Nippon Steel, JFE Holdings, Expand Corporate Value

Aggregate market value increased to near 4 trillion yen for Nippon Steel and much more than 3 trillion yen for JFE Holdings after the share price increased at Tokyo Stock Exchange. The share price increased by 32.3% to 570 yen per share on December 11 from 431 yen on January 4 and by 40.9% to 5,720 yen from 4,060 yen while Nikkei stock average gained limitedly from 16,361yen to 16,527 yen. The market seems to support the positive return for the shareholders by the major 2 steel makers with high level earnings though the 2 makers’ share prices were relative lower among Japanese 5 major steels.

Japanese integrated steel makers are expected to keep high level profit for fiscal 2006 ending March 2007 after they posted record profit for fiscal 2005 and they improved the financial position since fiscal 2003 under firm steel market at home and abroad.

Mr. Atsushi Yamaguchi, steel analyst for UBS Securities said the top 2 makers’ share prices increase when the market finally recognizes their profit keep the high level after major up and down along with return for shareholders including share buy back. Especially, the share buy back action appeals to market participants as message of management for shareholders.

Mr. Yamaguchi also said the market values Nippon Steel’s growth strategy including further partnership with POSCO and USIMINAS and 300 billion yen of finance for profit growth.

The higher share price is partly due to market’s expectation for potential merger and acquisition when Japanese steels are potential target of M&A under mega consolidation in world steel industry.

POSCO’s share price increased by 45% to 293,000 won per share on December 11 from 202,000 won on January 4. The market capitalization increased from 25.546 trillion won to 17.612 trillion won. POSCO succeeded to expand the value by share buy back, further tie-up with Nippon Steel and aggressive offshore strategy.

See attached table.