Business Environment

In emerging countries, demand is increasing for automobiles as well as motorcycles, home appliances and building materials, underpinned by surging consumer spending. In addition, a modal shift in transportation is driving the development of railway infrastructure around the world. Accordingly, demand for steel products, which are the raw materials for this infrastructure, is expected to continue increasing.

Strengths and Strategies

In the steel sheet business, we will capture growing demand from customers by extending and upgrading our worldwide steel service center network of 39 companies in 14 countries worldwide, mainly in China and other parts of Asia.

In the transportation equipment business, including railway wheels and axles, and crankshafts for automobiles, we have also developed manufacturing and sales sites in various regions around the world.

Actions for Target Achievement

In Vietnam, we have established a joint venture to conduct distribution, processing and sales of steel construction materials together with SMC Trading Investment Joint Stock Company, a major local steel product distributor. Through this joint venture, we will work to promote greater market penetration of high-quality construction materials in the country.

Furthermore, in North America, Sumitomo Corporation and Sumitomo Metal Industries, Ltd. acquired Standard Steel, LLC, a manufacturer of railcar wheels and axles. At the same time, we established a sales company of wheels and axles to enhance and expand sales of varied railcar products.

Business Environment

Demand for tubular products, including OCTG and oil and gas transport pipelines, is anticipated to increase steadily in the medium to long term, in response to heightened demand for energy mainly in emerging countries.

Strengths and Strategies

Our business in the tubular products field boasts an industry-leading network and trading volume. This has been achieved by developing operations that demonstrate various value-added functions globally. For example, we have built supply chain management systems providing integrated services ranging from ordering of tubular products to inventory management, processing, inspection, transportation and maintenance from our network of 13 locations in 12 countries around the world. We intend to continue enhancing the tubular product value chain we have developed so far, with the view to expanding our earnings base.

Actions for Target Achievement

In North America, we have worked to develop a seamless steel pipe manufacturing business through a joint venture with Vallourec S.A. In addition to an existing medium-diameter seamless steel pipe mill, we have invested in a small-diameter seamless steel pipe manufacturing business targeting demand from shale gas and oil development, with the view to enhancing our capability of supplying a wider range of products.

Business Environment

Demand for non-ferrous products such as aluminum and titanium is expected to grow with its expanding usage and applications for these products in recent years. The market for non-ferrous products should continue to expand, given the strong need to reduce the weight and improve the fuel economy of automobiles, aircraft and other transportation equipment.

Strengths and Strategies

In the aluminum business, we boast one of the highest transaction volumes in aluminum sales among Japanese general trading companies. To expand our business network further, we will accelerate the development of production locations near the growing global market for aluminum.

Actions for Target Achievement

In Malaysia, we are pursuing an aluminumsmelting project with Press Metal Berhad, the country's largest aluminum extrusion products company. In addition to the first phase of the project already in operation (with a 120,000 ton/year smelting capacity), Sumitomo Corporation plans to participate in the second phase of the project, which will raise the annual smelting capacity by 240,000 tons. Furthermore, we have teamed up in the U.S. with Sumitomo Light Metal Industries, Ltd., Furukawa-Sky Aluminum Corp. and other partners to acquire a rolled aluminum sheet manufacturing and sales company. Through this acquisition, we aim to promote an aluminum can materials business for primarily the North American and Latin American markets.