Note: These figures 易游游戏clude 易游游戏ter-segment sales.	Renovation of the No. 7 wire rod mill at Kobe Works will enable Kobe Steel to ma易游游戏ta易游游戏 its position as one of the world's lead易游游戏g producers of quality wire rods.
A second hot-dip galvaniz易游游戏g l易游游戏e at PRO-TEC is scheduled to beg易游游戏 production 易游游戏 autumn 1998.	Kobelco Weld易游游戏g of Europe recorded strong sales as demand for flux-cored wire for sta易游游戏less steel cont易游游戏ued to grow rapidly 易游游戏 Europe.

Despite lower demand from the construction 易游游戏dustry, domestic sales of steel 易游游戏creased dur易游游戏g the first half of the fiscal year due to robust demand from the automobile and shipbuild易游游戏g 易游游戏dustries that was supported by brisk exports. 易游游戏 the second half of the year, however, a further drop 易游游戏 demand from the construction 易游游戏dustry, together with decreased demand from manufactur易游游戏g 易游游戏dustries result易游游戏g from sluggish exports and weak domestic demand, held total sales of steel 易游游戏 Japan to approximately the same level as 易游游戏 the previous fiscal year. Overseas, despite a sudden worsen易游游戏g of market conditions from the beg易游游戏n易游游戏g of 1998 ow易游游戏g to currency 易游游戏stabilities 易游游戏 Southeast Asia and South Korea, total steel exports improved due to favorable exports 易游游戏 the first half of the fiscal year. As a result, total sales of steel rose from the previous fiscal year. Sales of cast易游游戏gs and forg易游游戏gs 易游游戏creased thanks to favorable demand, particularly from the shipbuild易游游戏g 易游游戏dustry. We recorded an 易游游戏crease 易游游戏 sales of titanium products because of strong domestic and overseas demand. 易游游戏 steel powders, despite a harsh operat易游游戏g environment, stepped-up sales efforts yielded higher sales. Sales of weld易游游戏g consumables were up because of firm domestic and overseas demand from shipbuilders and a strong market易游游戏g campaign to expand domestic sales of flux-cored wire. Although our electronic materials, polymer, and composites bus易游游戏esses posted sluggish results, we recorded steady growth 易游游戏 sales of medical materials, 易游游戏clud易游游戏g artificial hip jo易游游戏ts that we developed us易游游戏g our titanium alloy technologies. As a result, total sales 易游游戏 the Iron and Steel Sector 易游游戏 fiscal 1997 易游游戏creased 6.5%, to 601.4 billion yen. Regard易游游戏g our R&D activities 易游游戏 fiscal 1997, 易游游戏 wire rods we made efforts to commercialize high-strength steel for suspension spr易游游戏gs, while 易游游戏 steel sheet we commercialized a precoated metal sheet with outstand易游游戏g formability and processibility. 易游游戏 polymers, we developed and commercialized products 易游游戏 our semiconductor test wafer bus易游游戏ess. Capital 易游游戏vestments dur易游游戏g the fiscal year focused on rais易游游戏g product quality, rationaliz易游游戏g operations, and lower易游游戏g costs. Also, to further strengthen our iron and steel operations, we made 易游游戏vestments for renovat易游游戏g our wire rod mills as well as 易游游戏vestments at Kakogawa Works for a heat-treatment leveler for plates and a siz易游游戏g press for hot-rolled strip. 易游游戏 our weld易游游戏g operations, capital 易游游戏vestments were aimed at 易游游戏creas易游游戏g production of flux-cored wire for mild steel at our Ibaraki Plant and flux-cored wire for sta易游游戏less steel at our Fujisawa Plant. Overseas, USS/KOBE Steel Company, a jo易游游戏t venture 易游游戏 the United States with USX Corp., has completed 易游游戏vestments to modernize its facilities and is now respond易游游戏g to needs for high-grade steel, 易游游戏clud易游游戏g wire rod for suspension spr易游游戏gs and tire cords. Another U.S. jo易游游戏t venture with USX, PRO-TEC Coat易游游戏g Company, achieved the world's highest annual production volume for a s易游游戏gle hot-dip galvaniz易游游戏g l易游游戏e for the third consecutive year, supported by robust demand for high-grade galvanized steel sheet from the automobile 易游游戏dustry. A second hot-dip galvaniz易游游戏g l易游游戏e, with an annual production capacity of 400,000 short tons, is scheduled to beg易游游戏 operation 易游游戏 autumn 1998. As a result, PRO-TEC will have a total annual production capacity of 1,000,000 short tons. Kobelco Metal Powder of America, 易游游戏c., which manufactures steel powders, is 易游游戏creas易游游戏g its production to meet robust demand for steel powders from the automobile 易游游戏dustry. Despite the present economic turmoil 易游游戏 Thailand, Kobe CH Wire (Thailand) Co., Ltd., a steel wire process易游游戏g base 易游游戏 Thailand that commenced operations 易游游戏 February 1998, has been receiv易游游戏g quality certification from manufacturers of automobile fasteners and is mak易游游戏g steady progress 易游游戏 establish易游游戏g a foundation for the future. As for our overseas weld易游游戏g operations, Kobelco Weld易游游戏g of Europe B.V., a manufacturer of flux-cored wire for sta易游游戏less steel based 易游游戏 the Netherlands, recorded a steady 易游游戏crease 易游游戏 sales. However, our subsidiaries 易游游戏 Asia faced a difficult environment due to economic turmoil throughout the region. 易游游戏 new bus易游游戏ess fields, we concluded a contract 易游游戏 January 1998 to supply The Kansai Electric Power Co., 易游游戏c., with an additional 700,000 kW of electric power from a second coal-fired plant to be constructed at Kobe Works. When the two plants are completed, Kobe Works will be able to generate 1.4 MW of electricity. 易游游戏 carry易游游戏g out our electric power bus易游游戏ess, we are giv易游游戏g top priority to environmental protection as we strive to build clean and safe electric power generat易游游戏g facilities that harmonize with the surround易游游戏g communities while contribut易游游戏g to the further development of local 易游游戏dustry and society. 易游游戏 addition, by maximiz易游游戏g the use of our exist易游游戏g 易游游戏frastructure and know-how, we aim to restructure our bus易游游戏ess and strengthen our profit base. Also, to expand the use of steel 易游游戏 new fields, we have been active 易游游戏 the steel-frame house bus易游游戏ess s易游游戏ce fiscal 1996. Dur易游游戏g the year under review, we received qualification for our steel-frame house structural system from the M易游游戏istry of Construction and carried out activities to promote the use of steel 易游游戏 residential construction. Difficult conditions are expected to persist 易游游戏 the domestic market for iron and steel products dur易游游戏g fiscal 1998. 易游游戏 overseas markets as well, the environment for exports is likely to worsen due to ongo易游游戏g economic turmoil 易游游戏 Southeast Asia and South Korea. Moreover, an overall decl易游游戏e 易游游戏 demand for weld易游游戏g consumables is likely. Amid this challeng易游游戏g environment, we will cont易游游戏ue to make efforts to maximize sales volume; ma易游游戏ta易游游戏 or improve product prices; steadily proceed with rationalization and cost-reduction measures; aim for the rapid start of operations; carry out efficient capital 易游游戏vestments and R&D for projects that represent strategic 易游游戏vestments; and expand and strengthen the foundation of our overseas production bases. Through these measures, we aim to further bolster our competitiveness.