• JFE Steel Corporation

TOKYO — JFE Steel Corporation has decided to invest approximately 15.0 billion yen to increase production capacity at its Chita Works’ medium-diameter seamless pipe mill in response to growing demand for high-end steel pipes in the energy sector that has been triggered by the acceleration of global resource development. This investment will substantially strengthen the company’s high-end seamless pipe capacity (from 160,000 to 250,000 tons per year, an increase of approximately 60%). JFE Steel is one of the world’s largest steel pipe manufacturers, producing and selling some 1.8 million tons each year.

The increases will come for 1) seamless 13% chromium oil country tubular goods (13%Cr OCTG) for drilling , a mainline product for which JFE keeps top share of the global market; 2) heavy-wall boiler tubes for which demand is surging; and 3) high-strength, large-diameter, thin-wall pipe for compressed natural gas (CNG) cylinders .

The Chita Works’ small- and medium-diameter seamless pipe mills currently give the company a combined annual capacity in high-end seamless pipes of approximately 400,000 tons. Upon completion of the enhancement, it will be capable of stably producing 500,000 tons of high-end seamless pipes every year.

Recent years have seen active development of deep (2,000- to 6,000-m) oil wells and gas fields, which require equipment able to withstand high-temperature environments. JFE’s 13%Cr OCTG is in demand due to its proven resistance to high temperatures and corrosion by CO₂ -- essential characteristics of deep-well pipes. JFE supplies nearly half the world’s requirement for 13%Cr OCTG, giving it the top share in the global market and making this one of the company’s main high-end seamless pipe products.

JFE Steel last year invested approximately 10.0 billion yen in its Chita Works’ small-diameter seamless pipe mill to boost capacity for 13%Cr OCTG from 90,000 to 120,000 tons per year. T his project was completed in January 2007. The new project will increase capacity for medium-diameter seamless pipes, enabling JFE to better serve growing customer needs for high-end seamless pipes, while further solidifying its position at the top of the global market.

In addition to 13%Cr OCTG, JFE Steel will also be expanding its capacity for large-diameter, heavy-wall high-chromium pipe for power boilers and high-strength, large-diameter, thin-wall chromium alloy pipe for automotive CNG cylinders . Both product areas are forecast to see steady increases in demand and are areas where JFE maintains competitive advantages.

The Chita Works’ medium-diameter seamless pipe mill uses the plug mill rolling process and proprietary rolling technology developed and applied by JFE Steel, enabling production of seamless pipes in a significantly wider range of thicknesses than the mandrel-type Mannesmann rolling process. Its production techniques are particularly efficient for hard-to-roll high-alloy pipes, earning JFE a solid reputation from global customers as a supplier of boiler tubes and pipes for CNG cylinders.

The series of investments that began last year will bring the Chita Works’ high-end seamless pipe capacity up to 500,000 tons per year, of which 150,000 tons will be 13%Cr OCTG. JFE Steel’s pipe operations are distinguished by their specialization in high-end products. “Only One” and “Number One” products now account for more than 60% of the Chita Works’ total output. The company will continue to contribute to society through the development of distinctive, innovative products.

Outline of capital investment

1)	Major facilities undergoing capacity increases: Medium-diameter seamless pipe rolling facilities Medium-diameter seamless pipe heat treatment facilities Pipe finishing line
2)	Production capacity: High-end medium-diameter seamless pipe: Rising from the current 160,000 tons/year to 250,000 tons/year
3)	Startup: Expected to come on-stream by end of July 2008
4)	Investment: Approx. 15.0 billion yen

(Reference)
Outline of Medium-Diameter Seamless Pipe Mill at Chita Works

Startup:		1978
Facilities:		Plug mill 1 heat treatment line 1 finishing line
Available dimensions:		Outside diameter  177.8 – 426.0 mm Length  5.5 – 13.5 m Thickness  4.3 – 55 mm