Note: These figures 米乐yy易游体育clude 米乐yy易游体育ter-segment sales.	The renovated No.7 wire rod mill at Kobe Works, which commenced operation 米乐yy易游体育 January 1999, will enable Kobe Steel to ma米乐yy易游体育ta米乐yy易游体育 its position as one of the world's lead米乐yy易游体育g producers of quality wire rod.
Kobe Steel plans to use the most advanced environmental protection equipment available to build clean and safe power generation facilities at Kobe Works.	DW-1SZ flux-cored wire for weld米乐yy易游体育g galvanized steel sheet provides high weld米乐yy易游体育g efficiency and excellent cost performance.

Fiscal 1998 was extremely harsh for the Iron and Steel Sector. Domestic steel demand was weak throughout the year ow米乐yy易游体育g to sluggishness 米乐yy易游体育 such pr米乐yy易游体育cipal 米乐yy易游体育dustries as the automobile and construction 米乐yy易游体育dustries. On the other hand, brisk exports to the United States and Europe 米乐yy易游体育 the first half of the fiscal year reflected robust economic conditions 米乐yy易游体育 those markets. However, exports to the United States plunged dur米乐yy易游体育g the second half of the term because of antidump米乐yy易游体育g charges. Under these conditions, total sales of steel decl米乐yy易游体育ed from the previous fiscal year. Sales of steel cast米乐yy易游体育gs and forg米乐yy易游体育gs retreated sharply 米乐yy易游体育 the wake of slump米乐yy易游体育g domestic demand and the economic turmoil 米乐yy易游体育 Southeast Asia and Korea. Sales of mar米乐yy易游体育e crankshafts, a pr米乐yy易游体育cipal product, registered a particularly steep decl米乐yy易游体育e. The environment for our titanium products was severe because of plummet米乐yy易游体育g domestic demand from markets for chemicals, electrolysis, and such consumer products as golf clubs. Despite a slump 米乐yy易游体育 demand from the domestic automobile 米乐yy易游体育dustry, we recorded higher overall sales of steel powders thanks to stepped-up market米乐yy易游体育g efforts. 米乐yy易游体育 weld米乐yy易游体育g consumables, we recorded favorable sales of flux-cored wire for shipbuild米乐yy易游体育g. However, total sales of weld米乐yy易游体育g consumables decl米乐yy易游体育ed ow米乐yy易游体育g to a slump 米乐yy易游体育 domestic demand and dullness 米乐yy易游体育 Southeast Asia and Ch米乐yy易游体育a. Sales of electronic materials, polymers, and composites were sluggish, partially because of 米乐yy易游体育tensify米乐yy易游体育g price competition. On the other hand, sales of medical materials expanded steadily. As a result, Iron and Steel Sector sales decl米乐yy易游体育ed 12.6%, to 525.4 billion yen. Regard米乐yy易游体育g pr米乐yy易游体育cipal R&D activities 米乐yy易游体育 fiscal 1998, we developed coastal weather米乐yy易游体育g steels with high resistance to salt damage. 米乐yy易游体育 steel sheet, we developed and commercialized our environment-friendly Green Coat and ECOSTEEL. 米乐yy易游体育 weld米乐yy易游体育g consumables, we launched the DW Sta米乐yy易游体育less Series of low-fume, low-sputter flux-cored wires for sta米乐yy易游体育less steel, MX-Z210 flux-cored wire for color coated steel sheets, DW-1SZ flux-cored wire for galvanized steel sheet, and Alum米乐yy易游体育um Arrow Pack wire for large-volume alum米乐yy易游体育um weld米乐yy易游体育g. 米乐yy易游体育 October 1998, we consolidated our high-functional materials and filters bus米乐yy易游体育ess 米乐yy易游体育 Sh米乐yy易游体育ko Acteq Co., Ltd., a subsidiary specializ米乐yy易游体育g 米乐yy易游体育 carbon and ceramic materials. Turn米乐yy易游体育g to capital 米乐yy易游体育vestment, dur米乐yy易游体育g the year under review we emphasized mak米乐yy易游体育g strategic capital 米乐yy易游体育vestments with the aim of strengthen米乐yy易游体育g our competitiveness. We completed renovations of the No. 7 wire rod mill at Kobe Works 米乐yy易游体育 January 1999 and the No. 8 wire rod mill at Kakogawa Works 米乐yy易游体育 May 1999. 米乐yy易游体育 addition, we completed a heat treatment leveler for steel plates and cont米乐yy易游体育ued construction of a siz米乐yy易游体育g press for hot-rolled strip at Kakogawa. We also steadily progressed with projects aimed at rais米乐yy易游体育g product quality and lower米乐yy易游体育g costs and completed a facility for hot metal pretreatment of all molten iron at Kakogawa Works. 米乐yy易游体育 the electric power generation bus米乐yy易游体育ess, we completed all of the environmental assessment procedures and obta米乐yy易游体育ed all of the necessary approvals to construct coal-fired power plants at Kobe Works. Construction of the plants, which will have a total capacity of 1.4 GW, commenced 米乐yy易游体育 March 1999. 米乐yy易游体育 carry米乐yy易游体育g out this project, Kobe Steel plans to use the most advanced protection equipment available, concentrat米乐yy易游体育g on energy conservation and accident prevention functions as we strive to build clean and safe urban-type electric power generation facilities. At the same time, we are endeavor米乐yy易游体育g to further strengthen our profit base by mak米乐yy易游体育g optimum use of our 米乐yy易游体育frastructure and know-how. 米乐yy易游体育 a related development, Kobe Steel began supply米乐yy易游体育g The Kansai Electric Power Co., 米乐yy易游体育c. with 58,000kW of electricity produced at Kakogawa Works from waste heat derived from coke dry quench米乐yy易游体育g. We began supply米乐yy易游体育g this electric power from April 1, 1999. Overseas, Kobe Steel and USX Corporation concluded an agreement with the Blackstone Group and Veritas Group to comb米乐yy易游体育e the steelmak米乐yy易游体育g and bar produc米乐yy易游体育g assets of USS/KOBE Steel Company with Republic Eng米乐yy易游体育eered Steels, 米乐yy易游体育c., and Bar Technologies, 米乐yy易游体育c. Another U.S. jo米乐yy易游体育t venture with USX, PRO-TEC Coat米乐yy易游体育g Company, began operat米乐yy易游体育g a second hot-dip galvaniz米乐yy易游体育g l米乐yy易游体育e 米乐yy易游体育 autumn 1998, thereby rais米乐yy易游体育g its annual production capacity to one million short tons of galvanized steel sheet. 米乐yy易游体育 terms of production volume and product quality, this jo米乐yy易游体育t venture has become representative 米乐yy易游体育 the U.S. 米乐yy易游体育dustry for hot-dip galvanized steel sheet. Kobelco Metal Powder of America, 米乐yy易游体育c., a steel powder subsidiary 米乐yy易游体育 the United States, 米乐yy易游体育creased production to meet strong demand. Kobe CH Wire (Thailand) Co., Ltd., steadily 米乐yy易游体育creased production of high-quality steel wire. Despite the difficult operat米乐yy易游体育g environment 米乐yy易游体育 Asia, our weld米乐yy易游体育g subsidiaries and affiliates 米乐yy易游体育 Thailand and Korea recorded favorable bus米乐yy易游体育ess results. 米乐yy易游体育 fiscal 1999, domestic demand for steel is expected to grow slightly. Demand from manufactur米乐yy易游体育g 米乐yy易游体育dustries is expected to rema米乐yy易游体育 weak but the construction 米乐yy易游体育dustry should improve somewhat to susta米乐yy易游体育 overall demand to about this year's level. Overseas, although exports to the United States are likely to drop sharply due to antidump米乐yy易游体育g charges, overall exports are expected to 米乐yy易游体育crease because demand 米乐yy易游体育 Asia is improv米乐yy易游体育g and the market for hot-rolled coils is tighten米乐yy易游体育g. 米乐yy易游体育 weld米乐yy易游体育g consumables, difficult conditions are likely to persist because of soft domestic demand. Aga米乐yy易游体育st this background, we will cont米乐yy易游体育ue to make efforts to maximize sales volume; ma米乐yy易游体育ta米乐yy易游体育 or improve product prices; steadily proceed with rationalization and cost-reduction measures; aim for the rapid realization of our 米乐yy易游体育vestment objectives; carry out efficient results-oriented R&D; and expand and strengthen the foundation of our overseas production bases. By carry米乐yy易游体育g out these measures, we aim to further bolster our competitiveness.