NKK CORPORATION: Annual Report 2002
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Review of Operations

n fiscal 2002, a gloomy domestic business climate suppressed investment on public works and private capital spending plans and encouraged consumers to restrict purchases. These factors crimped demand for steel.
      Overseas, the bright economic conditions seen previously in the United States and parts of Asia began to tarnish. The demand situation was further eroded by safeguards and antidumping measures implemented by the United States on imported steel products. Consequently, exports of steel made in Japan faltered. The industry marked a 4.5% drop in raw steel production, to 102 million tons.
      NKK was not immune to prevailing challenges. The Steel Division recorded a 3.5% dip in raw steel production, to 20.0 million tons.
      On the price front, sluggish demand for steel at home and abroad prompted lower prices.
      Against this operating backdrop, the Steel Division posted total sales of ¥1,184.5 billion, down 8.8% year-on-year, and an operating loss of ¥32.3 billion, owing to massive operating losses at National Steel in the United States.
  Billions of yen
Sheets and Plates . . . . . . . . . . . . . ¥698.5   ¥786.4  
Bars and Shapes . . . . . . . . . . . . . . 111.6   126.2  
Pipes and Tubes . . . . . . . . . . . . . . 80.6   89.0  
Others . . . . . . . . . . . . . . . . . . . . . . . 293.7   296.8  

Innovative Production Processes, Highly Competitive Products

  Charging hot metal to
basic oxygen furnaces
at the Fukuyama Works
  Super-OLAC for
Hot Strip Mill
  Blast furnaces at
the Fukuyama Works
  NKK-CAL at
the Fukuyama Works
  NKK’s zero-slag steelmaking process
minimizes generation of by-product slag
in basic oxygen furnaces and
improves steel yields
The Fukuyama Works and the Keihin Works utilize innovative production processes devised through proprietary R&D.

      At the Fukuyama Works, our primary steelmaking facility, we introduced the world’s first zero-slag steelmaking process and have been rewarded with shorter production times, higher productivity and expanded output capabilities. As a result, this works boasts an annual output capacity exceeding 10 million tons under a three-furnace production structure. Overall productivity has been improved with stronger casting capabilities matched to output capacity.

      NKK’s zero-slag steelmaking process is a revolutionary technique that goes beyond mere quality considerations. As well as ensuring the high quality clients demand of steel products, the process also satisfies social needs, particularly conservation of resources and energy, by minimizing the production of slag in steelmaking.

      Super On-Line Accelerated Cooling (OLAC) boosts the tensile strength of steel by rapidly cooling high-temperature materials immediately following hot rolling. Production has become more efficient with the introduction of this method in plate mill and large shape mill operations at NKK. In April 2002, the Fukuyama Works installed the Super-OLAC for Hot Strip Mill, a version of OLAC upgraded to the fullest degree possible. The new mill has enabled the Fukuyama Works to realize the world’s fastest cooling speed, ensure stable production of HITEN steel sheet for automotive applications, dramatically expand hot-rolling capabilities and use, and reinforce quality.

      NKK incorporates sophisticated technologies in the development of high-value-added products that are perfectly suited to market needs. These products are manufactured and marketed by the NKK Group.

      The NANO HITEN series, for example, is hot-rolled steel sheet in which nanosized particles have been dispersed to boost strength and formability. In fiscal 2002, we successfully developed a 980 newtons per square millimeter (N/mm2) product to complement the earlier 780 N/mm2 product, which debuted in fiscal 2001 as the world’s first 780 N/mm2 hot-rolled steel sheet made with nanometer-particle technology. We also enhanced the production parameters of 780 N/mm2 steel to include thin sheet and expanded widths, which had been impossible with conventional HITEN technology.

      With our proprietary rapid water quenching NKK Continuous Annealing Line (NKK-CAL) process, we made 100 kg grade cold-rolled steel plate boasting superhigh tensile strength and excellent press formability and machine-welding properties. Targeting sales at automakers, we scored a world first when a major domestic automaker employed this steel plate in ultra-lightweight, high-strength frames.

      In addition, Geo Frontier Coat, an environment-friendly, chromium-free coated steel sheet, was selected for use in all the copiers produced by a major domestic office equipment manufacturer, effective in fiscal 2002. We anticipate the excellent properties of this steel sheet to encourage greater application in a wide range of products.

      NKK Delta Eye, an innovative steel sheet quality-control system that automatically marks flaws at delivery, has been adopted by a major automaker. This system reduces coil handling load for both NKK and its clients because the unit weight of each coil can be increased, thereby limiting the number of coils that must be delivered. The system also facilitates pre-pressing inspection of materials subjected to severe surface quality control, such as exposed panels of an automobile, which reduces the on-site inspection load for users.

NKK Delta Eye Automatic Surface Inspection and Marking System


Global Supply Structure

Automakers seek to build lighter, less expensive cars and need steel products delivered to plants around the world. To accurately address these client requirements, NKK, Kawasaki Steel and ThyssenKrupp Steel signed a comprehensive cooperation agreement to jointly undertake R&D related to automotive-use steel.

      This agreement will underpin the establishment of a global supply network for automotive steel. It will sharpen the competitive edge of each participating company through cooperative R&D on high-tensile strength steel and next-generation rust-resistant steel for automotive applications.
      In regard to our own network, we operate Thai Coated Steel Sheet Co., Ltd., with annual output of 180 thousand tons of electrolytic galvanized sheets, and Thai Cold Rolled Steel Sheet PUBLIC Co., Ltd., with annual output of 1 million tons of cold-rolled sheets, to guarantee the stable supply of steel products to the many Japanese automakers and household appliance makers that have made Thailand their hub in Southeast Asia.

Consolidated Steelmaking Operations of JFE Steel

The Fukuyama Works and Keihin Works of NKK and the Mizushima Works and Chiba Works of Kawasaki Steel will be regrouped into two works—the East Works and the West Works—to hone a sharper competitive edge in steel operations as quickly as possible. Through this regrouping and reorganization, JFE Steel will have two steelmaking locations and one facility specializing in manufactured steel products, such as pipes and tubes. In the pursuit of higher efficiency under the new structure, NKK and Kawasaki Steel are looking into methods that will optimize blast furnace operations and effectively utilize consolidated and shared equipment, based on location and specialization.

West Works    
Fukuyama Works
Crude steel production (Fiscal 2002)  :  9.5 million tons/year
Number of blast furnaces  :  4
Main products  :  Steel plates, hot- and cold-rolled coils and sheets, magnetic steel sheets, coated steel sheets, UOE pipes, spiral-welded pipes, rails, sheet piling, wide-flange beams
Mizushima Works
Crude steel production (Fiscal 2002)  :  8.1 million tons/year
Number of blast furnaces  :  3
Main products  :  Steel plates, hot- and cold-rolled coils and sheets, magnetic steel sheets, coated steel sheets, wide-flange beams, sheet piling, bars, rods
East Works    
Keihin Works
Crude steel production (Fiscal 2002)  :  3.4 million tons/year
Number of blast furnaces  :  1
Main products  :  Steel plates, hot- and cold-rolled coils and sheets, coated steel sheets, electric-resistance welded pipes, welded pipes, square tubes, seamless pipes
Chiba Works
Crude steel production (Fiscal 2002)  :  4.2 million tons/year
Number of blast furnaces  :  2
Main products  :  Hot- and cold-rolled coils and sheets, stainless steel, coated steel sheets, UOE pipes, iron filings, hot charge
Chita Works    
Main products  :  Electric-resistance welded pipes, spiral-welded pipes, seamless pipes, welded pipes, square tubes, cast-iron products, cast-steel products

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