Economic Conditions, Competition, Automaker Production Trends and Bargaining Power

「Downside conditions progressed from the first year of the medium-term management plan, and changes in the demand structure surrounding the Company progressed faster than anticipated. In addition, the effects on the global economy are expected to include various impacts from policies including the Trump administration's tariff policies in the United States, export expansion measures and a shift to local production progressing alongside a slowdown in China's domestic economy, Japan's fragile political and economic conditions, rising geopolitical risks in various regions, and increasing instability in international trade. Uncertainty therefore remains elevated.」

「・The impact on operating results and financial condition of deteriorating economic conditions in Japan and overseas, restraint of public investment and private-sector capital investment, sluggish personal consumption, particularly reduced production by automobile manufacturers, the Group's main customer industry, an acceleration in the shift to electrification, and the Group's declining bargaining power over prices」

「A business environment containing downside risks to the economy due to geopolitical factors surrounding Ukraine and the Middle East continues.」

「Amid an unstable international situation, the operating environment continues to contain downside risks to the economy, including persistently high fuel and raw material prices, global inflation, and rapid foreign exchange movements.」

「The Japanese economy during the cumulative first quarter under review gradually recovered as personal consumption and capital investment picked up amid improvements in employment conditions and corporate earnings. At the same time, the operating environment remained subject to downside risks, including concerns about an economic recession resulting from constraints on the supply of raw materials and fuel caused by the prolonged situation in Ukraine, global inflation and monetary tightening in the United States and Europe, as well as sharp foreign exchange fluctuations.」

「The Japanese economy during the cumulative third quarter under review remained in an uncertain operating environment containing downside risks, including constraints on the supply of raw materials and fuel resulting from the prolonged situation in Ukraine, global inflation and disruption caused by sharp foreign exchange fluctuations, despite expectations for an economic recovery as efforts to contain COVID-19 and normalize economic activity progress.」

「During the cumulative first quarter, the Japanese economy showed signs of recovery as economic activity normalized, but a difficult business environment continued due to surging raw material prices and supply chain disruptions arising from the prolonged situation in Ukraine and the impact of lockdowns in China, as well as the recent resurgence of COVID-19 infections.」

「The impact on operating results and financial condition of deteriorating economic conditions in Japan and overseas, restraint of public investment and private-sector capital investment, sluggish personal consumption, particularly reduced production by automobile manufacturers, the Group's main customer industry, an acceleration in the shift to electrification, and the Group's declining bargaining power over prices」

「The Japanese economy during the cumulative third quarter under review showed signs of recovery as the spread of COVID-19 vaccinations gradually eased restrictions on people's activities. However, infections have recently begun to spread again due to the emergence of new variants, and the outlook remains uncertain.」

「The Japanese economy during the cumulative second quarter under review was on a recovery trend, with industrial production showing signs of recovery despite some weakness in capital investment. Going forward, further economic recovery is expected as vaccination progresses, various policy measures take effect and overseas economies improve, but the outlook requires close monitoring given downside risks from impacts through supply chains and developments in COVID-19.」

「The Japanese economy during the cumulative first quarter under review was on a recovery trend, supported by a recovery in capital investment and industrial production, but the situation remained uncertain due to the ongoing impact of COVID-19.」

「During the cumulative third quarter consolidated period, the Japanese economy remained in a difficult situation due to the impact of COVID-19, although exports and industrial production showed signs of recovery. However, infections have recently been spreading again, and the outlook remains uncertain.」

「During the cumulative second quarter consolidated period, the Japanese economy remained in a difficult situation due to the impact of COVID-19. Although personal consumption and industrial production have recently begun to recover as the level of social and economic activity is raised amid a declining trend in COVID-19 cases, the outlook remains uncertain due to developments in the pandemic in Japan and overseas and volatility in the financial and capital markets.」

「During the cumulative first quarter consolidated period, the Japanese economy remained in an extremely difficult situation due to the spread of COVID-19. Following the lifting of the state of emergency, economic activity is expected to recover gradually as it resumes in stages, supported by the effects of various policies. However, the outlook remains uncertain due to the possibility of a second wave of COVID-19 and volatility in the financial and capital markets, among other factors.」

「Against this economic backdrop, orders for automotive-related products, a major source of demand for specialty steel, decreased year on year in response to lower global production. Orders for industrial machinery decreased under the impact of US–China trade tensions and amid inventory adjustments. Although semiconductor-related orders have been on a recovery trend since the third quarter, they declined year on year.」

「Against this economic backdrop, orders for automotive-related products, a major source of demand for specialty steel, decreased year on year in response to lower global production. Orders for industrial machinery also remained on a downward trend, while orders in semiconductor-related fields declined significantly amid inventory adjustments.」

「Orders from the automotive industry, a major end market for special steel, declined year on year as global production edged down. Demand for industrial machinery also continued to decline, while demand in semiconductor-related fields fell sharply amid inventory adjustments.」

「As a result, steel shipments increased year on year. However, demand declined in some fields, including semiconductors.」

「Although growth in demand from the automotive and industrial machinery industries, which are our demand industries, has recently slowed, demand remained high and steel shipments increased year on year. Demand declined in some fields, including semiconductors, resulting in inventory adjustments.」

「The Group's performance is affected by trends in domestic and overseas economic conditions, public investment, private-sector capital investment, personal consumption and market conditions. In each product market, the Group faces intense competition from domestic and overseas competitors, and the Group's performance may be affected depending on those conditions.」