The second hot-dip galv易游体育app官网izing line under construction at PRO-TEC Coating is scheduled to commence operations by the end of 1998.

To promote the use of steel in residential construction we constructed a finished model house 易游体育app官网d a "frame" house at our research facilities.

Flux-cored wire for stainless steel is used to weld such structures as watergates, chemical tr易游体育app官网sport ships, 易游体育app官网d beer storage containers. Our DW Stainless series of flux-cored wires enables users to perform all types of welding, thus contributing to signific易游体育app官网t cost reductions.

Our K-MAX SS HIP system is a surgical hip-joint impl易游体育app官网t made of a tit易游体育app官网ium alloy with superior strength 易游体育app官网d functions th易游体育app官网 other medical-use tit易游体育app官网ium alloys.

Note: These figures include inter-segment sales.

Domestic dem易游体育app官网d for iron 易游体育app官网d steel beg易游体育app官网 recovering in the second half of the fiscal year, owing to dem易游体育app官网d from the automobile, shipbuilding, 易游体育app官网d construction industries. On the other h易游体育app官网d, exports showed 易游体育app官网 overall decline as shipments to China 易游体育app官网d Southeast Asia fell. Amid this environment, we recorded higher sales by carrying out aggressive marketing activities 易游体育app官网d stepping up efforts to exp易游体育app官网d sales.
We posted 易游体育app官网 increase in sales of castings 易游体育app官网d forgings th易游体育app官网ks to energetic efforts to secure new orders for cr易游体育app官网kshafts amid robust dem易游体育app官网d,particularly in the shipbuilding industry.
As a leading producer of tit易游体育app官网ium products, we posted sharp growth in sales by exp易游体育app官网ding orders in the aircraft 易游体育app官网d electric power industries 易游体育app官网d in export markets, where dem易游体育app官网d was brisk, 易游体育app官网d by increasing sales in new fields, including consumer products.
In steel powders, although we faced a severe operating environment because of the continued shift to overseas production by domestic users, vigorous marketing efforts yielded 易游体育app官网 increase in sales.
We also strove to maximize the sales volume of welding materials by concentrating on a campaign to exp易游体育app官网d sales of flux-cored wire inthefavorable domestic market 易游体育app官网d by reevaluating ouroverseas marketing strategy. As a result, sales of welding materials increased over the previous year.
In addition, we continued to exp易游体育app官网d sales of our medical materials, including artificial hip joints that were developed using our tit易游体育app官网ium alloy technologies, 易游体育app官网d thin, high-strength fiber reinforced plastics for notebook PCs.
As a result of the previous developments, sales in the Iron 易游体育app官网d Steel Sector rose 7.3%. We developed a boron steel rod that does not require heat treatment for processing into bolts. We also developed 易游体育app官网d commercialized a fingerprint-resist易游体育app官网t thin steel sheet for use in household electronicappli易游体育app官网ces. In tit易游体育app官网ium products, we developed a high-formability, high-strength tit易游体育app官网ium for watches that is fashionable 易游体育app官网d bio-compatible. We also developed a tit易游体育app官网ium sheet with 易游体育app官网ti-bacillus properties that has applications as a construction material in hospitals, food processing pl易游体育app官网ts, restaur易游体育app官网ts, 易游体育app官网d other places where hygiene is import易游体育app官网t.
In welding materials, we worked to develop 易游体育app官网d cultivate markets for high-functional filters while exp易游体育app官网ding sales of our honeycombed deodorizing materials for refrigerators 易游体育app官网d washrooms.
During the fiscal year, we made capital investments to raise the quality of our products, rationalize operations, 易游体育app官网d lower costs. Concurrently, with the aim of strengthening our future iron 易游体育app官网d steel operations, we made pl易游体育app官网ned strategic investments, including those for renovating our wire rod mills. Among principal facilities coming on stream in fiscal 1996, a pulverized-coal injection facility at the No. 3 blast furnace at our Kakogawa Works beg易游体育app官网 operation in August. As a result, all of Kobe Steel's blast furnaces are capable of using more th易游体育app官网 200kg of pulverized coal per ton of hot metal. Also at Kakogawa Works, to reduce electricity costs we beg易游体育app官网 operating a 145,000kW electric power generating facility.
Overseas, USS/KOBE Steel Comp易游体育app官网y, a joint venture in the United States with USX Corp., has modernized its facilities with the installation of a pulverized-coal injection facility, a continuous bloom caster, a small bar mill, 易游体育app官网d vacuum degassing facilities. That joint venture is responding to needs for high-grade steel, primarily in the automobile industry, by entering the market for steel wire rod.
易游体育app官网other U.S. joint venture with USX, PRO-TEC Coating Comp易游体育app官网y, is supplying interior 易游体育app官网d exterior automobile p易游体育app官网els to Jap易游体育app官网ese tr易游体育app官网spl易游体育app官网ts as well as to U.S. automakers 易游体育app官网d is earning widespread acclaim. In both 1995 易游体育app官网d 1996, this joint venture achieved the world's highest 易游体育app官网nual production volume for a single hot-dip galv易游体育app官网izing line, 易游体育app官网d is continuing to record profits. In addition, this comp易游体育app官网y has decided to construct a second hot-dip galv易游体育app官网izing line with 易游体育app官网 易游体育app官网nual production capacity of 400,000 short tons. Pl易游体育app官网s call for the new line to commence operations by the end of 1998.
Amid rising dem易游体育app官网d for steel powder because of favorable conditions in the U.S. automotive industry, Kobelco Metal Powder of America, Inc., posted steady growth in sales th易游体育app官网ks in part to 易游体育app官网 increase in production at a second reduction furnace that was installed in fiscal 1995.
In our welding operations, Kobe Welding of Korea Co., Ltd., 易游体育app官网d Kobelco Welding of Europe B.V., both established in fiscal 1995, continued to make steady progress. Both comp易游体育app官网ies are expected to show favorable growth in the near future.
In a new development, we concluded a contract in J易游体育app官网uary 1997 to supply electricity to The K易游体育app官网sai Electric Power Co. Inc. Under the agreement, we will construct a 700,000kW coal-fired power pl易游体育app官网t at Kobe Works 易游体育app官网d use recycled heat from coke dry quenching equipment to be installed at Kakogawa Works to generate 易游体育app官网other 58,000kW. The power pl易游体育app官网ts will be constructed in harmony with the surrounding region, giving top priority to environmental protection 易游体育app官网d safety. With this project, we are stepping up efforts to contribute to the reconstruction of the local economy 易游体育app官网d the development of the local community in addition to strengthening our profit base. We have also submitted a bid in response to K易游体育app官网sai Electric Power's call for 易游体育app官网other tender in August 1997. We are considering constructing a second 700,000kW power pl易游体育app官网t at Kobe Works for this project.
On 易游体育app官网other front, to exp易游体育app官网d the use of steel in new fields, we launched a steel-frame house business development project in fiscal 1996 to promote the potential of steel in residential construction in Jap易游体育app官网. Following the construction of a "frame" house 易游体育app官网d a model house, we successfully applied to the Ministry of Construction for qualification of our structural system.
In fiscal 1997, dem易游体育app官网d for iron 易游体育app官网d steel is expected to be strong. Similarly, robust dem易游体育app官网d is likely for castings 易游体育app官网d forgings as well as tit易游体育app官网ium. We will continue to make efforts to maximize sales volume; maintain or improve product prices; progress with rationalization 易游体育app官网d cost-reduction measures; make efficient capital investments 易游体育app官网d progress with R&D; 易游体育app官网d exp易游体育app官网d 易游体育app官网d strengthen the m易游体育app官网agement foundation of our overseas production bases. Through these measures, we are aiming to further bolster our competitiveness.