 2017(E) 2018(E)
+22.2MMT
+12.2MMT
+17.4MMT
+22.2MMT
(MMT)
*Illegal induction furnaces (out of statistics) CY2014:52.4MMT, CY2015:57.6MMT, CY2016:62.4MMT
2017 2018
World Developed Em.andDev. China World Developed Em.and
Dev. China
Oct.17 3.6 2.2 4.6 6.8 3.7 2.0 4.9 6.5
Jul.17 3.5 2.0 4.6 6.7 3.6 1.9 4.8 6.4
Apr.17 3.5 2.0 4.5 6.6 3.5 2.0 4.8 6.2
Cf. IMF World Economic Outlook Projections (%)
Emerging and Developingexcl. China
China
DevelopedWorld
(Source: World Steel Association, IMF)
“Upward revision: Ongoing moderate growth”◆CY2017 +44MMT (vs.CY2016)Expanding demand in the global steel market. Higher performance than expected for both developed and developing economies except MENA.◆CY2018 +26MMT(vs.CY2017)Increase in global steel demand for 3 consecutive years despite leveling offin Chine.
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Raw Materials and HC Price Trend 11
Hard Coking Coal Price (US$/wmt)
Fine Iron Ore Price (US$/dmt)
50
100
150
200
250
300'1
3/2Q
'13/
3Q
'13/
4Q
'14/
1Q
'14/
2Q
'14/
3Q
'14/
4Q
'15/
1Q
'15/
2Q
'15/
3Q
'15/
4Q
'16/
1Q
'16/
2Q
'16/
3Q
'16/
4Q
'17/
1Q
'17/
2Q
'17/
3Q
Contract Price
Market Price
$309 $314
$150
30
50
70
90
110
130
'13/
2Q
'13/
3Q
'13/
4Q
'14/
1Q
'14/
2Q
'14/
3Q
'14/
4Q
'15/
1Q
'15/
2Q
'15/
3Q
'15/
4Q
'16/
1Q
'16/
2Q
'16/
3Q
'16/
4Q
'17/
1Q
'17/
2Q
'17/
3Q
(Source: LME, Bloomberg, Japan Metal Daily)
East Asia HC ($/t)
Domestic HC (k¥/t)
350
390
430
470
510
550
590
630
16/2
Q
16/3
Q
16/4
Q
17/1
Q
17/2
Q
17/3
Q
5759616365676971737577
16/2
Q
16/3
Q
16/4
Q
17/1
Q
17/2
Q
17/3
Q
(2.3×4×8)
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
8090
100110120130140150160170180
'16.
01
'16.
04
'17.
01
'17.
04
'17.
10FY16 FY17
HC FeCr(US¢/lb-Cr)
660
760
860
960
1,060
1,160
1,260
1,360
1,460
'16.
01
'16.
04
'17.
01
'17.
04
'17.
10FY16 FY17
HC FeMn(75%)(US$/t)
Commodity Price Hike 12
1,450
1,650
1,850
2,050
2,250
2,450
2,650
2,850
3,050
3,250
'16.
01
'16.
04
'17.
04
'17.
10
FY16 FY17
LME(US$/t)
1,420
1,520
1,620
1,720
1,820
1,920
2,020
2,120
'16.
01
'16.
04
'17.
04
'17.
10FY16 FY17
LME(US$/t)
(Source : LME, Bloomberg, Japan Metal Daily)
Manganese
Chromium
Scrap
Freight
Zinc
Aluminum
12
17
22
27
32
37
160
200
240
280
320
360
'16/
01
'16/
04
'17/
04
'17/
10
USA Scrap(No1HMS)(US$/t, CIF Korea)(Left axis)
Iron Scrap Bid Prices in Kanto Region(k\/t)(Right axis)
FY16 FY17
(US$/WMT, Cape size 170 thousand tons hull form)
2
6
10
14
18
22
'16/
01
'16/
04
'17/
04
'17/
10
From Brazil
From Western Australia
FY16 FY17
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]
10.49 10.76 21.26 20.89 42.15 9.92 10.13 20.20 20.05 21.40 41.50 -1.21 -0.15 +1.35 -0.65
11.16 11.53 22.70 22.47 45.17 11.44 11.69 23.50 23.12 24.80 47.90 +0.43 -0.38 +1.68 +2.73
10.58 10.93 21.51 21.11 42.62 9.90 10.19 20.40 20.09 21.50 41.60 -1.42 -0.31 +1.41 -1.02
9.60 10.09 19.68 20.09 39.78 9.34 9.39 19.40 18.72 20.30 39.00 -0.96 -0.68 +1.58 -0.78
0.24 0.23 0.47 0.46 0.93 0.24 0.25 0.46 0.49 0.50 0.99 +0.02 +0.03 +0.01 +0.06
111 103 107 110 109 111 111 110 111 110 110 4 1 1 1
424343
68.1 67.9
42
77.1
43
68.0
FY16
72.6
FY17 Change16/1H
vs.17/1H
17/1H[E]vs.
17/1H
17/1Hvs.
17/2H[E]
FY16 VS.
FY17[E]
84.0 83.0 83 83.5
42 42 41 42
+1185 84 +15.5 +0.5 +1
-1 +1 -1 -141 41
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
approx. approx.
NSSMC Operational Highlights 13
Forex ($・¥)
(million tons)
Pig-iron production
Consolidated Crude Steel Production
Non-ConsolidatedCrude Steel Production
Steel Shipments
Seamless PipeShipments
Average Steel Selling Price (1,000 yen/ ton)
Steel Export Ratio(Value basis (%))
Includes pig-iron production of Hokkai Iron & Coke corp. and Nippon Steel & Sumikin Koutetsu Wakayama Co.
Depreciate
*2*1
*1
*2
Includes crude steel production of Nippon Steel & Sumikin Koutetsu Wakayama Co.
Depreciate Appreciate Depreciate
*3 Figures as of July 28, 2017
*3
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1Q 2Q 1Q 2Q
1,051.1 1,109.6 2,160.7 2,472.0 4,632.8 1,355.4 1,389.6 2,700.0 2,745.0 2,855.0 5,600.0 +584.3 +45.0 +110.0 +967.2
(7.3) 25.2 17.8 96.3 114.2 66.5 33.4 99.9 +82.1
(12.0) 40.0 28.0 146.5 174.5 107.9 49.6 150.0 157.6 142.4 300.0 +129.6 +7.6 -15.2 +125.5
(6.2) (2.9) (9.1) 16.2 7.1 - (2.9) (2.9) +6.2
(14.6) 25.6 11.0 119.9 130.9 71.3 27.8 85.0 99.1 70.9 170.0 +88.1 +14.1 -28.2 +39.1
[(16.4)] [ 29.1 ] [ 12.4 ] [135.9] [148.0] [80.8] [31.5] [ 96.0 ] [112.3] [80.7] [193.0] [+99.9] [+16.3] [-31.7] [+45.0]
64.1 99.0 163.0 255.9 418.9 148.0 113.2 261.2 +98.2
6.1% 8.9% 7.5% 10.4% 9.0% 10.9% 8.1% 9.5% +2.0%
-1.1% 3.6% 1.3% 5.9% 3.8% 8.0% 3.6% 5.6% 5.7% 5.0% 5.4% +4.4% +0.2% -0.8% +1.6%
-2.2% 3.9% 0.8% 8.6% 4.6% 9.6% 3.7% 6.6% +5.8%
1H
FY16FY16 VS.
FY17[E]
Change17/1H
vs.17/2H[E]
17/1H[E]vs.
17/1H2H
16/1Hvs.
17/1H1H1H[E] 2H[E] [E]
FY17
FY2017 1H Results & Full Year Forecast 14
(¥ in billions)
Net Sales
Operating Profit
Ordinary Profit Extraordinary Profit
(Loss)
Net Profit
[ EPS ]
EBITDA
ROS
EBITDA / Sales
ROE
*1
Profit attribute to owners of parent*1*2
*2
Figures as of July 28, 2017
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Extraordinary Profit & Loss 15
1Q 2Q 1Q 2Q
(6.2) (2.9) (9.1) 16.2 7.1 - (2.9) (2.9)
Gain on sales of shares of subsidiaries and associates - - - 24.1 24.1 - - -
- - - 10.0 10.0 - - -
Loss on inactive facilities - (2.7) (2.7) (10.0) (12.7) - (2.9) (2.9)
Loss on disaster - - - (7.8) (7.8) - - -
Restructuring Loss (6.2) (0.2) (6.4) - (6.4) - - -
1H(¥ in billions)
Extraordinary Profit (Loss)
FY17
1H2H
FY16
Gain on step acquisitions
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(Adjustment Page) 16
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
28.0
157.687.0 -29.0
-279.0+249.0
+12.0 -10.0 -15.0 +14.0 +59.0+10.0
97.6
Ordinary Profit Variance Analysis [FY16/1H vs. FY17/1H] 17
(¥ in billions) FY16/1H[A]
FY17/1H[B]
Change[A→B]
Ordinary Profit 28.0 157.6 +129.6Steel 14.0 128.7 +114.7
Non-Steel 13.4 23.2 +9.8
Adjustment 0.4 5.6 +5.2
FY161H FY17
1H
*2
*3
*6*5
*7
PositiveNegative
Exclude Inventory Valuation Impact Exclude Inventory
Valuation Impact
*1
*1
*8
Volume
Raw MaterialPrices
Cost Reduction Others Forex
Group Companies
Non-Steel*4
Oita Works’ Fire Accident
Inventory valuation: +119.0 (-59.0 → 60.0) Crude steel production: -1.42MMT (21.51→20.09)Steel shipment: -0.96MMT (19.68→18.72)
* Figures above incl. impacts of Oita Plate Mill fire accident, but not incl. impacts on earnings.
Incl. carry overBoth volume decrease & cost increaseIncrease in depreciation etc. Stock: +19.0 (-20.0→ -1.0) Flow: -5.0Mining interests, Nisshin Steel, Business overseas etc.Engineering +0.4, Chemicals +8.5, New Materials +0.4, System Solutions +0.4
*1
*2
*3
*4*5
*6
*7*8
*2
Steel Prices &Product Mix
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
150.0 100.0 97.6 157.6
-16.0 -6.0 +4.0 ~ ~ -3.0 +1.0 +11.0 +7.0
Ordinary Profit Variance Analysis [FY17/1H(E) vs. FY17/1H] 18
(¥ in billions)FY17/1H(E)as of Jul. 27
[A]FY17/1H
[B]Change[A→B]
Ordinary Profit 150.0 157.6 +7.6Steel 130.0 128.7 -1.3
Non-Steel 16.0 23.2 +7.2
Adjustment 4.0 5.6 +1.6
FY171H(E)
FY171H
*2*5
*7
PositiveNegative
Exclude Inventory Valuation Impact
Exclude Inventory Valuation Impact
*1 *1
Volume Others Forex
Group Companies
Non-Steel
Cost Reduction
*3Raw Material
Prices
Steel Prices &Product Mix Oita Works’
Fire Accident *4*2
*7
*6
Inventory valuation: +10.0 ( 50.0 → 60.0) Crude steel production: -0.31MMT (approx. 20.40→20.09)Steel shipment: -0.68MMT (approx. 19.40→18.72)* Figures above incl. impacts of Oita Plate Mill fire
accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseStock: +1.0 (-2.0→ -1.0) Flow: ~Nisshin Steel etc.Engineering +1.9, Chemicals +4.3, New Materials +0.6, System Solutions +0.2
*1
*2
*3
*4
*5*6
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
157.6 163.4 142.497.6+33.0 +55.0
+38.0+10.0 -25.0 -39.0
-6.0
Ordinary Profit Variance Analysis [FY17/1H vs. FY17/2H(E)] 19
(¥ in billions) FY17/1H[A]
FY17/2H(E)[B]
Change[A→B]
Ordinary Profit 157.6 142.4 -15.2Steel 128.7 131.3 +2.6
Non-Steel 23.2 16.3 -6.9
Adjustment 5.6 (5.1) -10.7
FY171H
FY172H(E)
*2
*3
*6
*5
*7
PositiveNegative
Exclude Inventory Valuation Impact
Exclude Inventory Valuation Impact
*1 *1
Volume
andRaw Material
Prices
Cost Reduction
Others
Group Companies
Non-Steel
Inventory valuation: -81.0 (60.0 → -21.0) Crude steel production: approx. +1.41MMT
(20.09→approx. 21.50)Steel shipment: approx. +1.58MMT
(18.72 →approx. 20.30)* Figures above incl. impacts of Oita Plate Mill fire
accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseForex +2.0 (Stock: +2.0 (-1.0→ 1.0) Flow: ~),Increase in depreciation etc.Nisshin Steel, Business overseas etc.Engineering -0.3, Chemicals -7.6, New Materials -0.2, System Solutions +1.6
*1
*2
*3
*4*5
*6
*7*4Oita Works’
Fire Accident *2
Steel Prices &Product Mix
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
174.5213.5
261.0 300.0
-37.0 +38.0+50.0 -51.0
+43.0 +5.0
Ordinary Profit Variance Analysis [FY16 vs. FY17(E)] 20
(¥ in billions) FY16[A]
FY17(E)[B]
Change[A→B]
Ordinary Profit 174.5 300.0 +125.5Steel 138.0 260.0 +122.0
Non-Steel 35.2 39.5 +4.3
Adjustment 1.2 0.5 -0.7
FY16 FY17(E)
PositiveNegative
Exclude Inventory Valuation Impact
Exclude Inventory Valuation Impact
*1 *1
*2
*3
*6*5*7
Volume
Cost Reduction
Others Group Companies
Non-Steel
Inventory valuation: +78.0 ( -39.0 → 39.0) Crude steel production: approx. -1.02MMT
(42.62→ approx.41.60)Steel shipment: approx. -0.78MMT
(39.78 → approx. 39.00)* Figures above incl. impacts of Oita Plate Mill fire
accident, but not incl. impacts on earnings. Incl. carry overBoth volume decrease & cost increaseForex +3.0 (Stock: +9.0 (-9.0→ ~) Flow: -6.0),Increase in depreciation, Decrease in non-operating assets sales etc.Mining interests, Nisshin Steel, Business overseas etc.Engineering -3.3, Chemicals +6.5, New Materials +0.3, System Solutions +0.9
*1
*2
*3
*4
*5
*6
*7
Steel Prices & Product Mix
Oita Works’ Fire Accident
*2*4
and Raw Material
Prices
~
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1H 1H (YoY)
106.0 232.5 116.5 242.0 (+9.5)
10.3 22.1 10.7 23.0 (+0.9)
FY2016 FY2017(E)
1H 1H (YoY)
81.2 174.2 98.3 185.0 (+10.8)
0.8 4.5 9.3 11.0 (+6.5)
FY2016 FY2017(E)
1H 1H (YoY)
17.1 34.5 17.9 38.0 (+3.5)
0.7 1.7 1.1 2.0 (+0.3)
FY2016 FY2017(E)
1H 1H (YoY)
116.5 267.5 134.1 280.0 (+12.5)
1.5 6.8 1.9 3.5 (-3.3)
FY2016 FY2017(E)
13.4 21.7 23.2 16.3
321.0387.7 366.9 378.1
16/1H 16/2H 17/1H 17/2H(E)
Non-Steel Business 21
Sales & Ordinary Profit(Non-steel business total)
Profit increase thanks to market recovery in chemicals, strong sales of functional materials and needle coke .
Profit decline due to drop in oil prices & overseas steel makers’ investment.
Both sales & profit increase mainly thanks to business solution, despite of SG&A increase.
Profit increase thanks to strong demand for electrical industries’ materials such as coated copper & carbon fiber.
(¥ in billions)
Sales
Ordinary Profit
Change in Ordinary Profit (FY16 vs. FY17(E))
System Solutions
Engineering & Construction
Chemicals
New Materials
Decrease
Increase
Increase(¥ in billions)
Engineering & Construction
New Materials
Chemicals
Sales
OrdinaryProfit
Sales
Sales
Sales
OrdinaryProfit
OrdinaryProfit
OrdinaryProfit
SystemSolutions
Increase
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Balance Sheet 22
End of Mar. 2017 End of Sep. 2017 Change
Total assets (bn¥) 7,261.9 7,477.0 +215.1Interest bearing debt (bn¥) 2,104.8 2,174.5 +69.7Equity capital (bn¥) 2,948.2 3,055.8 +107.6DER 0.71 0.71 -
(¥ in billions)End of
Mar. 2017End of
Sep. 2017
Current Assets 2,244.4 2,372.7
Inventories 1,215.6 1,350.7
Fixed Assets 5,017.4 5,104.2Tangible fixedassets 2,840.8 2,860.0
Investment insecurities 816.3 884.2
Investment 1,041.3 1,034.9
Assets 7,261.9 7,477.0
(¥ in billions)End of
Mar. 2017End of
Sep. 2017
Liabilities 3,970.9 4,065.7Interest-bearingdebt 2,104.8 2,174.5
Net Assets 3,291.0 3,411.3
Equity capital 2,948.2 3,055.8Unrealized gains on available-for-sale securities 269.2 312.5
non-controlling Interest in consolidated subsidiaries 342.7 355.4
Liabilities & net assets 7,261.9 7,477.0 2,394.0
2,683.6
2,978.62,773.8
2,948.23,055.8
2,543.02,296.3
1,976.52,008.2
2,104.82,174.5
1.06
0.86
0.66
0.72
0.71
0.71
End ofMar.2013
End ofMar.2014
End ofMar.2015
End ofMar.2016
End ofMar.2017
End ofSep.2017
D/E Ratio
D/E ratio
Equity Capital
Interest-bearing debt
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Interim Dividend 23
[Basic Profit Distribution Policy] Allocate profits according to earnings Factors below need to be considered as well
Reserves for future investment / Earnings forecast / Consolidated and non-consolidated financial structureTargeted dividend payout ratio: around 20% - 30% (consolidated basis)
20 20 30 3010
30 35 154510
5055
45 4517.4% 18.7%
23.4%28.4% 30.4%
26.7%
0%
5%
10%
15%
20%
25%
30%
35%
0
20
40
60
80
100
120
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Interim
Year-end dividend (left axis)Interim dividend (left axis)Payout ratio (right axis)
¥/share
In accordance with the basic profit distribution policy, NSSMC has decided to increase interim dividend by ¥5.0 from ¥25.0, as previously disclosed,
to ¥30.0 (representing a dividend payout ratio of 26.7%).NSSMC plans to determine the forecast for the year-end dividend distribution amount, with
due consideration of the full-year outlook for profit attributable to owners of parent, and announce it at the time of its third-quarter results announcement.
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
CAPEX and Depreciation 24
0
200
400
600
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17見
( ¥ in billions)
NSSMC(Upper : NSCLower :SMI)
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17(E)
CAPEX490.0
(310.0)(178.8)
460.0(300.0)(159.1)
465.0(330.0)(136.6)
400.0(290.0)(109.9)
380.0(265.0)(115.7)
420.0 257.0 304.3 304.6 351.0 450.0
Depreciation346.5
(244.0)(102.5)
383.5(273.7)(109.8)
404.8(284.0)(120.8)
417.7(291.5)(126.2)
403.8(280.9)(122.9)
338.5 331.8 320.0 308.2 304.7 350.0
CAPEX420.0
338.5
CAPEX
DEPSMI
257.0331.8DEP
SMI
NSCNSC
304.3320.0
FY17(E)
308.2304.6 304.7
351.0 aprrox.350.0
approx.450.0
approx.Incld. Nisshinapprox. 41.0
approx.Incld. Nisshinapprox. 36.0
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25
2. Progress in Mid-Term Management Plan
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
0.66 0.72 0.71 0.71
FY14 FY15 FY16 FY171H
40.0
60.0
FY14 FY15 FY16 FY17
8.1%
1.8%
0.8%
8.6%6.6%
FY151H
FY152H
FY161H
FY162H
FY171H
5.2%3.0%
1.3%
5.9% 5.7%5.0%
2017 Mid-Term Plan:Targeted KPIs 26
TargetFY17
ROS
Cost Reduction
10 %ROE
TargetFY17
TargetFY17
D/E ratio
TargetFY17
0.5
10 % or more or more
Approx.or more per year
¥150 bn
Base
FY151H
FY152H
FY161H
FY162H
FY171H
FY172H(E)
50.0
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Progress of Mid-Term Plan 27
Company / Works Action FY152H FY16 FY17 FY18
Later
Domestic
Kimitsu Close No.3 BF
Yawata Reorganize production frame work
Kashima/ Kimitsu/ Muroran Start up Coke Oven
Nisshin Steel (Kure Works) Relining No.1 BF/Close No.2 BF
Overseas
ICI Started operation of No.4 line
NSCh Started operation
VSB ・ VBR Integration Business merger
AGIS Started operation of No.2 galvanizing Line
VAM® BRN Started operation
WTC Execution of Agreement to sell shares
KOS Started operation
KNSS Started operation
NSCI Start operation(E)
NS BlueScope Installation of No.3 Metal Coating Line
Mar.
Oct.
Oct.
Dec.
FY18~FY20(E)
FY17(E)
(Kimitsu/4A) Aug.
(Kashima/1F)Aug.
Nov.
FY18(E)
Oct.
(Kimitsu/4B)Jan.
Jan.
Jul.
(Kashima/2E)
FY18.Apr.(E)
Dec.
(Kimitsu No.5)
FY18.2H(E)
(MuroranNo.5)
FY19.1H(E)
FY23(E)
(Thailand: Construction/ JV with BlueScope Steel)
(UAE: Construction/ JV with Saif Al Ghurair Gr.)
(China: Auto/ Ramp up capacity of NBC)
(Indonesia: Auto/ JV with PTKS)
(USA: Crankshaft/ No.4 Forging Press Line)
(Brunei: Pipe/ JV with SC and Vallourec)
(USA: Auto/ JV with secondary processors)
(Indonesia: Structural/ JV with Osaka & PTKS)
(Brazil: Pipe / Merger with Vallourec’s subsidiary)
(USA: ERW / Agreement to sell shares)
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METI Honors NSSMC for Eco-friendly Stainless Steel Making Process28
*called “YES”: Yawata Environment-friendly Smelter
*
Recycle ratio of stainless steel scrapgenerated in Yawata 2% 100%
Notable cost Reduction
Slag volume -38%
Consumption of ferrochromium alloyConsumption of ferrosilicon alloy
・Enlarged heat energy・More effective reduction by YES compared to it by converter, utilizing silicon contained in ferrochromium alloy as reducing agent instead of ferrosilicon alloy.
1.Shortage of heat → low recycle ratio of stainless steel scrap, chromium (rare metal) loss2.Ferrosilicon alloy use as reducing agent in converter → high cost, large slag volume & chromium loss
-11%
-88%
Japanese Ministry of Trade, Economy and Industry honors NSSMC with award for Yawata works’ newly developed Eco-friendly stainless steel manufacturing process*
YES
Problems of Conventional Process
Effect of YES installation
*1
METI = Ministry of Economy, Trade and Industry*1
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NSSMC Group’s Quality Management 29
Quality always prevails production(delivery deadline, cost, etc.)
NSSMC’s Value in manufacturing
⇒Clear notification on NSSMC’s Quality Guidelines
Under the principal of “Quality always prevails production”,
NSSMC has persistently carried out measures to cope with “Guideline for Reinforcement of Quality Assurance Structure”
established by the Japan Iron and Steel Federation in 2008.
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NSSMC Group’s Quality Management Structure in line with JISF Guideline 30
Educate relevant employees by e-Learning every year Thorough compliance training according to each employee’s grade and work contents
Headquarter‘s Quality Control Department executes all group’s quality audit Keep updating checklist reflecting other quality incidents in steel sector
【Management Principles】 1.We continue to emphasize the importance of integrity and reliability in our actions.【Employee Action Guidelines】 We observe rules, keep our promises and pierce to the heart of matters by actively investigating the facts.
Quality Control Department directs the how of inspection for each lot Promote to automate inspection data input Check soundness of inspection system periodically Preserve record of sampling and inspection effectively and check periodically
Separate Quality Control Department from manufacturing department in all works Obtain ISO9001 certification in all works of NSSMC & main works of group companies Receive certifications from JIS・API, etc. and third party’s audit periodically Educate and issue internal qualification for employees who direct or prosecute
inspections
Education of basics of quality assurance
Thorough awareness of compliance with rules
(laws, contracts& standards)
Reinforcement ofquality assurance
management
Improvement in reliability of inspection data
Group-wide reinforcement of quality audit
Thorough awareness of compliance and quality assurance
Mechanism to prevent nonconformity
Mechanism to detect nonconformity
Reinforcement of inspection certificate management
* frequency, manner and method etc.
*
*1
Inspection certificate must be issued by Quality Control Departmentwhich is independent from manufacturing department
JISF = The Japan Iron and Steel Federation*1 *2 JIS=Japanese Industrial Standards
*2
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NSSMC Group’s Contribution to SDGs 31
Job creation in emerging countries Reduction of vulnerability to
disaster based on use of Nonframe method
Use of converter slag fertilizer to improve farming productivity and salt damage in farmland
Provision of titanium and stainless steel, which have excellent seawater corrosion resistance, for seawater desalination plants, securing agriculture water
Conducting science classes, sending lecturers, hosting Tatarasteelmaking experiments to promoting interest in manufacturing
Study sessions for teachers, internship for students
Establishment of in-house 24-hour nursery to support working women
More hiring of women in production and other workplaces
Recycling and reuse of limited water resources
Promotion of water quality risk management
Provision of titanium and stainless steel for seawater desalination plants
Provision of lining steel pipes for delivery of clean water
Promotion of air, water, soil risk management and chemical substance management
Development and provision of high-tensile steel sheets with excellent collision safety performance
Development and provision of steel products that contain no substances of concern, etc.
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
NSSMC Group’s Contribution to SDGs 32
Efficient use of energy, such as 100% use of by-product gas
Diffusion of CDQ that generates power from waste heat and waste power generation in emerging countries
Development and provision of steel materials for high-pressure hydrogen to support a hydrogen-oriented society, etc.
Thorough compliance training, such as for the Anti-Monopoly Act
Promotion of employment of people with handicaps
Expanded hiring of women and non-Japanese
Provision of various indispensable Eco ProductsTM
Provision of earthquake-resistance steel products
Conservation and management of the Yawata Works, an industrial world heritage site, etc.
Taikan Program (an experience-based safety education program)
Promotion of health management programs for employees
Enhanced measures to support the work-life balance, etc.
Pursuit of Eco ProcessesTM
Introduction of advanced technologies through bilateral cooperation (India, ASEAN, etc.)
Use of steel slag in road materials and materials for civil engineering
Promotion of air, water, soil risk management and chemical substance management
Full recycling of by-products Promotion of recycling of waste
plastics and waste tires Curbing the used amount of rare
metals while ensuring high performance, etc
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NSSMC Group’s Contribution to SDGs 33
Raising awareness of and compliance with anti-bribery guidelines
Elimination of antisocial forces Thorough confirmation of no use of
conflict materials Thorough management of security
export control Compliance with the OECD
Guidelines for Multinational Enterprises across a wide range of topics
Eco solutions to transfer and spread environmental, energy-saving technologies to emerging markets
Japan-India and Japan-ASEAN regular exchanges among public and private steel-related parties
Active participation in various activities of the World Steel Association (LCA, CO2 data collection, environmental committee, etc.)
Pursuit of Eco ProcessesTM
Development and provision of Eco ProductsTM
Promotion of Eco SolutionsTM
Promotion of innovative technology development, such as reduction of iron ore by hydrogen, separation, collection, and use of CO2, etc.
Promotion of water and soil risk management and chemical substance management
Regeneration of seaweed beds with the use of steel slag
Collaboration with an NPO, Mori wa Umi no Koibito
Promotion of air, water, soil risk management and chemical substance management
“Creation of Hometown Forests” to promote greenery within steelworks
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
34
3. Appendix
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]
0.25 0.25 0.50 0.47 0.97 0.25 0.25 (0.48) 0.50 0.44 0.93 -0.00 +0.01 -0.06 -0.04
13.59 13.20 26.79 24.54 51.33 13.90 13.25 (26.48) 27.15 25.75 52.90 +0.36 +0.67 -1.40 +1.57
1,904 3,430 5,333 5,456 10,790 1,920 3,000 (5,260) 4,920 6,080 11,000 -414 -340 +1,160 +210
2.11 2.31 4.41 4.95 9.36 2.30 2.39 (4.68) 4.69 4.91 9.60 +0.28 +0.01 +0.22 +0.24
1.08 1.18 2.26 2.38 4.64 1.12 1.25 (2.37) 2.37 2.49 4.86 +0.11 -0.00 +0.12 +0.22
4.62 4.57 9.19 9.71 18.90 4.74
16 16 32 35 66 20 17 (34) 37 34 71 +5 +3 -3 +5
88 90 178 188 366 102 96 (185) 198 204 401 +19 +12 +6 +35
3.07 3.27 6.34 6.27 12.61 2.90 2.90 (5.80) 5.80 5.75 11.55 -0.54 +0.00 -0.05 -1.06
ChangeFY16 VS.
FY17[E]
16/1Hvs.
17/1H
17/1Hvs.
17/2H[E]
17/1H[E]vs.
17/1H
FY16 FY17
Key Indicators of Demand 35
Large & Middle sized Shovel Production
Overseas Auto Production(8 Japanese car makers)
(million houses)
(thousand tons)
(thousand units)
(million m³)
(million units)
(million units)
(million units)
(mil. gross tons)
(¥ in billion)
Housing StartsNon-residential Construction Starts
Public Works Orders
Finished Auto Production
Export of Finished Auto
Metal Machine Tool ProductionKeel-laid New Ships
[ Domestic ]
(Source: Baker Hughes, Smith international, NSSMC est.)Estimates as of early Sep., 2017
Rig Count CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 Latest Peak Bottom
USA 1,089 1,546 1,875 1,919 1,761 1,862 977 510 859 940 (Sep.‘17) 2,031 (Sep.‘08) 404 (May.‘16)
Deep well (≧15,000ft) 249 249 395 324 326 354 205 126 221 221 (Aug.‘17) 413 (Nov.‘11) 98 (May.’16)
World Total (Exc. N. America,Russia & China)
997 1,094 1,167 1,234 1,296 1,337 1,167 955 948 931 (Sep.’17) 1,382 (Jul.‘14) 920 (Oct.’16)
*1*2
*1
*2Figures published on July 28, 2017
*2 *2 *2 *2
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
1Q 2Q 1H 2H 1Q 2Q 1H[E] 1H 2H[E] [E]
26.21 26.33 52.54 52.62 105.17 26.09 25.94 52.37 52.03 -0.51 -0.34
14.78 15.45 30.23 31.62 61.85 15.29 15.63 30.76 30.92 31.57 62.50 +0.69 +0.16 +0.65 +0.65
63.2 63.1 63.1 62.8 63.0 63.2 62.6 62.6 62.9 62.1 62.5 -0.2 +0.3 -0.7 -0.5
11.68 12.23 23.91 25.14 49.05 12.10 12.38 24.37 24.49 25.12 49.61 +0.58 +0.12 +0.63 +0.56
5.17 5.41 10.58 11.23 21.81 5.37 5.56 10.96 10.93 11.38 22.31 +0.35 -0.03 +0.46 +0.50
6.51 6.81 13.33 13.90 27.23 6.74 6.82 13.41 13.56 13.73 27.29 +0.23 +0.15 +0.17 +0.06
1.05 1.07 2.12 2.09 4.21 0.99 0.99 1.98 1.98 1.94 3.92 -0.14 +0.00 -0.04 -0.29
2.56 2.75 5.31 5.67 10.98 2.73 2.82 5.51 5.55 5.67 11.22 +0.24 +0.04 +0.12 +0.24
1.09 1.15 2.24 2.32 4.55 1.17 1.16 2.28 2.34 2.32 4.66 +0.10 +0.06 -0.02 +0.10
0.68 0.74 1.42 1.45 2.87 0.70 0.73 1.41 1.44 1.44 2.88 +0.02 +0.03 +0.01 +0.03
3.10 3.23 6.32 6.48 12.81 3.19 3.25 6.40 6.44 6.46 12.90 +0.11 +0.04 +0.02 +0.09
1.50 1.58 3.08 3.37 6.46
10.28 10.42 20.70 19.77 40.47
16/1Hvs.
17/1H
FY17FY16 VS.
FY17[E]
Change17/1H
vs.17/2H[E]
FY1617/1H[E]
vs.17/1H
Domestic Steel Consumption by Industrial Sector 36
(million tons)
Crude Steel Productionin Japan
Domestic Steel Consumption (A + B)
% for manufacturing sector
Ordinary Steel Consumption (A)
Construction
Manufacturing
Shipbuilding
Automotive
Industrial Machine
Electronic Machine
Specialty Steel Consumption (B)
Steel Imports
Steel Exports
( Source : NSSMC est.)Estimates as of early Sep., 2017
*1
*2Figures published on July 28, 2017
*1*2*2 *2 *2 *2
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16
3.0 -0.5 5 .3 3 .9 3 .4 3 .4 3 .4 3 .4 3 .2 (3.5) 3.6 (3.6) 3.7
0.5 -3.4 3 .2 1 .7 1 .2 1 .4 1 .9 2 .1 1 .7 (2.0) 2.2 (1.9) 2.0
0.4 -2.6 3 .0 1 .8 2 .3 2 .2 2 .4 2 .6 1 .6 (2.1) 2.2 (2.1) 2.3
0 .6 -4.1 1 .9 1 .5 -0.7 -0.4 0 .9 2 .0 1 .8 (1.9) 2.1 (1.7) 1.9
-1.2 -6.3 4 .4 -0.6 1 .5 1 .6 0 .0 1 .1 1 .0 (1.3) 1.5 (0.6) 0.7
6 .1 2 .7 7 .5 6 .2 5 .1 5.0 4 .6 4 .3 4 .3 (4.6) 4.6 (4.8) 4.9
9 .6 9 .2 10.4 9 .3 7 .7 7.7 7 .3 6 .9 6 .7 (6.7) 6.8 (6.4) 6.5
7 .3 6 .8 10.6 6 .3 4 .7 6.9 7 .2 8 .0 7 .1 (7.2) 6.7 (7.7) 7.4
4 .7 1 .7 7 .0 4 .5 6 .2 5.1 4 .6 4 .9 4 .9 (5.1) 5.2 (5.2) 5.2
5 .6 -7.8 4 .3 4 .3 3 .4 1 .3 0 .7 -2.8 -0.2 (1.4) 1.8 (1.4) 1.6
5 .1 -0.6 7 .5 2 .7 1 .0 2 .7 0 .1 -3.8 -3.6 (0.3) 0.7 (1.3) 1.5
CY17見通し
CY18見通し
World Economic Outlook <Released on Oct. 10, 2017 by IMF>37
( ): Outlook as of Jul. 24, 2017
*
World Total
Developed Countries
USA
EU27
Japan
DevelopingCountries
China
India
ASEAN5
Russia
Brazil
(GDP growth rate)
*ASEAN 5 : Thailand, Malaysia, Indonesia, Philippines, Vietnam(Source : IMF)
[E] [E]
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
World Steel Demand <Released on Oct. 16, 2017 by WSA>38
0.66
0.740.71
0.67
0.74
0.77 0.77
74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18E
China
Others
Japan/NorthAmerica/Europe
CY74
0.55
(Source : World Steel Association, Apparent finished steel consumption)
Figures in parentheses are previous forecasts as of Apr.21, 2017
( billion tons )CY14 1.54
CY081.22
CY121.44
CY161.58CY13
1.53CY15 1.50
CY171.62
CY181.65
<CY12> <CY13>
1.53<CY14>
1.54<CY15>
1.50WorldTotal 1.44 1.578
(1.515)
<CY16> <CY17(E)>1.622
(1.535)
<CY18(E)>1.648
(1.548)
* * *
*including illegal induction furnaces
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Jul Aug Sep
1,609.2 836.0 144.7 144.8 141.4 430.9 1,266.9 1,689.2 +80.0(+0.7%) (+4.4%) (+7.3%) (+7.2%) (+5.6%) (+6.7%) (+5.2%) (+5.0%)
104.8 52.3 8.6 8.7 8.6 25.9 78.3 104.4 -0.4(-0.4%) (+0.5%) (-4.3%) (-2.0%) (+2.0%) (-1.5%) (-0.2%) (-0.4%)
68.6 34.7 6.2 6.1 5.9 18.1 52.8 70.4 +1.8(-1.6%) (+3.8%) (+2.3%) (+3.5%) (+2.8%) (+2.9%) (+3.5%) (+2.7%)
78.5 40.7 7.0 7.1 6.7 20.8 61.5 81.9 +3.5162.0 86.1 14.1 12.5 13.8 40.4 126.4 168.6 +6.5
70.8 35.7 6.2 6.2 6.0 18.5 54.2 72.3 +1.531.3 16.7 2.8 3.0 3.0 8.7 25.5 34.0 +2.795.6 50.3 8.3 8.5 8.2 25.0 75.3 100.4 +4.8
808.4 418.3 74.0 74.6 71.8 220.4 638.7 851.6 +43.3(+0.6%) (+4.0%) (+10.3%) (+8.7%) (+5.3%) (+8.1%) (+5.4%) (+5.4%)
CY16[A]
Change(A → C)
CY17[C]
(B*12/9)Jan -Sep[B]
Jul - Sep
Jan -Jun
CY17
World Crude Steel Production 39
(Source : World Steel Association) Total of 66 countries *
*World Total
(million tons)
Japan
Korea
USA
EU28
Russia
Brazil
India
China
(YoY)
(YoY)
(YoY)
(YoY)
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Hot Rolled Sheets Prices by Region 40
( Prices of Hot Rolled Sheets in Local Currency as of Apr. 2014=1.0 )
(Source : The Japan Iron and Steel Federation)
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
'14/04 06 09 12 '15/03 06 09 12 '16/03 06 09 12 17/03 06 09
Japan
USA
Europe
S.Korea
China
BaoSteel Prevailing List Price
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
120
114
102
108
101 105
113
107 103
96 100
106 104
96
102 106
108 112
106
99 97 101 100 101 103
91
98
107 102
110 111 113 113 118
122
106
96
111 106 107
112 110
104
105
26
34 31
37 34
31 31 30 30 29 33 33 32
30 25 23
19 17 18 19 24 24 23 21
24 27
30 28 33
36 35 35 32
36 38
34 39
44 40
44 42 42 41 41
74
64 58 59 59
63
71 69 67 63 64
68 69 68
74
81
88
94 89
82
75 76 77 81
77
69 70 72 71 71 73 76 78 79 79
70
57 60 62 61
65 64 61 62
0
20
40
60
80
100
120
Consumption(Manufacturing Sector)Consumption(Construction and Civil Engineering Sector)Crude Steel ProductionSteel Exports
Domestic Steel Consumption Trend 41
(million tons)
Manufacturing Sector
Construction and Civil Engineering Sector
Crude Steel Production
Steel Exports
(Source : NSSMC estimation)
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
4.82 7.70
7.95
10.40 11.05
11.50 11.52 11.63
11.01 11.29
11.59
11.20 10.88
10.31 10.76
10.56 10.55
10.58
10.93 10.84
10.28 9.90
10.19
2.28
3.07 3.38
25.91
28.08 28.14 27.89
26.74 25.86
26.33
25.84
26.33 26.23 26.09
25.9526.51
0.00
5.00
10.00
15.00
20.00
25.00
30.00
0.00
5.00
10.00
15.00
20.00
SMI (Left axis)
NSC,NSSMC (Left axis)
All Japan (Right axis)
Domestic Crude Steel Production 42
7.10
All Japan (million tons) (Domestic Crude Steel Production of FY17/3Q(E) released by METI )
FY17/3Q(E)
(MMT) (MMT)
Includes Sumitomo Metals(Kokura), Sumitomo Metals(Naoetsu) and Sumikin Iron & Steel Co.*1Includes NIPPON STEEL & SUMIKIN KOUTETSU WAKAYAMA CORP *2
Total Production of Crude Steel ( NSC (non-consolidated)+SMI )
*1
*2
FY07121.51
FY08105.50
FY0996.45
FY10110.79
FY11106.46
FY12107.30
FY13111.52
FY14109.84
FY15104.23
FY16105.17
46.73 41.48 39.15 45.37 42.92 43.55 45.67 44.96 42.17 42.62FY17(E)41.60
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Domestic Steel Products Prices 43
50
60
70
80
90
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
Hot-rolled sheets (2.3xS)
Cold-rolled sheets(1.0xS)
50
60
70
80
90
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
H-flange beams (200×100)
Plates(19mm)
Hot-rolled sheets & Cold-rolled sheetsPlates & H-flange beams(thousand yen / ton ) (thousand yen / ton )
(Source : Japan Metal Daily)
77.0
80.0
82.0
75.0
26th, Oct
26th, Oct
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
0.0
0.5
1.0
1.5
3.0
4.0
5.0
6.0
7.0
'13/
03 06 09 12
'14/
03 06 09 12
'15/
03 06 09 12
'16/
03 06 09 12
'17/
03 06 09
Ordinary steel products inventory (Left axis)Rolled sheets inventory (Left axis)Ordinary steel products inventory turnover ratio (Right axis)
Domestic Steel Inventory 44
(MMT) (Times)
Rolled Sheets Inventory H-flange beams*2 Inventory(MMT) (Times)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
0.1
0.2
0.3
0.4
0.5
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
Inventory quantity (Left axis)
Inventory turnover ratio (Right axis)
(Source : Japan Iron and Steel Federation) Inventories of the distributors dealing with H-flange beams manufactured by NSSMC
*2Hot-rolled, Cold-rolled and Coated sheets*1
*1
*1
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Iron Ore & Coking Coal Prices 45
0
100
200
300
400
FY04
FY06
FY08
10/ 1
Q
10/3
Q
11/ 1
Q
11/3
Q
12/ 1
Q
12/3
Q
13/ 1
Q
13/3
Q
14/ 1
Q
14/3
Q
15/ 1
Q
15/3
Q
16/1
Q
16/3
Q
17/1
Q
17/2Q
0
50
100
150
200
FY04
FY06
FY08
10/ 1
Q
10/3
Q
11/ 1
Q
11/3
Q
12/ 1
Q
12/3
Q
13/ 1
Q
13/3
Q
14/ 1
Q
14/3
Q
15/ 1
Q
15/3
Q
16/1
Q
16/3
Q
17/1
Q
17/2Q
(US$/dmt) (US$/wmt)
Iron Ore (Fine) Hard Coking CoalNSSMC Contract Price
FOB from Australia to JapanNSSMC Contract Price
FOB from Australia to Japan
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Market Trends <Crude Oil & Scrap>46
0.0
20.0
40.0
60.0
0
200
400
600
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
USA Scrap(No1HMS) (US$/t, CIF Korea)(Left axis)
Iron Scrap Bid Prices in Kanto Region(thousand yen/ton)(Right axis)
0.0
150.0
300.0
450.0
600.0
750.0
900.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
Arabian Light Crude (Left axis)
Bunker (Right axis)
Scrap(US$/ton) (thousand yen/ton)(US$/bbl) (US$/MT)
Crude Oil
50.4362.5
33032.2
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Market Trends <Freight & Mold Pig Iron>47
0
100
200
300
400
500
600
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
Mold Pig Iron(US$/t,CIF Korea)
0
5
10
15
20
25
30
35
'13/
03 06 09 12'1
4/03 06 09 12
'15/
03 06 09 12'1
6/03 06 09 12
'17/
03 06 09
From Brazil
From Western Australia
(US$/T, CIF Korea)(US$/WMT, Cape size 170 thousand tons hull form)
Mold Pig IronFreight
380
18.2
7.7
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
51.08
0
20
40
60
80
100
120
140
Jan-
05
May
-05
Sep-
05
Jan-
06
May
-06
Sep-
06
Jan-
07
May
-07
Sep-
07
Jan-
08
May
-08
Sep-
08
Jan-
09
May
-09
Sep-
09
Jan-
10
May
-10
Sep-
10
Jan-
11
May
-11
Sep-
11
Jan-
12
May
-12
Sep-
12
Jan-
13
May
-13
Sep-
13
Jan-
14
May
-14
Sep-
14
Jan-
15
May
-15
Sep-
15
Jan-
16
May
-16
Sep-
16
Jan-
17
May
-17
Sep-
17
Energy Sector : Oil Price / Rig Count 48
US Oil Price (WTI Spot)
$62.9
Rig Counts (Jan. 2005=100)
World Bank Estimates
(as of Apr.,2017)
CY2020
(US$/bbl)
As of Oct. 26Oct. Avr.
0
50
100
150
200
Jan-
05
May
-05
Sep-
05
Jan-
06
May
-06
Sep-
06
Jan-
07
May
-07
Sep-
07
Jan-
08
May
-08
Sep-
08
Jan-
09
May
-09
Sep-
09
Jan-
10
May
-10
Sep-
10
Jan-
11
May
-11
Sep-
11
Jan-
12
May
-12
Sep-
12
Jan-
13
May
-13
Sep-
13
Jan-
14
May
-14
Sep-
14
Jan-
15
May
-15
Sep-
15
Jan-
16
May
-16
Sep-
16
Jan-
17
May
-17
Sep-
17
North America (BakerHughes)
World (BakerHughes)
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Forex Trend 49
700
850
1,000
1,150
1,300
1,450
1,600
70
85
100
115
130
145
160
'08/
04 06 09 12'0
9/03 06 09 12
'10/
03 06 09 12'1
1/03 06 09 12
'12/
03 06 09 12'1
3/03 06 09 12
'14/
03 06 09 12'1
5/03 06 09 12
'16/
03 06 09 12'1
7/03 06 09
Oct. 26. 2017113.5 USD/JPY
1,125 USD/KRWUSD/KRW
USD/JPY
(USD/JPY) (USD/KRW)
Apr.1.2008101.9 USD/JPY985 USD/KRW
© 2017 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
50
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Any statements in this document. other than those of historical facts, are forward-looking statements about future performance of Nippon Steel & Sumitomo Metal Corporation and its group companies, which are based on management’s assumptions and beliefs in light of information currently available, and involve risks and uncertainties. Actual results may differ materially from these forecasts.
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