Securities Code：5411.T

JFE Group
Financial Results through Third Quarter of
Fiscal Year 2022 ending March 31, 2023

JFE Holdings, Inc.
February 6, 2023
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

1

Key Points of today’s Announcement
Results for
3Q of FY2022

JFE-HD• Business profit in Apr-Dec of FY2022 was ¥231.0bn.
• Full-year business profit is expected to be ¥235.0bn.
(decreased by ¥20.0bn. from previous forecast）• Steel demand is expected to further decline under the previous forecast
due to sluggish activity and reluctance to buy in domestic market
and due to slow recovery in overseas market.
• Maintaining an emphasis on selling price, crude steel production
volume is expected to decline from the previous forecast.
Forecastof
FY2022Full-year crude steel production [stand alone] :Approx. 25.00Mt (previous forecast) ⇒ Approx.24.00Mt (Updated forecast)• Profit of steel business is expected to decrease due to reducing
crude steel production etc. (decreased by ¥15.0bn. from previous forecast)
However, the spread improvement is expected to progressfrom the previous forecast due to initiatives for improving sales price.
• Profit of engineering business is expected to decrease due tolosses from European construction projects.
(decreased by ¥7.0bn. from previous forecast : ¥20.0bn. → ¥13.0bn.)• Profit of trading business is expected to post a record profit of ¥60.0bn.,
as the previous forecast is.
Dividends• JFE has decided to propose at its general meeting of shareholdersa year-end dividend of 30 yen per share(annual:80yen)

Topics• Consideration of expand manufacturing facilities
for non-oriented electrical steel sheet

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

2

A table of contents➢ JFE Holdings’ Financial Results through Third Quarter of
Fiscal Year 2022 (April 1 to December 31, 2022) and
Financial Forecasts for Fiscal Year 2022 (April 1, 2022, toMarch 31, 2023)➢ Dividends➢ Financial Results through Third Quarter of Fiscal Year 2022
and Financial Forecast for Fiscal Year 2022 by Segment➢ Topics
Appendix 1: Profit/Loss Analysis
Appendix 2: Business Environmental Indicators, etc.
Appendix 3: The 7th Medium-Term Business Plan
Appendix 4: JFE Steel Carbon Neutrality Strategy Briefing (Excerpted)
This presentation material is for information and discussion purpose only.
Any statements in the presentation which are not historical facts are future projections based on certain
assumptions and currently available information. Please note that actual performance may vary significantly due tovarious factors.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

3

Consolidated Results through Third
Quarter of Fiscal Year 2022
(April 1 to December 31, 2022)
andConsolidated Financial Forecast
for Fiscal Year 2022
(April 1, 2022 to March 31, 2023)

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

4

JFE-HD

Financial Results through Third Quarter of Fiscal Year 2022

➢ Business profit in Apr-Dec of FY2022 was ¥231.0bn.
(decreased by ¥91.8bn. year-on-year)
FY2021

FY2022

Change（billion yen）

Oct-Dec

Apr-Dec

Oct-Dec

Apr-Dec

Apr-Dec

1,154.4

3,097.3

1,344.2

3,908.5

811.2

123.9

322.8

43.1

231.0

(91.8)[26.9][135.8][44.1][116.0][(19.8)]Finance Income/Costs

(2.9)

(8.5)

(4.2)

(10.9)(2.4)

Segment Profit

121.0

314.2

38.8

220.0

(94.2)(10.4)(10.4)

(6.2)

(6.2)

4.2

110.6

303.8

32.5

213.8

(90.0)Tax Expense and Profit (Loss)
Attributable to Non-Controlling
Interests(28.3)(80.7)(11.8)(69.8)

10.9

Profit Attributable to Ownersof Parent

82.2

223.0

20.6

143.9

(79.1)

Revenue
Business Profit[Excluding Inventory
Valuation etc.]

Exceptional Items

Profit before Tax

Business profit is profit before tax excluding financial income and one-time items of a materially significant value.
Segment profit is profit including financial income in business profit.
Inventory Valuation etc. is inventory valuation, carry over and foreign exchange valuation in steel business.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

5

Financial Results through Third Quarter of Fiscal Year 2022
(by Segment)

FY2021

FY2022

JFE-HD

Change（billion yen）
Oct-Dec

Apr-Dec

Oct-Dec

Apr-Dec

Apr-Dec

Steel Business

832.8

2,243.2986.9

2,905.9

662.7

Engineering Business

129.8

359.1

130.9

349.9

(9.2)

Trading Business

329.8

873.7

383.6

1,133.8

260.1

Adjustments(137.5)(378.6)(157.2)(481.1)(102.5)

1,154.4

3,097.3

1,344.2

3,908.5

811.2

123.9

322.8

43.1

231.0

(91.8)

(2.9)

(8.5)

(4.2)

(10.9)(2.4)

Steel Business

93.5

252.0

21.8

170.0

(82.0)Engineering Business

10.2

21.3

1.7

(2.1)

(23.4)

Trading Business

16.2

41.9

15.1

55.7

13.8

1.0

(1.0)

0.1

(3.5)

(2.5)

121.0

314.2

38.8

220.0

(94.2)

Revenue
Business Profit (A）Finance Income/Costs（B）

Adjustments

Segment Profit(A+B)

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

6

JFE-HD

Financial Forecast for Fiscal Year 2022
➢ Full-year business profit is expected to be ¥235.0bn.

(decreased by ¥20.0bn. from previous forecast, decreased by ¥181.4bn. year-on-year)

FY2021
ActualFY2022
Forecast(Previous)

Full Year

Full Year

1H(Apr-Sep)

2H(Oct-Mar)4,365.1

5,260.0

2,564.3

416.4

255.0

[222.4]

Finance Income/Costs

Segment Profit

ChangeFY2022
Forecast(Updated)

ChangeFY2021→
FY2022（Updated）

Previous→Updated

Full Year

Full Year

Full Year

2,635.7

5,200.0

834.9(60.0)

187.9

47.1

235.0

(181.4)(20.0)[173.0][71.9][90.1][162.0][(60.4)][(11.0)](11.6)(15.0)

(6.6)

(8.4)

(15.0)

(3.4)

0.0

404.8

240.0

181.2

38.8

220.0

(184.8)(20.0)(16.2)

-

-

(6.2)

(6.2)

10.0

(6.2)

Profit before Tax

388.5

240.0

181.2

32.6

213.8

(174.7)(26.2)Tax Expense and Profit (Loss)
Attributable to Non-Controlling
Interests(100.4)(85.0)(57.9)(5.9)(63.8)

36.6

21.2

Profit Attributable to
Owners of Parent

288.0

155.0

123.2

26.8

150.0

(138.0)(5.0)（billion yen）

Revenue
Business Profit[Excluding Inventory
Valuation etc.]

Exceptional Items

Business profit is profit before tax excluding financial income and one-time items of a materially significant value.
Segment profit is profit including financial income in business profit.
Inventory Valuation etc. is inventory valuation, carry over and foreign exchange valuation in steel business.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

7

JFE-HD

Financial Forecast for Fiscal Year 2022
(by Segment)
FY2021
ActualFY2022
Forecast(Previous)

Full Year

Full Year

1H(Apr-Sep)

2H(Oct-Mar)

Steel Business

3,173.4

3,960.0

1,918.9

Engineering
Business

508.2

520.0

Trading
Business

1,231.7

Adjustments

ChangeFY2022
Forecast(Updated)

ChangeFY2021→
FY2022（Updated）

Previous→Updated

Full Year

Full Year

Full Year

1,941.1

3,860.0

686.6(100.0)

219.0

301.0

520.0

11.8

0.0

1,490.0

750.2

739.8

1,490.0

258.3

0.0

(548.3)(710.0)(323.9)(346.1)(670.0)(121.7)40.0

4,365.1

5,260.0

2,564.3

2,635.7

5,200.0

834.9(60.0)

416.4

255.0

187.9

47.1

235.0

(181.4)(20.0)(11.6)(15.0)

(6.6)

(8.4)

(15.0)(3.4)

0.0

Steel Business

323.7

165.0

148.2

1.8

150.0

(173.7)(15.0)Engineering
Business

26.0

20.0

(3.9)

16.9

13.0

(13.0)(7.0)

Trading
Business

55.9

60.0

40.6

19.4

60.0

4.1

0.0

Adjustments

(0.9)

(5.0)

(3.6)

0.6

(3.0)

(2.1)

2.0

Segment Profit

404.8

240.0

181.2

38.8

220.0

(184.8)(20.0)（億円）

Revenue
Business Profit (A）Finance Income/Costs

（B）

(A+B)

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

8

JFE-HD

Demand for steel and Crude steel production➢

Due to the postponement of domestic demand in the residential & civil engineering construction
sectors and continued weakness in overseas steel demand & market, Standalone crude steel
production is expected to be approx. 24Mt, down 1Mt from previous forecast.
Aug. 2022 announcement

Nov. 2022 announcement

Feb. 2023 announcement(This Time)

Sales environment
・Parts supply constraints in the domestic
auto sector are expected to ease gradually.
・Despite sluggish domestic demand due to thezero-COVID policy in China, overseas demand
and market are expected to recover for thesecond half of the year due to economic
stimulus measures by Government of China.

HRC Metal Spread

・The recovery of activity levels in thedomestic auto sector delays than theprevious forecast.
・ China's economic is weak and demand forconstruction is postponed in emerging countries.
Recovery in overseas demand and market
due to economic stimulus measures in China is
expected to be delayed to the fourth quarter.

($/t）(Chinese Spot Basis）

250

250

150

150

150

50

50

250

22/4

22/10

Crude Steel(Standalone)
6.50(Unit:Mt） 6.43

23/4

50
22/4

6.50/Q

22.3Q

22.4Q

23/4

22/4

22/10

23/4

More than

6.43

Less than 26.0Mt
22.2Q

22/10

Less than

1.0Mt
down

22.1Q

・Due to the rising cost of materials,
demand is postponed, especially in thedomestic housing, civil engineering andconstruction sectors.
・Demand for overseas steel products andmarket conditions remain weak in the
fourth quarter due to economic
uncertainty.

6.21 Less than
6.00

6.50

22.2Q

22.3Q

22.4Q

Approx.

6.21

1.0Mt
down

Approx. 25.0Mt
22.1Q

6.43

5.90
5.48

Approx. 24.0Mt
22.1Q

22.2Q

22.3Q

22.4Q

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

9JFE-HD

Initiatives for Improving Sales Price➢ In the 2H of FY2022, overseas steel market price and Key raw material costdeclined due to sluggish steel demand.
➢ Further sales price improvement is expected due to the reflections of metal andcommodity costs*, overhaul of extra pricing, and enhancing sales price to thesustainable level. *Including foreign exchange effect, scrap, metal, fare, energy, etc.
➢ The spread in 2H of FY2022 is expected to increase by ¥87.0bn. (+8,100yen/t)
from 1H of FY2022 and increase by ¥28.0bn.(+2,600yen/t) from the previous
forecast.
Average Sales Price / Key Raw Material Cost
180
(000yen/t)

Apr-Sep
131.6

160
140

Initiatives of Improve our Sales Price

Oct-MarApprox. 130■JFE Sales price120◆ Quick reflection of raw material cost to
sales price
Make effort to quickly and steadily pass on thecost increase of key raw materials to the sales
prices.

◆ Overhaul of extra pricing

Already realized some part of extra revision.
Accelerate overhaul to modify the extra pricing
which is inappropriate to the current status.

100
80◆ Sales price improvement to thesustainable level

6040■Key raw material cost20
20.3Q 4Q 21.1Q 2Q

3Q

4Q 22.1Q 2Q

3Q

Improve sales prices to the sustainable level evenamong the long-term/continuous contracts if themargin is not enough.

4Q
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

10JFE-HD

Maintaining Profit in a Tough Business Environment➢ In 2H of FY2022, overseas metal spread is significantly declined,
and production volume shrunk.
➢ The establishment of a stable and profitable business structure that is less affected byoverseas steel market conditions and steel demand is progressing, amid enhancing
profit due to initiatives of improving the spread etc..
Overseas Metal Spread Trend

Changes in Profit(HRC Metal Spread : Chinese Spot Basis)(Segment Profit of Steel Business,
Excluding Inventory Valuations etc. )FY2020
Oct-Mar

($/t)

500

400

Historically
Low Level

Improve
Spread etc.

Decline Overseas Steel Market
Shrink Production Volume

4,200

3,300

yen

yen

300

(Profit per sales volume)

Decline

Improve

Approx. 8,000yen

Approx. 9,000yen

Profitable businessstructure less affectedby overseas market andsteel demand

200
Chinese Spot Basis

100

0

HRC Metal Spread
FY202215.04 16.04 17.04 18.04 19.04 20.04 21.04 22.04

FY2022
Oct-Mar$342

Decrease $180

Crude Steel Production(Standalone)

12.59Mt

Decrease 1.20Mt

Approx.

$160

Approx.

11.40Mt

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

11

Dividend

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

12JFE-HD

Dividend➢ JFE Holdings has decided to propose at its general meeting ofshareholders a year-end dividend of 30 yen per share, which would
bring the annual dividend of 80 yen per share.

(yen/share)

160
140
120

Pay-out Ratio

31.9%

33.5%

N/A

N/A

28.0%

30.9%

Interim devidend
Year-end dividend

100

80

80
50
60

30

50

40
20

30

60

45
20

0
FY2017FY2018FY201950

10FY2020

FY2021

FY2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

13

JFE Steel
Financial Results through Third Quarter of
Fiscal Year 2022 andFinancial Forecast for Fiscal Year 2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

14

JFE Steel

Financial Forecast through Fiscal Year 2022
FY2021 Actual
Unit Apr-Dec

FY2022 Updated Forecast

Actual

Full
Year

1H
Actual3Q
Actual4Q
Forecast

2H

Full
Year

FY2022Previous
Forecast(Full Year)

Revenuebillionyen

2,243.2

3,173.4

1,918.9

986.9

954.2

1941.13,860.0

3,960.0

Segment
Profitbillion
yen

252.0

323.7

148.2

21.8

(20.0)

1.8

150.0

165.0

billion
yen

65.0

129.7

32.2

22.8

22.0

44.8

77.0

83.0

Crude Steel(Standalone)

Mt

19.20

25.88

12.64

54.8

Crude Steel(Consolidated)

Mt

20.24

27.26

13.37

58.1

Shipment(Standalone)

Mt

16.46

22.38

10.86

52.5

Export Ratio on
Value Basis（Standalone）

%

46.2

45.5

46.7

41.0

Average Sales
Price(Standalone)

00
0
yen
/ｔ

Exchange Rate¥/$

ExcludingInventory
Valuation etc.*

99.0
111.0

103.7
112.1

131.6
131.6

136.3
144.0

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

59.0
62.0
55.0

11.40
12.00
10.80

24.00

21.60

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

Approx.

124
131

41

130
137

2,500

25.40

Approx.

41

Approx.

44

131
135

Approx.

138＊Excluding inventory valuation, carry over of raw materials and foreign exchange valuation from segment profit
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

15

JFE Steel

82.0Bn. Yen Decrease in JFE Steel’s Segment Profit(FY2021 Apr-Dec vs. FY2022 Apr-Dec)（ billion yen ）JFE Steel

FY2022

FY2021
Apr-Dec

1H

3Q

Apr-Dec

ChangeSegment
Profit

252.0

148.2

21.8

170.0

(82.0)

ExcludingInventory
Valuation etc.

65.0

32.2

22.8

55.0

(10.0)

1. Cost2. Volumeand Mix
3. Sales and
Raw materials

4. Foreign exchange
effects on trade
5. Inventory
valuation
6. Others+5.0(18.0)+182.0• Cost reduction progress despite Chiba No.6 blast furnace
refit• Volume -20.0, Mix +2.0
• Improve spreads due to the reflection of high prices ofmain raw materials, metals, and other commodities inselling prices(75.0)• 1USD=111.0yen→1USD=135.7yen(72.0)• Inventory valuation-26.0 (+123.0→+97.0)• Carry over-59.0 (+60.0→+1.0)• Foreign exchange valuation+13.0(+4.0→+17.0)(104.0)• Group companies-51.0• Energy prices-36.0, etc
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

16

JFE SteelCurrent Business Environment（Domestic）➢

Domestic demand in the residential and civil engineering construction sectors is the postponed andsome customer’s production activity is slowing due to a slowdown in overseas economies.

➢

The level of activity in the auto sector is slightly behind the previous forecast but is improving.

【Trend by Sector】【Outlook for Domestic Ordinary Steel Consumption】

2.2%

-5%

0.8%
-3.0%

-3.5%

-1.6%

-4.4%

Construction
FY21.1H

FY21.2H

FY22.1H

FY22.2H

FY22.3Q

FY22.4Q

Source: Ministry of Economy, Trade and Industry, “Outlook for SteelConsumption” 24 December 2022. (FY2022.1H and after is estimated results)【Outlook for Domestic Auto Production】
10,000 units.

237

199

Avg

FY20

1Q

164
2Q

197

3Q

FY21

196

4Q

167

1Q

2Q

• In the non-residential use, large projects such as distribution
warehouses and semiconductor factories are steady, but small
and medium-sized projects are still sluggish.
• In residential properties, the number of new housing starts has
been sluggish due to soaring materials prices.
• Demand for steel materials decreased slightly from the previous year.

recoverytrend• In the public sector, a high level of budget has been secured, butdelays have become apparent due to design reviews caused bysoaring materials prices. Demand for steel materials decreased slightly
from the previous year.
17

3Q

FY22

4Q

Civil

Avg

FY19

196

FY22.2H
mid 400

FY22.1H
372

205• Orders for industrial machinery have slowed due to the global
economic slowdown.
• The level of activity in construction equipment is strong. The
impact of declining housing investment in North America should beclosely watched. Demand for steel materials is almost flat compared tothe previous year.

0.0%

-0.6%

-10%

• Negotiation of new shipbuilding is deadlocked, however the contract
balance still remains for two years.
• The current level of activity is expected to remain stable over the
next two to three years, although there are soaring materials prices
and labor shortages.

engineering

-0.3%

4.0%

Building

0%

Manufacturing

2.7%

5%

• Demand remains strong and there is a large backlog of orders.
• Restrictions on the supply of semiconductors and other components aregradually ease and the level of activity is expected to improve inthe future.

Other
manufacturing

10%(Change YonY）

Shipbuilding

12.7%

Automobile

15%

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

JFE SteelCurrent Business Environment（Overseas）➢

With weak domestic demand in China and the outlook uncertain in Europe and US due to the slowdown of
economies, demand for steel overseas is currently weak and there were moves to adjust inventories.

➢

The supply and demand for steel products and market conditions are expected to improve in the
future due to the economy recovery with a round of inventory adjustment, China's lifting of the zero-COVID
policy and support measures for the real estate sector. Moderate improvement are seen recently.

110【 crude steel production and steel exports in China 】

15

Annual crude steel
production (per month)
2020: 1,053 million tons (88)2021: 1,033 million tons (86)2022: 1,013 million tons (84)12

Crude steel production(per month)
100
（Mｔ）
90

97
Avg(2020)
88Mt/month

94

90
80

78

60

4-6

7-9

10-12

1-3

2020

4-6

7-9

10-12

2021

4-6

7-9

（Arrows indicate changes from the previous forecast）

World

10-12

3

2022

HRC
Price

6.8%

5.2%

Oct. 2022

2.7%

1.0%

4.4%

6.1%

4.5%

2.9%

1.4%

5.2%

6.1%

４.3%

Forecast

Jan. 2023【Trend by Sector】

400
20.1

20.7

21.1

21.7

22.1

22.7

23.1

*ASEAN5：
Thailand, Malaysia, Indonesia,
Philippine, and Singapore

Thin
Sheet

・Demand was generally weak due to weak real estate market in China, inventory
adjustment due to uncertainty about the future, and postponement of building
demand in emerging countries due to weak currency and insufficient foreignexchange reserves.
・A recovery is expected in the future, and moderate improvement was seen
recently.

Automobile• Demand remains firm and production levels gradually recover as supply
constraints ease.
• In Europe, production and sales were sluggish due to the situation in Ukraine andinflation.

Ship
Building

・Chinese and South Korean shipbuilding companies secured stable contracts
balance by increasing new construction orders.
・It is assumed that there will be a delay in construction due to a shortage of workers,
but there will be no significant impact.

Energy・WTI crude oil prices remain in high range. Development of alternatives to Russiancrude oil and gas has progressed mainly in North America and the Middle East.
・Inquiries increased mainly for high chromium seamless steel pipes.

500

Sign of a reversal

ASEAN-5

3.0%

Source: IMF World Economic Outlook Update October 14, 2022, January 31, 2023
6800

※HRC Price：Average pricein 5 cities in China

India

2.0%

900

600

China

3.4%

【China : Steel market price】

700

US

2022 Estimate

Forecast

77

1-3

(Mｔ)
9

76

Steel
exports

1-3

Avg(2020)
84Mt/month

84

82

81

70

93

Avg(2021)
86Mt/month

90 90【Real GDP Growth Forecast in 2023】

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

18

JFE SteelRaw materials（Steel Business）◼ Key raw material

Iron ore bottomed out at the end of October 2022 and has been on an uptrend mainly
due to expectations of a recovery in demand for steel products following China's easing of its
zero-coronavirus policy.
• Coking coal prices are on a downward trend from their recent peak due to the recent
deterioration in overseas steel prices, but it remain in the high range, and is expected tocontinue at current levels.
• The effects of reduced supplies due to weather in Australia and Brazil, which haveentered the rainy season, and China’s partial lifting of import restrictions on Australiancoal should be closely watched.
•◼ Metal and scrap

Market have calmed down after a brief surge but have remained relatively high.

•

$700

$225
($/DMT)($/WMT)

Iron ore（Iron Ore Fines from Australia）$200

Coking Coal
（Hard Coking Coalfrom Australia）

$600

$175

Term-contract FOB

$500

$150
$400

$125
$300

$100

$200

$75
$50
21/4
Termcontract
FOB

$/DMT

21/7

21/10

22/1

22/4

22/7

FY2021
Oct-Dec
182

22/10

23/1

FY2022
Jan-MarApr-Jun

Jul-Sep

95

118

133

Oct-Dec
103

Jan-Mar85

Term-contract FOB

$100
21/4
Termcontract
FOB
$/WMT

21/7

21/10

22/1

FY2021
Oct-Dec
371

22/4

22/7

22/10

23/1

FY2022

Jan-MarApr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

395
526
287
279
－
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

19

JFE Steel

15.0bn. Decrease in JFE Steel’s Segment Profit(FY2022 (Previous Forecast) vs. FY2022(Updated Forecast))（billion yen）

FY2022

FY2022Previous Forecast

Updated Forecast

Segment Profit

165.0

150.0

(15.0)

Excluding Inventory
Valuation etc.

83.0

77.0

(60)

JFE Steel

Change1. Cost(10.0)• Cost increases due to production reduction

2. Volumeand Mix(20.0)• Volume -20.0+20.0• Reflect high prices of main raw materials, metals,
and other commodities quickly in selling prices tofurther improve spreads

3. Sales and
Raw materials

4. Foreign exchange
effects on trade
5. Inventory
valuation

6. Others

+14.0
(9.0)

(10.0)• 1USD=138yen(about)→1USD=135yen(about)• Inventory valuation+12.0 (+72.0→+84.0)• Carry over-6.0 (-19.0→-25.0)• Foreign exchange valuation-15.0 (+29.0→+14.0)• Group companies-6.0• Energy prices -6.0, etc.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

20

JFE Steel

173.7Bn. Decrease in JFE Steel’s Segment Profit(FY2021 (Actual) vs. FY2022 (Forecast))

JFE Steel

FY2021
ActualFY2022
Forecast（billion yen）
ChangeSegment Profit

323.7

150.0

(173.7)

Excluding Inventory
Valuation etc.

129.7

77.0

(52.7)

1. Cost2. Volumeand Mix±0(30.0)

3. Sales and
Raw materials+220.04. Foreign exchange
effects on trade(91.0)• Positive : Promote cost reductions
Negative: Chiba No.6 blast furnace refit and cost
increases due to production reduction.
• Volume -35.0, Mix +5.0
• Improve spreads due to the reflection of highprices of main raw materials, metals, and othercommodities in selling prices• 1USD=112.1yen→1USD=135yen(about)

5. Inventory
valuation(121.0)• Inventory valuation -76.0 (+160.0→+84.0)• Carry over-48.0 (+23.0→-25.0）• Foreign exchange valuation+3.0 (+11.0→+14.0)

6. Others(151.7)• Group companies-73.5• Energy prices -51.0,Copyrightetc. © 2023 JFE Holdings, Inc. All Rights Reserved. 21

JFE Steel

146.4Bn. Yen Decrease in JFE Steel’s Segment Profit(FY2022.1H vs. FY2022.2H)（billion yen）

JFE SteelSegment Profit
Excluding Inventory
Valuation etc.

1. Cost2. Volumeand Mix

3. Sales and
Raw materials
4. Inventory
valuation

FY2022 Forecast

1H Actual

2H Forecast

ChangeFull Year

148.2

1.8

150.0

(146.4)

32.2

44.8

77.0

12.6

(10.0)• Positive : Promote cost reductions
Negative: Chiba No.6 blast furnace refit and cost
increases due to production reduction.

(21.0)• Volume -24.0, Mix +3.0

+117.0• Reflect high prices of main raw materials, metals,
and other commodities quickly in selling prices tofurther improve spreads(159.0)• Inventory valuation -80.0 (+82.0→+2.0)• Carry over-35.0 (+5.0→-30.0)• Foreign exchange valuation-44.0(+29.0→-15.0)

5. Others(73.4)• Foreign exchange effects on trade -9.0
（1USD=131.6yen→1USD=137yen(about)• Group companies-25.0• Energy prices -21.0, etc.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

22

JFE Steel

Initiatives toward achieving the 7th mid-term planfrom 2nd half of FY2022➢ In the second half of FY2022, segment profit excluding Inventory Valuationetc.(including Disappear impact of Chiba No.6 blast furnace refit) in the steel businessis expected to be about 110 billion yen on an annual basis.

➢ We will implement various measures, including the Shut down of upstream
facilities in Keihin planned for next fiscal year, and aim to exceed the performancetarget of 230 billion yen in FY2024.
・Product-mix enhancements
・Improvements in sales prices
such as overhauling the extra pricing, etc.
・Expansion of overseas solution business, etc.

Initiatives to achieve mid-term plantargets, starting in the second halfof fiscal 2022(billion yen)

Recovery ofexport market

Crude Steel(Standalone)
23Mt ⇒ 26Mt
Including 45 billion
yen in Structuralreform effectIncluding todisappear impact of
Chiba No.6 blast
furnace refit

80.0

230.0

75.0

Including 20 billion
yen of disappearing
production cut cost

Cost

Volume110.0
FY2022.２H ×２

22下×2（Excluding Inventory
Valuation etc.）

Recovery of market

Others

FY2024 targets

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

23

JFE Engineering
Financial Forecast for Fiscal Year 2022

24
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

JFE Engineering

Financial Forecast for Fiscal Year 2022
Current Business Environment/Overview of Financial Status➢ Orders remain strong, but losses from European construction projects
have been significant.
➢ Full-year segment profit is expected to fall to ¥13.0bn.
(decrease by ¥7.0bn. from previous forecast）

Financial
Forecast

FY2021 Actual

FY2022 Forecast(Updated)

ChangeFY2021→FY2022

FY2022 Forecast(Previous)(Updated forecast)(billion yen)Orders
Revenue
Segment Profit

2H
Full Year
253.5
505.8
278.9
508.2
14.8
26.0

2H
Full Year264.0 550.0
301.0 520.0
16.9
13.0

2H
Full Year
10.5
44.2
22.1
11.8
2.1 (13.0)

2H
Full Year
264.0
550.0
301.0
520.0
23.9
20.0

Compared to previous forecast (segment profit)<Full-year (7.0)> Loss on constructions in Europe (5.5)➢ Cost increases due to construction delays caused by・・・ (3.5)
shortages of materials/equipment and manpower
resulting from the prolonged situation in Ukraine.
➢ Delay in obtaining additional fees from customers
・・・ (2.0)(Delay for next fiscal year and beyond)Rising price of rising price of utilities (1.5)
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

25

JFE Shoji
Financial Forecast
for Fiscal Year 2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

26

JFE-Shoji

Financial Forecast for Fiscal Year 2022
Current Business Environment/Overview of Financial Status➢ Full-year segment profit is expected to be ¥60bn.
(As the previous forecast is, increased by ¥4.1bn. year-on-year)
Financial Forecast
FY2021 Actual

FY2022 Forecast(Updated)

ChangeFY2022 Forecast(Previous)

FY2021→FY2022(Updated forecast)2H(billion yen)

2H

Revenue

687.3 1,231.7

739.8 1,490.0

30.3

19.4

Segment Profit

Full Year

55.9

Full Year

60.0

2H

Full Year

52.5

258.3

(10.9)

4.1

2H

Full Year

739.8 1,490.0
19.4

60.0

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

27

Topics

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

28

JFE SteelConsideration of expand manufacturing facilities for
non-oriented electrical steel sheet➢

As the electrification of automobiles accelerates with the strengthening of environmental
regulations worldwide, the demand for high-grade non-oriented electrical steel
sheet(N/O) for the main engine motors of electric vehicles will rapidly increase.
Therefore, supply and demand are expected to tighten.
Electric Vehicle Global Demand Outlook

Regulations for automobiles (electrification)

Source: Fuji Keizai 2020, 2022 edition HEV, EV-related market
thorough analysis survey

Europe: Ban sales ofgasoline vehicles
2025: Norway
2030: UK
2035: EU Member
States(Units: 1 million)
2022 edition
Forecast *Japan: Promoteelectrification
Zero sales of gasolineonly cars from 2035

2020 edition
Forecast *US:Promoteelectrification
2030: 50% of all electric cars

19

20

21

22

23

24

25

26

30

35

*20 edition forecast: Estimate in 20 and forecast thereafter.
22 edition forecast: Estimate in 22 and forecast thereafter.

India: Promote
shift to EVs
30% by 2030

China: Shift to new energy
vehicles and HEVs
2025: At least 50%
2030: At least 40%
2035: At least 50%

Prediction of global demand and supply ofhigh-grade non-oriented electrical steel
sheet(N/O) for the main engine motors
14（ Calculated by JFE; 2020 results = 1.0 ）12（ Demand is expected to be about 5 times
higher in 25, 10 times higher in 30 and 13
times higher in 35 than in 20 ）10

ASEAN:Promote EVs

8

Thailand

62030: 30% of production are EVs
2035: 69% of sales are EVs/PHEVs
Indonesia 2030: EV sales:600touzand
2035: Sales of gasoline-powered vehicles
banned (all vehicles to be EVs)

Room to増産
increaseproductions
余地

Demand4

Supplycapacity

2
0

20

21

22

23

24

24

30

35

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

29

Consideration of expand manufacturing facilities for nonoriented electrical steel sheet➢➢

JFE Steel

We are considering further capacity expansion of non-oriented electrical steel sheet(N/O) in response toincreased demand. (Plan; starting operation in fiscal 26, with top grade N/O for the main engine
motors of electric vehicle 3 times higher than the current level)
In anticipation of increased global demand, we will continue to consider increasing our supply capacity inJapan and overseas.

Japan

Expand manufacturing facilities for nonoriented electrical steel sheet (N/O)
in Kurashiki district

Apr.21 Release

Total
investment

Approx. 49 billion yen

Operation
start

First half of FY2024

Production
capacity

Double current production
capacity for high-grade nonoriented electrical steel sheets

Approx. 50 billion yen(plan)

Operation
start(plan)
Production
capacity(plan)◇Higher efficiency(improve electricity)◇High speed rotation andhigh power-- > More cruising distanceand save battery usage-- > Downsizing andweight reduction

Performance Requirements for non-oriented electricalsteel sheet and JFE's efforts

Low iron loss
The challenge is
to be compatible

Feb. 23 Release

Total
investment

Aim of the main engine motors of electric vehicles

FY2026
Triple current production capacity
for top-grade non-oriented electricalsteel sheets used in the main engine
motors of electric vehicles

High magnetic
flux density

JFE’s original technology
achieves all required
performance in highdimensions.
(Top Grade N/O)

The challenge is
to be compatible

High Strength

In addition to our product development and production
technology capabilities, we can use the Group's extensive
supply chain to increase production and sell top-grade N/O.
30
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

JFE-HDDX Report➢ We have published 「DX report 2022」 to describe
JFE’s initiatives for DX. Visit our company website.
*English version is coming soon.

＜URL：https://www.jfe-holdings.co.jp/investor/library/dxreport/index.html＞

Table of Contents
1. JFE’s DX Strategy Direction～Providing new added value～
2. Feature Story：Taking a New Step
➣ Collaboration among group companies and creation of synergy effectin O&M field of offshore wind-power generation business.

➣ Transformation of existing business and creation of new businessdue to integrated management system of plant information and videos.

➣ Initiatives to secure and develop human resources to promote DX.
3. DX Initiatives in Each Business
Steel BusinessRealization of blast furnace operation automation by Cyber Physical System(CPS) ,Forging ahead with IT structural reforms etc.

Engineering Business
DX-related service package for boiler power plants “RODAS” etc.

Trading BusinessBusiness transformation and creation by holding DX workshops etc.

4. Security Measures

Digital Governance, Security Management etc.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

31

Appendix(1)Profit/Loss Analysis

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

32

JFE-HD

Main Financial Data
J-GAAP

IFRS
FY14

FY15

FY16

FY17

FY18

(bn. Yen, times)

FY18

FY19

FY20

FY21

’22

Forecast(bn. Yen, times)

Ordinary Income

231.0

64.2

84.7

216.3

221.1

Business profit

232.0

37.8

-12.9

416.4

235.0

EBITDA

421.5

254.4

279.9

388.8

405.9

EBITDA ＊1

428.2

269.4

223.4

668.7

505.0

ROS

6.0%

1.9%

2.6%

5.9%

5.6％

ROS ＊2

6.0%

1.0%

-0.4%

9.5%

4.5%

ROE

7.7%

1.8%

3.7%

7.6%

8.3％

ROE ＊3

8.6％-11.1%

-1.3%

15.7%

7.3%

ROA

5.5%

1.7%

2.3%

5.2%

5.1％

ROA ＊4

5.0％

0.8%

-0.3%

8.4%

4.4%

Debt Outstanding

1,501

1,379

1,375

1,331

1,450

Interest-bearing debt
outstanding

1,524

1,814

1,806

1,849

1,950

Debt/EBITDA Ratio

x3.6

x5.4

x4.9

x3.4

x3.6

Debt/EBITDA
multiple
*5

x3.6

x6.7

x8.1

x2.8

x3.9

D/E Ratio

59.0%

56.9%

51.4%

58.1%

62.0％

D/E Ratio ＊6

68.2％

96.4%

93.2%

80.8%

75.0%

Profit attributable toowners of parent(yen/share)

241.6

58.4

117.8

250.8

285.0

Profit attributable toowners of parent(yen/share)

283.8-343.4

-38.0

500.1

258.9

60

30

30

80

95

95

20

10

140

80

24.8%

51.4%

25.5%

31.9%

33.3％

33.5％

ー

ー

28.0%

30.9%

Dividend(yen/share)
Pay-out Ratio

Notes[IFRS]

Dividend(yen/share)
Pay-out Ratio＊1 EBITDA = Business profit + Depreciation and Amortization＊2 ROS = Business profit / Revenue＊3 ROE = Profit attributable to owners of parent company / Equity＊4 ROA = Business profit / Total assets＊5 Debt/EBITDA ratio = Interest-bearing debt outstanding / EBITDA＊6 D/E ratio = Interest-bearing debt outstanding / Equity attributable to owners of parent
For debt having a capital component, a portion of its issue price is deemed to be capital, as assessed by rating agencies.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

33

JFE-HD

Consolidated

Main Financial Data and Performance & Profitability Targets
7 th mid-termbusiness plan
FY2024FY2020
ActualFY2021
ActualFY2022
Forecast

Business profit¥320.0 billion¥-12.9 billion¥416.4 billion¥235.0 billion

Profit attributable toowners of the parent¥220.0 billion¥-21.8 billion¥288.0 billion¥150.0 billion

10%

-1.3%

15.7%

7.3%

About 3x

8.1x

2.8x

3.9x

About 70%

93.2%

80.8%

75.0%

10,000 yen/ton-3,000 yen/ton

14,000 yen/ton

7,000 yen/ton¥230.0 billion¥65.4 billion¥323.7 billion¥150.0 billion

Engineering business Segment
profitRevenue¥35.0 billion¥650.0 billion¥24.0 billion¥485.7 billion¥26.0 billion¥508.2 billion¥13.0 billion¥520.0 billion

Trading Business Segment profit¥40.0 billion¥20.0 billion¥55.9 billion¥60.0 billion

7 th mid-termbusiness plan
Around 30%－（10 yen）

28.0%（140 yen）

30.9%(80 yen)ROE
Debt/EBITDA
D/E*1

Operatingcompanies

Steel businessPayout ratio

Profit per ton*2
Segment profit*1 For liabilities with equity subject to credit ratings, theseequities reflect the evaluations of rating agencies*2 Steel business profit per ton (consolidated segment profit /non-consolidated sales volume)
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

34

JFE-HD

Progress of Cash Flow Improvements, Debt/EBITDA Ratio➢ At the end of FY2022, the Debt/EBITDA ratio is expected to be x3.9.
FY2022（billion yen）

Consolidated Cash Flow Forecast

Cash-in
Net Profit

Cash-out

CAPEX &
150.0 Investments

Depreciation andAmortization

330.0

Debt

100.0

Debt/EBITDA Ratio

16,000(Right Axis)

14,00012,00010,00075.0Working Capital
etc.

158.0

* Debt is expected to increase by ¥100 bn. from FY2021 to FY2022.
It includes ¥25 bn. increase by foreign currency translation impact
due to the yen depreciation.

4,000

9.0

Target of 7th mid-termbusiness plan
Approx. 3x

2.8
668.7

6,000
Dividend Payment

43.0(billion yen)

8,000

270.0

Asset Compression

Progress of Debt/EBITDA Ratio

3.9

7.0
5.0
3.0
1.0

505.0

EBITDA(Left Axis)

(1.0)
(3.0)

2,000

(5.0)

0

(7.0)

Debt

1,849.4

1,950.0*

FY2021

FY2022◼ EBITDA＝Business profit＋Depreciation and Amortization◼ Debt/EBITDA Ratio＝Interest-bearing debt outstanding/EBITDA
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

35

JFE Steel

Financial Results for Third Quarter of Fiscal Year 2022
FY2021

FY2022

Unit

1Q

2Q

3Q

4Q

Full
Year

1Q

2Q

3Q

Revenuebillion
yen

638.5

771.9

832.8

930.2

3,173.4

932.6

986.3

986.9

Segment
Profitbillion
yen

69.7

88.8

93.5

71.7

323.7

93.0

55.2

21.8

billion
yen

25.7

42.8

(3.5)

64.7

129.7

(23.0)

55.2

22.8

Crude Steel(Standalone)

Mt

6.25

6.45

6.49

6.69

25.88

6.43

6.21

5.48

Crude Steel(Consolidated)

Mt

6.59

6.80

6.85

7.02

27.26

6.77

6.59

5.81

Mt

5.26

5.56

5.63

5.92

22.38

5.54

5.32

5.25

%

43.2

49.3

45.9

43.6

45.5

48.5

45.0

41.0

000
yen/ｔ

87.6

101.0

107.6

116.7

103.7

126.7

136.7

136.3

Exchange Rate

¥/$

109.8

110.0

113.1

115.3

112.1

126.5

136.6

144.0

Exchange Rate
(End of Term)

¥/$

110.6

111.9

115.0

122.4

122.4

136.7

144.8

132.7

ExcludingInventory
Valuation etc.*

Shipment(Standalone)
Export Ratio
on Value Basis（Standalone）
Average Sales
Price(Standalone)＊Excluding inventory valuation, carry over of raw materials and foreign exchange valuation from segment profit
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

36

JFE Steel

33.4Bn. Yen Decrease in JFE Steel’s Segment Profit(FY2022.2Q (Actual) vs. FY2022.3Q (Actual))（billion yen）
FY2022

JFE Steel

1Q

2Q

3Q

4Q

Full
Year

ActualActualActualForecast

Forecast

ChangeSegment Profit

93.0

55.2

21.8

(20.0)

150.0(33.4)

Excluding Inventory
Valuation etc.

(23.0)

55.2

22.8

22.0

77.0

(32.4)

1. Cost2. Volumeand Mix
3. Sales and
Raw materials
4. Inventory
valuation
5. Others(5.0)(16.0)• Chiba No.6 blast furnace refit• Volume-17.0、Mix+1.0+5.0• Improve spreads due to the reflection of highprices of main raw materials, metals, and othercommodities in selling prices(1.0)• Inventory valuation -6.0 (+21.0→+15.0)• Carry over+28.0 (-32.0→-4.0)• Foreign exchange valuation-23.0(+11.0→-12.0)(16.4)• Foreign exchange effects on trade -6.0
（1USD=136.6yen→1USD=144yen）• Group companies -10.0, etc.
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

37

JFE Steel

41.8Bn. Yen Decrease in JFE Steel’s Segment Profit(FY2022.3Q (Actual) vs. FY2022.4Q (Forecast))（billion yen）

FY2022

JFE Steel

1Q

2Q

3Q

4Q

Full
Year

ActualActualActualForecast

Forecast

ChangeSegment Profit

93.0

55.2

21.8

(20.0)

150.0(41.8)

Excluding Inventory
Valuation etc.

(23.0)

55.2

22.8

22.0

77.0

(0.8)

1. Cost2. Volumeand Mix
3. Sales and
Raw materials
4. Inventory
valuation
5. Others

±0
＋11.0
(5.0)
(41.0)(6.8)• Volume＋9.0、Mix＋2.0
・Sluggish market due to overseas economic slowdown• Inventory valuation -28.0 (+15.0→-13.0)• Carry over-22.0 (-4.0→-26.0)• Foreign exchange valuation+9.0(-12.0→-3.0)• Increase in depreciation cost and other expenses etc.

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

38

JFE Steel

Impact of the depreciation of the yen(Steel Business)➢ Currently, the yen is trending toward appreciation, but compared to the past, the yen is still at aweaker level.
➢ The impact of foreign exchange effects on trade in FY2022 is expected to decrease by ¥91bn.
(improve by ¥14bn. from previous forecast).
➢ We promote to reflect the impact of the depreciation of the yen to sales price by improving sales
prices in the domestic market.

Past

Sales environment

Manufacturing cost

Improving export
competitiveness ofcustomers/JFE SteelA small portion of imported raw
materials in manufacturing costs=> Small impact of FOREX
movements

Parts supply constraints
in the automotive sector
and weak overseas steelmarketDue to the soaring prices, a big
portion of imported raw materials
in manufacturing costs=> Heavy impact of FOREX
movements

Profit and Loss※1
Valuation ：positiveeffects on trade ：neutral(imports and exports)

Now

USD-JPY trend
150

1H

2H
(3Q/4Q)

year

FY2021

110

114

112

FY2022132

145(145/145)

138

132

137
(144/131)

135

Previous
Forecast

130

FY2022Updated
Forecast

120

・Excess payments have been
increasing since the second
half of FY2020. It is expected
to shrink in the second half of
FY2022.
・Currently, foreign currency
costs account for
approximately 60% of
manufacturing costs.

2021

22/4

2020

21/4

2019

20/4

2018

19/4

2017

18/4

2016

17/4

2015

16/4

15/4

110

100

(imports and exports)※1

FOREX balance of trade

USDJPY(Yen/$)
140

Valuation ：positiveeffects on trade :Negative

Valuation：
Translational FOREX↑excess receipts↓ excess payments Impact concerning
foreign currency assets,
liabilities and overseas
Gr companies‘ profit.
Previous
Forecast

effects on trade：

Impact of FOREX
movements on
Updated
Forecast foreign currency
trade (imports andexports) on earnings.

2022(FY2015 ~ FY2021: half-year basis)

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

39

JFE Steel

Shifting Focus from Quantity to Quality（Progress of Structural Reform and Major CAPEX）➢ Steadily implementing structural reforms and capital investment to shift from quantity to quality.
✓ August 2022: Shutdown of Tin Mills in Chiba was completed, and production of steel
sheet for cans was consolidated in Fukuyama.
✓ January 2023: Refit of No. 6 Blast Furnace in Chiba was completed.
Facilities

FY2022

FY2021

FY2022（No.2 Tandem Mill, No.4 CAL, TFL)

Kurashiki Refit
No.4 BF(~Dec.2021)

Refit of Blast Furnace

No.6 BF(Sep.2022~Jan.2023)

Shut down of upstream facilities
in Keihin（No.2 BF, Sintering Machine, Coke oven,
Converters, EAF, Continuous Casting
Machine etc.)

Shutdown of Hot Rolling
Facilities in Keihin

CAPEX related to improvements ofhigh-value added product ratio

FY2024～

Shutdown(Aug. 2022)（No.2 Tandem Mill, No.4 CAL, TFL)

Shutdown of Tin Mills in Chiba（excl. Pickling line and skinpass
mill）

FY2023

Installed new Continuous
Casting Machine（Jun.2021）

Shutdown of Tin Mills in Chiba• August 2022: Shutdown of Tin Mills in Chiba wascompleted.
• Consolidation of manufacturing to Fukuyama andcustomer approval are progressing well.

To be shut down(~Sep. 2023)

Effect of structuralreform and CAPEX

To be shut down(~Sep. 2023)• Maintenance cost
reduction• Fixed cost reduction• Product-mix
enhancements etc.

Reinforce extra-thick steel
plate production line foroffshore wind-power
application （Nov.2023）

1H of FY24 Reinforce
Non-oriented Electrical Steel
Sheet Production Line

Refit of No. 6 Blast Furnace in Chiba
・Refit began in Sept. 22, and a blow-in was carried out in Jan. 23.
・Facility enhancements such as furnace stabilization and Cyber Physical
Systems improvements are also planned.
・Investment: 43 billion yen/Furnace capacity after refit: 5,153㎥

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

40

JFE-HD

Grain-Oriented Electrical-Steel-Sheet, Trading Business
Steel Business
Overseas

To conduct FS of grain-oriented
electrical-steel-sheet JV with JSW
in India

JFE Steel signed a memorandum of understanding toconduct a feasibility study with JSW, JFE’s strategic
alliance-partner in India, regarding establishing a
G/O manufacturing and sales joint-venturecompany in India.

＜Demand forecast of G/O＞
Demand for G/O, which are used for the iron coresof power transform, is expected to grow globallyamid continuous increase in demand for electric
power and expansion of reusable energy.
(Economic growth in India is estimated to boost its
local demand for electric power.)

Trading Business
Establish No.1 global distribution andprocessing system of electrical steel
sheet market
Promote the investment to capture the growthdemand for in-vehicle motors and transformers insideand outside Japan.
Trading Business
Processing Base for Electrical Steel Sheet
Decided expansion of capacity
to manufacture core products
for transformer in Canada.
(JFE Shoji Power Canada Inc. Oct, 2021)〈Electricity Needs in India〉
160% ≒ equivalent to an annual
increase of 4%(Largest in the world)
Decided expansion of capacity to manufacture
in-vehicle motor core products.
・ China Jiangsu JFE Shoji Steel Products Co., Ltd. Nov, 2021
・ Japan JFE Shoji Electrical Steel Co.,LTD.
Apr, 2022
・ USA JFE Shoji Steel America Inc.
Jul, 2022
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

Appendix(2)Business Environmental
Indicators, etc.

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

42

Domestic
Market Environment

JFE Steel

Combined Inventories of HR,
CR and Coated Steel Sheet(month)（000ｔ）

5,000

Maker

Whole Saler

Coil Center

5

Inventory Ratio(Right axis)

4,000

4

3,000

3

2,000

2
ChangeDec,2022
1,000

Inventories

4,214(000t)

Inventory Ratio（month）

3.28

From
previousmonth-75(-1.7%)

Frompreviousyear-335(-7.4%)

+0.32

+0.55

Nov,2022

Dec,2021
1

4,289

4,549

2.96

2.73

2018

2019

2020

2021

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

0

Jan

0

2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

43

Domestic
Market Environment

Inventories of Plate (Plate Shear)and Wide Flange Shapes

Inventories of Plate (Plate Shear)

Inventories of Wide Flange Shapes（month）（000ｔ）（000ｔ）
500

3.5（month）

Inventories

250

3.5

Shipment

Inventories

Inventory Ratio(Right axis)

Inventory Ratio(Right axis)
450

3.0

400

2.5

350

200

3.0

150

2.5

100

2.0

2.0

1.5

2018

2019

2020

Inventories 191.2

2022

2018

2.77

ChangeFromprevious
month

From
previous
year

+4.6

＋1.7

(+2.5%) (＋0.9%)

+0.21

Nov,
2022

Dec,
2021

1.5

186.6 189.5

ー0.10

2.56

2.87

2019

2020

Oct

Jul

Apr

Jan

Jul

2021

Oct

Jan

Apr

Oct

Jul

Apr

1.0

Jul

Jan

Oct

Jul

0.5

0

Apr

Inventory
ratio（Month）
Jan

2.5
Jul

2.7

Oct

（000t）

Jan

380

Apr

Jul

2021

1.0

450

Oct

+0.3
Apr

+0.1
Jan

Oct

Jul

Jan

(-2.0%) (+16.1%)

2.8
Apr

Jul

Oct

Jan

Apr

Inventory
ratio（Month）

+61

Jan

（000t）

-9

Oct

441

year

Jul

Inventories

month

Apr

250

50

Oct

Dec,
Nov, Dec,
From
Fromprevious
previous
2022
2022 2021

Dec,
2022

Jan

Change

Apr

300

200

JFE Steel

2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

44

JFE Steel

Domestic
Market Environment

Trend of Import Steel (Ordinary Steel)（000ｔ）
600

S.Korea

China

TaiwanOthers

500

400

300

200

ChangeFrom
From
Dec,2022
Nov,2022 Dec,2021
Previous Previous
Month
Year

Unit: 000t
100

Import Steel

375

＋7

＋12

(+1.9%)(+3.3%)

368

363

0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
2018

2019

2020

2021

2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

45

Domestic
Market Environment

JFE SteelPrice Trend of Import Steel（000 yen/ｔ）

120
110
100
90
80
70
60
50

Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov

40
2016

2017

2018

2019

2020

2021

2022

Data: The Japan Iron and Steel Federation Import Steel from S. Korea
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

46

JFE Steel

Overseas
Market Environment

Crude Steel & Im/Export, China

Export（Left axis）（Mｔ）

Import（Left axis）

Crude steel（Right axis）

（Mｔ）

9

120

8

100
7
6

80

5
60
4

Dec,2022

From
Previousmonth

Apr-Dec,
2022

From
Apr-dec,
2021

Crude Steel（Mt）

77.9

+4.5%

764.6

+0.3%

Export（Mt）

5.4

-3.4%

54.3

10.3%

3
2
1

40

20

0

0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
2018

2019

2020

2021

2022

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

47

JFE Steel

Overseas
Market Environment

Inventories in China by Product

（Mｔ）

30.0

100.0%
Bar

Rod & Wire

Plate

HR

CR

Change by Previous year(%)
50.0%

25.0
0.0%
20.0
-50.0%

15.0-100.0%-150.0%10.0-200.0%ChangeJan,2023
13.4

2019

2020

-250.0%

2021

2022

1月

Nov

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

May

Mar

Jan

-300.0%

Nov

Sep

Jul

May

Mar

Sep

Jul

May

Mar

Jan

Nov

Sep

Jul

Mar

Jan

May

2018

From
Dec,2022 Jan,2022
Previous
Year
+2.2
8.9
11.2

(+50.6%) (+20.1%)

0.0

Jan

Inventories（Mt）

From
Previous
month
+4.5

Nov

5.0

2023

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

48

Overseas
Market Environment

Metal Spread Trend(Chinese Spot Basis)

JFE Steel

（$/t)

（$/t)
1000

1000

900

900

800

800

700

HRC

700

600

600

500

500

400

400

300

300

200

200

100

Metal
Spread10000Metal Spread ＝ HRC Price － Raw Materials Cost
*HRC Price： Chinese Spot basis
Raw Materials Cost： Calculated from market price of Iron Ore and Hard Coking Coal
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

49

(US$/t)FeMn

2,600

2,200

1,800

1,400

1,000

600

2018.1
2018.72019.1
2019.72020.12020.72021.12021.72022.01
2022.072023.012018.72019.1
2019.72020.12020.72021.12021.72022.01
2022.072023.01

34.0
32.0
30.0
28.0
26.0
24.0
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0

2018.1(US$/lb) Mo

2017.760

2017.11102017.7160

2017.1

210

2016.7(US$/t)2016.7260

2016.12023.01

2022.072022.01

2021.72021.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.7FeCr

2016.12023.01

2022.072022.01

2021.72021.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1(￠/lb)

2016.1JFE Steel

Raw Materials Trend of Sub Material’s Market Price
Zn

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

50

JFE SteelRaw Materials

Trend of Sub Material’s Market Price

Scrap

Spot Bulker($/B)（yen/ｔ）
70,000100,000
90,00060,00080,00070,00050,00060,00040,00050,00040,00030,00030,00020,00020,00010,0002023.12022.72022.12021.72021.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72023.12022.72022.12021.72021.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1（yen/ｔ）

2016.10

10,000

Oil

LNG

180,000(Crude Oil: $/bbl)

160,000

130

140,000(bunker oil: $/t)
bunker(Japan VLSFO (Right axis)

110

120,000

1200

WTI crude oil（left axis）

1000

bunker(Japan 380CST) (Right axis)

800

90

2023.12022.72022.12021.72021.12020.702020.1

10
2019.7200
2019.130
2018.7400

2018.12023.12022.72022.12021.72021.12020.72020.1

2019.72019.1

2018.72018.12017.72017.1

2016.72016.1

20,00050

2017.740,000600

2017.160,00070

2016.780,0002016.1

100,000

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

51

JFE Steel

Progress of Initiatives of Steel Business（Structural Reforms and Strategic Investment in Japan）

Facilities

Structural
Reforms

KeihinDistrict

～FY19

FY20

FY21

FY23～

Upstream Facilities

To be shut down

Hot rolling Facilities

To be shut down(~Sep. 2023)(~Sep. 2023)

Cold-rolling & Hot-dip
Galvanizing Facilities

Shut downed

Chiba
District

Tin Mills

Shut downed

Chiba &
Kurashiki

Blast Furnace Refit(2CAL・2ETL)Continuous
Casting Machine

Strategic Investments

Kurashiki
District

FY22

Facilities manufacturing steel sheet forcans were shut downed (Aug.2022)

Kurashiki Refit
No.4 BF(~Dec.2021)

Chiba Refit
No.6 BF(Sep.2022~Jan.2023)

Installed new Continuous
Casting Machine（Jun.2021）
Reinforce extra-thick steel plateproduction line (Nov. 2023)

Extra-thick steel platefor offshore wind-power
application

Electrical Steel
Sheet Facilities
Coke Oven
Fukuyama
District

Sintering Machine
Energy Plants
Ferro Coke
Production Facility

Overseas

Mexico NJSM

RenewedNo.3 Coke Oven(A)Renewed No.3 CokeOven(B) (Jun.2021)

FY24 Reinforce
Non-oriented Electrical
Steel Sheet ProductionLine

Installed new Sintering Machine
Installed No.2 power generator in Joint Thermal
Power
Develop ferro coke production technology

Begun Operating CGL for Automotive Applications

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

52

Orders by Business Area

JFE Engineering（billion yen）

BusinessArea

FY2021

FY2022

ActualForecast

ChangeMain orders received in FY2022★・・・New projects received in 3Q of FY2022
Construction works of domestic waste treatment plant [Okayama]

Waste
to
Resource203.9 214.0

Renewal construction of domestic waste treatment plant
10.1 [Hokkaido, Aichi, ★Tochigi]
Construction works of overseas waste treatment and power plant[Germany, UK]

CarbonNeutral

87.4

80.0

(7.4)

Combined
Utility
Service

13.4

20.0

6.6
Construction works of fuel feeding pipe for LNG power plant [Hyogo]

Core
Infrastracture

Construction works of bridge (DAINI SHINMEI ROAD [Hyogo]

201.1 236.0

34.9 Reconstruction works of bridge (★Tomei Expressway [Aichi]）Construction works of overseas bridge [Ghana, ★Cote d'Ivoire]★Construction works of overseas chemical plant [Singapore]

Total

505.8 550.0

44.2
Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

53

JFE-HD

Links to the reports published during FY2022
ReportURL

QR codeJFE Group REPORT
2022

https://www.jfeholdings.co.jp/en/investor/library/gro
up-report/index.html

JFE Group CSR
REPORT 2022

https://www.jfeholdings.co.jp/en/csr/data/index.html

JFE Group CSR
REPORT 2022
ESG Data

https://www.jfeholdings.co.jp/en/csr/pdf/2022/2022_09.pdf

DX REPORT 2022

*English version is coming soon

Copyright © 2023 JFE Holdings, Inc. All Rights Reserved.

54

Appendix(3)The 7th Medium-TermBusiness Plan

55

JFE-HD

Mid/long-term directions

Biggest transformation in company’s history aimed at achieving global success

JFE’s corporate vision
Contributing to society with the world’s most innovative technology
JFE’s mission

To be essential to society’s sustainable development
and to create safe, comfortable lives for people everywhere

Environmental & Social
sustainability（helping to solve critical issues）

Economic sustainability（stable earnings power）

Ensuring environmental & social sustainability and establishingeconomic sustainability will enable to ensure the resiliency of JFE’s operationalfoundations and allow the company to achieve sustainable growthand increased value over the mid/long-term.

56

JFE-HD

Initiatives to achieve environmental and social sustainability(helping to solve critical issues)E

JFE Group Environmental Vision for 2050

• Aim to realize carbon neutral by 2050, taking climate change as anextremely important business concern for JFE• Accelerate R&D in new technologies and strive to create superinnovative technologies• Contribute to the reduction of CO₂ emissions in society and use this as abusiness opportunity to increase corporate value• Work systematically to combat climate change under TCFD philosophy

S

Solve issues impacting society

1. Safety/health management
2. Facilitate employee participation（Diversity & Inclusion, Personnel development, Workstyle reforms）

3. Contribute to regional societies through engineering
4. Respect human rights throughout supply chain（Conduct human-rights due diligence from FY2021）

G

Enhance corporate governanceConsider how to apply non-financial metrics
in terms of director compensation andinvestment decisions etc.

57

JFE-HDJFE Group Environmental Vision for 2050
Toward Carbon Neutrality by 2050

JFE Group Environmental Vision for 2050
（GX Investment during 7th mid-term business plan：340 billion yen)
GX：Green transformation

1. Key environmental initiative under 7 th mid-term business plan
• Steel business：Reduction of CO₂ emissions by 18% by the end of
FY2024（vs. FY2013）

2. Carbon Neutrality by 2050①

Reduce CO₂ emissions at JFE Steel• Pursue super-innovative technology for carbon-recycling blast furnaces and
CCU• Develop hydrogen-based ironmaking（direct reduction）technology etc.

②

Expand contributions to CO₂ emissions reduction in society• Engineering business：Expand & develop renewable-energy
power generation and carbon-recycling technologies.

Targets to contributions to
CO₂ emissions reduction
FY2024 12 Mt
FY2030 25 Mt• Steel business：Develop & market eco-products and eco-solutions.
• Trading business：Increase trading in biomass fuels, steel scrap, etc.
and strengthen business in SCM for eco products.
SCM：Supply Chain Management③

Groupwide commercialization of offshore wind-power business58

JFE-HDJFE Group’s activities for Carbon neautrality
Steel Business: CO₂ emission reduction by 18% at the end of FY2024 (vs. FY2013)
Through decarbonization in steel manufacturing processes etc., JFE Group aims to becarbon neutral.
Engineering Business: Contribute to carbon neutrality in society on the whole by expanding
JFE Engineering’s contributions to CO₂ emissions reduction resulting from its businesssuch as development of renewable-energy generation and carbon recycling technologies.
（Mt/year）

CO₂ emissions reduction

58.1

-10.5

Steel
business
CO₂
emissions

18%

30%

(End of FY2024)

47.6

or more

-17.4
40.7

Steel business：

Carbon neutrality
by 2050

25.0
Engineering business：

12.0

Expand contributions to
CO2 emissions reduction
in society

Engineering business
CO₂ emissions reduction

FY2013(CO₂ reduction base year)

FY2024(last year of 7th Medium-term
Business Plan)

FY203059

JFE Steel[Steel Business] Roadmap for Carbon Neutrality
Revised our roadmap for realizing carbon neutrality in 2050, considering installing the technologies
below in the concrete:➢ Carbon recycling blast furnace: Each established technology to be installed in order (late 2030s）➢ Hydrogen-based ironmaking:
Small-scale pilot furnace demo(2024～25), middle-scale direct reduction furnace demo（～2040）➢ EAF: Install pilot EAF in Chiba (demo to be started from 2024)→Install highly efficient large scale EAF(2027～30)
JFE Group’s CO2
reduction targets

30% or more reduction compared

18% reduction comparedto FY2013（Steel Business）

to FY2013 （Steel Business）

Carbon neutrality
by 2050

Released in Feb, 2022

Technology
Carbonrecycling
blast
furnace

Blast
Furnace2021 ～

24

26

27

28

（2025-2026）
Element development<GI Fund>Electric Arc
FurnaceTechnologies to beinstalled to theexisting facilities
R&D expenses

30

2031～2040

Small-scale demo

Large-scale
development<GI Fund>（2024～2025）

2041～2050

Each established technology Implementation
to be installed in order
・ LNG injection
・ Oxygen Blast Furnace
・ CCU

Middle-scale direct reduction
furnace demo

Small-scale pilot furnace demo

(Direct reduction)

Development ofother technologies

29

Small-scale demo

CCU

Hydrogen-based
ironmaking

25

Implementation（～2040）Ferro-coke（300t/day → 1500t/day）
COURSE50
Super-COURSE50<GI Fund>Install highly-efficient
Pilot EAF

large-scale EAF<GI Fund>Expand scrap use in converters（Pretreating in converter etc.）●Implement burner lance（Burner to melt scraps）●HBI use¥100bn. R&D expenses for 10 years

Items newly
released thistime arecolored green

Currently executing R&D expenses
on schedule for technology
development above

60

JFE SteelCarbon-recycle Blast Furnace• Technologies for reducing CO₂ emissions from blast furnaces are necessary to maximize blast furnaces’
advantages such as mass production, high-efficiency production, and high-grade steel production• Combining carbon-recycling blast furnace with CCU enables to reuse CO₂ inside a steelworks by using raw
materials of the same grade as those used in conventional blast furnaces. By doing so, JFE aims to achieve net
zero carbon emissions.

Sintered Ore(Fe2O3)

Coke (C)N2 H2O
CO2 CO H2

Coke (C)

Sintered Ore(Fe2O3)

Byproduct gas(Fully used for

Hot air

O2

Blast
Furnace

CO2

Blast
FurnaceFe
1500℃

Conventional

Blast Furnace
Capacity

Methane converted
from CO₂ is reusedin blast furnace.

4M t / BF-year

Oxygen (O₂)

Byproduct gas（Reused insidea steelworks, circulated
in shaft furnace）

Hydrogen (H₂)

Shaft
Furnace

Methanation
Facility
ReducedPellets

Methane (CH4)
Molteniron

Pellets made ofhigh-purity iron ore

In-house use
CCU

Carbonrecyclingheating andelectric power
generation insidea steelworks)

Molteniron

Hydrogen-based ironmaking(direct reduction)

Carbon-recycling Blast Furnace

Conventional Blast Furnace（As carbon-neutral
reduction agent）

Carbon-recycling Blast Furnace
4M t / BF-year（on par with Conventional BF）

Electric Arc
FurnaceHydrogen(H₂)

Carbon-free Power（hydrogen/ nuclear）

Melting

Hydrogen-based ironmaking(direct reduction)
2M t/ Shaft Furnace-year（current direct reduction ironmaking basis）

Reducing Agent

Coke＋Pulverized Coal

Coke＋Recycled methane（CH4）

Hydrogen （H2）Raw Materials

Low-grade raw materials
possible.

Low-grade raw materials possible.

Limited（High-grade iron ore）

CO₂ Emissions

2/t-CO₂/1-ton of pig iron

Target: Zero（CO₂ reduction in BF＋CCUS）

Target: Zero（Carbon-free method）

61

JFE-HDGroupwide commercialization of offshore wind-power business(Study feasibility)• Become a pioneer in offshore wind-power generation business by commercializing
manufacture of monopile and other seabed-fixed structures.
• Establish groupwide supply-chain such as monopile-structure manufacturing and O&M• Aim to expand renewable energy business by leveraging group synergy effect, taking JFE
Engineering as a main driver.
O&M: Operation and Maintenance. Apply expertise of maintenance and analysis technologies.

JFE Engineering

JFE Steel

Manufacture and market monopileand other seabed-fixed structures
for offshore wind-power generation

Increase capacity for heavy, extrathick steel plate for offshore windpower applications
Provide steel products

Utilizing NO.7 new continuous-casting equipment inKurashiki district (Start operating in FY2021)

Provide steel products
Carry out SCM
Provide steel products

Carry out SCM

JFE Shoji

Subsidiaries/ Affiliates

Contribute to groupwide cooperation
by carrying out SCM of steel
materials and processed products foroffshore wind-power generation

JMU：manufacture power-generation
floating structures and construct work
vessels. Groupwide: O&M making
maximum use of group resource
JMU: Japan Marine United Corporation (equity method affiliate)62

JFE-HD

Facilitate employee
participation

Safetymanagement

Social sustainability：Safety management, HR issues

Further increase efforts to prevent accidents not only by using facilities but
also through safety education and obedience of rules, in order to achieve
top-priority goal of zero major accidents.
Groupwide investment for safety issues：Approx. 10 billion yen/year
Implement multifaceted health/safety management using advanced IT (monitoring,detection, etc.).

Proceed following initiatives in order to allow employees to maximize
performance and enhance groupwide competitive advantages
Diversity &Inclusion

Maximize capabilities of employees with diverse
background

Personnel
development

Improve individual abilities and develop skills for global
competenceWorkstylereforms

Create workplaces and internal structures to maximize
employees potential and enable them to work safely
and confidently

63JFE EngineeringSocial sustainability：Contribution to Regional Societies
through Engineering Business• Expand bases of local production and local consumption business (Food-recycling
business and regional PPS business)• Contribute to the regional society considering to expand combined utility service business in the
future.
• Realize circular economy by developing this business（Example） Local PPS Business ：Smart Energy Kumamoto
1.

Points2.
3.

Local production of energy for local consumption (Local generation of renewable-energy power tobe consumed in the regional societies）
Return economic merits to the city fund. (Investment for renewable energy and energy savingby citizen)
Strengthen disaster prevention and energy saving（Establishing self-supporting energy supply
line**, using storage battery）

Electricity supply throughself-supporting energy
supply line

Urban Energy

Business support
Electric
power
Disaster Prevention Bases（local parks）

Western waste disposal factory（built by JFE Engineering）

Smart Energy
Kumamoto

Electric
power

PublicFacilities

EMS (Energy Management
System)Electric
power
Eastern waste disposal factory■Demand: 226 public facilities in the city
■Energy source
Western waste disposal factory：5,980kw
Eastern waste disposal factory：10,500kw

Charge/Discharge（optimized control）*Regional PPS（Power Producer and Supplier）：Power producers and suppliers engaged in local production of energy for local
consumption **Self-supporting energy supply line: Direct energy supply line from power generation plants to the connection points

Storage battery

64JFE-HD

Establish economic sustainability (stable earnings power)
Establish sufficient profitability and stable financial base forproactive business operation for the mid/long-term growth

1. Shift focus of domestic steel business fromquantity to quality ーPursue world-class earnings power• Achieve world-class cost and quality competitiveness• Expand margins and achieve stable profit

2. Promote growth strategies
3. Significantly enhance competitiveness throughDX
4. Balance financial soundness with effective
investment based on a “select and concentrate”
approach65

JFE Steel7 th mid-term business plan <Steel Business>
Aim to achieve world-class per-ton profit and enhance strategies for global growth
Promote innovation for carbon neutrality

Main initiatives
1. Transition to a lean, robust business structure by shifting focus
from quantity to quality
2. Expand and accelerate overseas business via solutions based on
knowledge, skills, and data
3. Use digital technology to strengthen production base andstrategies for new growth
4. Pursue innovation aimed at achieving carbon neutrality

Targets
FY2024Per-ton profit 10,000yen/ton*（Segment profit ¥230.0bn.）

Cf. 2H of FY2020（actual）• Per-ton profit 6,000 yen/ton• Segment profit ¥70.8bn.

*Segment profit / unconsolidated sales volume in tons

Equipment & Business Investment：
1,080bn. over 4 years• 40% for GX, DX, equipment modernization andprofitability improvements (6th mid-term actual:20%)• 30% for maintenance investments (6th mid-term actual:50%)66

JFE SteelTransition to a lean, robust business structureby shifting focus from quantity to quality

Improve per-ton profit by both fixed cost reduction and increase of high valueadded products ratio, and enhance earning base.
Achieve world-class costand quality competitiveness• Cost reductions: ¥120bn. over 4
years

Expand margins
and achieve stable profit• Increase mix of highly value-added
products* to an unprecedented 50%*Products that offer technological advantages, are• Labor productivity: ＋20％

（13% via structural reform +1,670→2,000t/person/year via DX etc.
Number of employees: 16,000→13,000）

Establish profit base that is resilient tochanges in economic conditions bycompleting structural reforms• Greatly reducing fixed costs• Lowering breakeven points• Introduce new technologies through DX• Improve production efficiency andyields• Greatly improve labor productivity• Ensure quality competitiveness byimproving product quality, production
efficiency and our delivery

recognized by customers for their value added andhave greater earnings power than commodity products.

••

Product-mix enhancements by focusing on
selective concentration in priority fields• Increase non-oriented electrical steel sheet
production capacity• Increase capacity for heavy, extra-thick steel platefor offshore wind-power applications• Production of high-tensile steel sheet for
automotive•

Fully overhaul our sales pricing
Ensure that products offering the type of highvalue that customers seek are suitably recognizedin the market, based on which we aim to fully
overhaul our sales pricing
67JFE Steel

Expand and Accelerate Overseas Business• Expand returns from 1. vertical specialization business such as steel production applied forautomobiles• Further deepen integrated production in high-demand market (2. “Insider” business)• Expand 3. solution business, in which we provide cutting-edge technologies, operations andresearch knowhow （aim to triple earnings in FY2024 compared to FY2020）
India

1. Vertical specialization business

JSW•

Investment in 2009 (current equity ratio 15%)•

Further deepen direct participation such as
beginning FS of establishing a grain-oriented
electrical steel sheet manufacturing company

2. “Insider” business
3. Solution business

china

GJSS started renewal construction [FY2020]
Started JV of production of iron powder（BJCMX）[FY2018]
Started JV of production and sales of specialty bar
steel（BJSS)[FY2019]

Vietnam•MexicoStarted commercial production of largediameter welded pipe （AGPC）[FY2019]

FHS

Investment in 2015 (current equity ratio 4%)

ASEAN

UAE

JFE Chemical Established JV of anode materials[FY2019]
NUCOR-JFE STEEL MEXICO Began Operating Hot-dip
Galvanized Steel Sheet Production Facility for
Automotive Applications[FY2019]

JSGI（Indonesia）・JSGT（Thailand）
production and sales of galvanized steel sheet
and cold-rolled steel sheet for automotive

68JFE Steel

Examples of Steel Business’s Critical Initiatives:
Strategy to Capture Growing Demand for Electrical Steel Sheet
Domestic

To expand non-oriented
electrical steel sheet (N/O)
production capacity Released April 1, 2021

JFE Steel decided that it would expand theelectrical steel sheet production capacity of its
West Japan Works (Kurashiki District) amid
increasing demand for high-grade N/O appliedfor EV and HEV motors.

＜Demand forecast of high-grade N/O＞
The global movement to tighten and accelerateenvironmental regulations will rapidly increasedemand for high-grade N/O, which are essential for
production of motors that drive electric vehicles.
CAPEX

Approx. 49.0bn.

Expected time tostart production

1H of FY2024

Expected capacity

Doubling the facility’s existing
capacity for producing highgrade non-oriented electricalsteel sheet

CO₂ reductions

Approx. 1.5Mt-CO₂/Year**CO₂ reductions effect resulting from expanding EV/HEV

Overseas

To conduct FS of grain-oriented
electrical-steel-sheet JV with JSW
in India
Released May 7, 2021

JFE Steel signed a memorandum of understanding toconduct a feasibility study with JSW, JFE’s strategic
alliance-partner in India, regarding establishing a
G/O manufacturing and sales joint-venturecompany in India.

＜Demand forecast of G/O＞
Demand for G/O, which are used for the iron coresof power transform, is expected to grow globallyamid continuous increase in demand for electric
power and expansion of reusable energy.
(Economic growth in India is estimated to boost its
local demand for electric power.)
2009 Signed comprehensive
strategic alliance agreement
2012 Started providing
N/O manufacturing technology
JSW became an India’s largest
N/O supplier2021 FS regarding establishinga G/O manufacturing and sales JV

69

JFE-HDJFE Group-wide Strategy to Capture Growing Demand forElectrical Steel Sheet（Steel Business and Trading Business）

JFE Steel
Production ofelectrical steel
sheetsJFE Shoji

Expand production and supply
function of high value-added
electrical steel sheets

Processing anddistribution ofelectric coresWorld’s No.1 global distribution
and processing system

Domestic

Increase electricalsteel sheet
production capacity

Overseas

Production & sales JV
with India’s JSW forelectrical steel sheets

Sharing
Strategies

Synergy

Expand collaboration
with alliance partners

Establish SCM in
new regions

Expand processing
functions in coil centers

Groupwide Strategy: Capture increasing demand for high value-added
electrical steel sheets both in domestic and overseas market

70JFE Engineering

7 th mid-term business plan <Engineering Business>
Expand sales revenue to 1-trillion-yen level in FY2030
Targets
FY2024（billion yen）

• Revenue• Segment Profit【Revenue】

1,000

650.0 billion yen
35.0 billion yen（billion yen）【Segment profit】

1-trillion-yen level

650.0
500

40
30

485.7

20

20.1

23.1

24.0
Equipment & Business
Investment：
Approx. ¥220 billion
over 4 years

100
2020年度FY2020

FY20242024年度(Final Year of 7th
mid-term plan)

0
2030年
FY203035.0

FY2018FY2019 FY2020

FY2024(Final Year of 7th
mid-term plan)

1. Enhance mid/long-term priority areas（See next page）

Main
initiatives

Waste to Resources, Carbon-neutral business,
Combined utility service, Core infrastructure

2. Expand overseas business enhance EPC competitiveness, engage in
ODA, pursue M&A synergies in chemical plant field, participation in local
business in environmental, water and recycling fields

3. Promote DX initiatives

71

JFE Engineering

Engineering Business’s Main initiatives

ーEnhancing mid/long-term priority areasー• Expand engineering business as a growth sector by helping to solve pressing issues in
global society, in view of increasing importance of the environmental, recycling and renewableenergy fields.

• Expand revenue and profit by setting the following four priority areas:

Waste to Resource

FY2024 revenue target¥290 billion

Carbon Neutral

FY2024 revenue target¥80 billion• Put priority in renewable energy(offshore wind-power generation,
biomass power plant, solar power
plant, geothermal power plant etc.)• Establish stable profit basein domestic environment
business• Priority investment and expansionof domestic market in recycling
business* *Food, Plastic, Incineration and Power generation• Develop carbon neutral
technologies.

Combined utility
services

FY2024 revenue target• Shift to comprehensive businessmodel, including for efficient
operation of facilities to contributeto energy savings anddecarbonization

Water
supply¥20 billion

Gas
Electricity
SupplyRecycling etc

Core infrastructure

FY2024 revenue target¥260 billion• New technologies to address newly arising needs forstrengthening and improving life of infrastructure• Strengthening of existing infrastructure →install new
product and method for construction• Improving life of existing infrastructure→install new
materials and new products

1. Waste to Resource：Recycling and waste-to-power generation etc. 2. Carbon neutral：Renewable energy, carbon recycling etc.
3. Combines utility services: contribute to the local-production and local-consumption (circular economy) by mutual combination among
various operation and maintenance business such as water, gas, electricity supply and recycling business/72
4. Core infrastructure：infrastructure business to establish social foundation such as bridge and pipeline.

JFE Shoji

7 th mid-term business plan <Trading Business>

Establish growth foundation by enhancing SCM
TargetFY2024（bn.）

Segment profit
40

20

0

40bn.

【Segment Profit】
20.3

23.5

¥40 billion

27.6

Equipment & Business Investment ：Approx. ¥120 billion over 4 years

4th mid-term ave.

5th mid-term ave.

6th mid-term ave.

※4th and 5th mid-term used J-GAAPFY2024
7次中期(Final Year of 7th
mid-term plan)

1. Proceed key strategies for growthMain
initiatives

Establish No.1 position in global processing & distribution of electrical steel sheet,
Strengthen SCM of automotive steel composite materials, Accelerate efforts inoverseas construction materials business, Fully capture steel demand in Japan

2. Strengthen purchasing & sales capabilities（expand non-JFE Steelbusiness）
Increase sales of both JFE group products and alliance-partner products as well as actively
expand business with other suppliers’ products

3. Seize new business opportunities
Expand environmental-solutions business, DX initiatives73

Trading Business’s Main initiatives

JFE ShojiーKey Strategies for growth, Strengthen purchasing and sales capabilitiesー

Strengthen SCM of Automotive steel
Enhance SCM for high-tensile steel both inoverseas and domestic market to increase
sales of JFE’s strategic products
Further collaboration with JFE Steel both indomestic and overseas market• Along with the EV and HEV promotion and increasingneeds for lighter body of automobiles, application
volume of high-tensile steel for automotive is
expected to increase because of its characteristics
and environmental-friendly advantages.

China
ASEAN

Japan

US

Strengthen SCM along withgroupwide optimum businessacross four-pillar regions

Accelerate efforts in overseas
construction materials business• In ASEAN and North American regions, expand
trading in this sector and collaborate with local
companies to strengthen business foundations.

Fully Capture steel demand in Japan
Increase earnings by enhancing JFE Group’s
presence through expansion of function(quality) and additional trading (quantity)

Strengthen processing and distribution
in domestic steel business• Strengthen SCM continue to strengthen collaboration
beyond group boundaries and establish optimum
processing and distribution system• Widen processing functions to expand businessexpand capabilities including secondary and tertiary
processing to build strong foundation to meet various
types of clients’ needs

Pursue the best sales structure by sharing
strategies with JFE Steel in the domestic
market, which is the most critical

Expand non-JFE Steel business• Aim to expand business to meet clients’ needs.
Increase sales of both JFE group products and alliancepartner products as well as actively expand businesswith other suppliers’ products
74JFE-HDJFE Group’s DX strategies• Promote DX in every business area such as advancing productivity throughinnovation, transforming exiting businesses and creating new businesses.
• Proactively invest money and human resource necessary for DX：
DX investment approx. 120 billion yen over 4 years

JFE SteelUse digital technology to streamline production
operations and implement new growthstrategies
TargetInvestment

Labor productivity: 20% improve**FY2024 structural reform 13%+ DX effects etc.

115 billion yen
over 4 years

JFE Engineering
Digitalize entire business and provide
new digital services to customers.
TargetDesign efficiency: 20% increase
in FY2024

JFE Shoji
Improve customer service, pursue new
businesses by leveraging DX＜JFE Steel’s initiatives＞• Enhance competitiveness by introducing cyber-physical systems on all
production lines• Improve production efficiency, labor productivity and yield ratio etc.

••

Utilize digital technologies to raise customer satisfaction through quality
enhancements and better delivery services.
Actively expand solutions businesses75JFE-HD

Balance Financial Soundness with Effective Investment based ona “select and concentrate” approach
Selective maintenance investment, focusing on investments for enhancing
competitiveness and establishing stable profit base
Ensure earning source by asset compression••

1. Equipment & Business Investment about 1,450 billion yen over 4 years• Equipment investment：Approx. 1,200 billion yen over 4 years
GX：About ¥340 billion over 4 years*, DX：About ¥120 billion 4 years
Execute maintenance investment carefully selected from the perspectives of effectiveness and necessity
Shift focus on investment for improving profitability and cutting-edge facilities• Business investment：About 250 billion yen over 4 years
Steel business：expand overseas insider businesses, Engineering business：expand operation &maintenance business and overseas business*Steel Business：¥160 billion
Trading business：business investment including M&A for increasing
Engineering Business：¥130 billion
earnings from processing and distribution businessTrading Business： ¥50 billion

2.
•

Ensuring earning source
Generate cash by asset compression：Approx. 200 billion yen over 4 years
Assets that contribute little to earnings or are tied to unprofitable businesses**3.
•

Returns to shareholders
Dividend payout ratio: Around 30% on par with the target during 6 th mid-termbusiness plan**Regarding development plans for partial area of Keihin district resulting from structural reform（Ogishima area):
We will disclose development plans in FY2023, and strive to see some properties put to new use by FY2030.
76

JFE-HD

Main Financial Data and Performance & Profitability Targets

Operatingcompanies

Consolidated

7 th mid-termbusiness plan
FY2024FY2020
ActualBusiness profit¥ 320.0 billion¥ -12.9 billion

Profit attributable to owners of the parent¥ 220.0 billion¥ -21.8 billion

10%

-1.3%

About 3x8.1x

About 70%

93.2%

10,000 yen/ton¥ 230.0 billion-3,000 yen/ ton¥ -65.4 billion

Engineering business Segment profit
Revenue¥ 35.0 billion¥ 650.0 billion¥ 24.0 billion¥ 485.7 billion

Trading Business Segment profit¥ 40.0 billion¥ 20.0 billion

ROE
Debt/EBITDA
D/E*1
Steel businessProfit per ton*2
Segment profit

Payout ratio*1 For liabilities with equity subject to credit ratings, theseequities reflect the evaluations of rating agencies

7 th mid-termbusiness plan
Around 30%

6 th mid-termbusiness plan
Around 30%*2 Steel business profit per ton (consolidated segment profit /non-consolidated sales volume)77

Appendix(4)JFE Steel Carbon Neutral
Strategy Briefing78JFE Steel’s Transition to Low-carbon Processes
Develop ultra-innovativetechnologies for carbon
neutrality

2024

Transition Period

18% less
CO2

Use EAFs
Expand use of DRI

Small-scale
tests

Mid-scaledemonstration tests

Carbonrecycling
blast
furnace

Directreduction

2030(GI Use of funds)+CCU

High-grade
HBI

Innovation Period

30% or more
CO2

EAF ironsourceCarbonneutrality

Adopt optimal processes
based on external conditions

Develop large-scale furnaces

Use inexisting
blast
furnaces

2050

Establish & implement ultrainnovative technologies

Roll out based on hydrogen supply volume● LNG injection● HBI● Oxygen blast
furnaces● Low-grade ore● Carbon recycling
technology

×

α

×

Transition to carbon-free hydrogenβ

Direct-reduced iron made withblast furnace-grade ore (Fe<65%)

EAF
Use ofscrap
External
conditions• Carbon-freeelectricity• Carbon-freehydrogen• CCUS

Upgrade Sendai
EAF

Large, high-efficiency
EAF (possibly inKurashiki District)

DRP
technology
Double-slag
reﬁning process

Expand use of scrap

Transition to carbon-free electricity

×

BurnerlesstechnologyγStore CO2 inslag/concrete
CO2

Green steel
Sustainable market based on
actual environmental value

CO2

Carbon-free electricity Carbon-free hydrogen

CO2

CCS

Pursue multilayered technology development, via GI Fund projects, etc., to discover the mostproven technologies and then achieve carbon neutrality by deploying the most optimized
configuration of green steelmaking processes.
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

79

JFE Steel’s Carbon Neutrality Vision 2050
CCS
Store CO2 inslag/concrete

Storage

Reduction

CCS

More energy-saving equipment

CO2

CCS
CO2

Carbon-freehydrogenIntelligent
Usage

Converter
Carbon-freeelectricity

Introduce EAFs

Energy savings,
etc.

2050

(external conditions)Electric arc
furnace (EAF)

Effective use of
scrap

Carbon-freeelectricity

Carbon neutrality
Breakdown of CO2 reduction

Deploy more carbon-recycling
technologies in direct-reduction
steelmaking

Fuel/oxygen +powdermaterial

Increased use of scrap(external conditions)

CO2

Oxygengas

Large, highefficiency EAFs

Carbon-recycling blast
furnaces & CCU(external conditions)

Carbon-recycling direct-reduction

DRI
CO2 & H2O

Blast furnace gas (CO2, CO & H2)

Carbonrecycling
O2*Uses circulating gas

Methanation

H2O

CH4: Carbon-neutral reductant

Hydrogen(indirect hydrogen
injection)

Reduction
furnace

Shaft gas injection(SGI)*

H2O
out ofsystemCO2

Methanation

More use of CCU at industrial complexes

CCUS

Reduction furnace gas (CO2, CO & H2)

CO & H2

Pellets

Circulates

Carbon-recycling blast furnace

Coke

Carbon-freehydrogenCarbonrecycling

CO2+4H2=
CH4+2H2O

CH4Hydrogen(indirect hydrogen
injection)

H2O

CH4: Carbon-neutral reductant
DRI

Blast furnace, EAF & converter

Combine reduction, intelligent usage and CO2 storage
to realize a carbon-neutral steel business by 2050
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

80

JFE’s Carbon Neutrality Action Plan
▶︎ JFE Steel is introducing low-carbon steel processes during its “transition period” to 2030.
▶︎ In its “innovation period” from 2030 to 2050, JFE Steel aims to develop and implement ultrainnovative technologies for carbon neutrality.

Transition period⚫

Increasingly deploy low-carbon technologies
through capital investment to achieve targets

Innovation period⚫ Swiftly establish and deploy ultra-innovativetechnologies

such as cutting 2013-level CO2 emissions by
30% or more by 2030⚫

Accelerate multitrack R&D targeting ultra-⚫ Collaborate with communities and industrial
complexes toward carbon neutrality

innovative technologies for innovation period⚫ Grow markets for sustainable green steel based⚫ Create markets for renewable green-steel

materials based on actual environmental valueon actual environmental value→Grow demand leading to virtuous cycles→ Create initial demand
Maintain the competitiveness of Japanese steel
Stimulate demand through government policy

through plentiful, low-cost, stable supplies of carbonfree hydrogen and electricity

Behavior must be shifted on both supply and demand sides to create markets for green steel
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

81

Transition to Low-carbon Processes▶︎ Continue to develop ultra-innovative technologies for decarbonized steel processes by 2030
▶︎ Increasingly use low-carbon technologies to cut CO2 by 30% or more by FY2030
Energy savings andhigh efficiency

Low-carbon feedstock &fuel

Low-carbon processes

Upgrade to high-efficiency cokeovens

Expand use of scrap in converters
Use direct-reduced iron (HBI)

Upgrade existing EAFs

Fukuyama District (2025)

All districts (under way)

Sendai Works (2024)

Securing Scrap and HBI
Reinforcing storage depots

Introduce large, high-efficiency
EAFs

All districts (under way)

Kurashiki District (2027-2030)

Bolster LNG supply network

Use ferro-coke for commercial
production

Improve efficiency of powerdemand facilities(Electrify blast-furnace blowers, raise
efficiency of oxygen plants, etc.)

All districts (under way)

Leverage AI & DS (companywide
CPS, etc.) for energy savings
All districts (under way)

Fukuyama District (TBD)✓ To reduce CO2 emissions by 30% or more by 2030, 1 trillion yen in capital investment will
be needed for low-carbon initiatives (large electric furnaces, ferro coke, scrap andreduced iron, LNG, etc.).
✓ A market that reflects the actual environmental value of green steel must be created tosupport capital investment in decarbonization technologies.
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

82

Development Project Supported by Green Innovation Fund▶︎ This project, targeted at using hydrogen in ironmaking and commissioned and subsidized by NEDO*,
was selected in December 2021 to receive support from the Green Innovation Fund.
▶︎ The fund is helping to accelerate the development of technologies for achieving carbon neutrality.
▶︎ Formed a consortium with three steel companies and JRCM** and held the first meeting of theHydrogen Iron and Steel Committee in June 2022.
*New Energy and Industrial Technology Development Organization

Carbon-recycling blast furnace

Large, high-efficiency EAF

Low-grade iron ore

CO2CarbonrecyclingH2

By-product gas(use on-site, circulate
through reduction furnace,etc.)

Electrode(-)

H2

Methanation facility
Methane CH4 (CNreductant)
O2

Build a small test blast furnace(150m3) in Chiba District
Prefecture to develop a process
for converting CO2 by-productinto methane for reuse as a
reductant, aiming to cut CO2
emissions by 50% or more.

BurnerPreheating of
reduced iron

Cold iron source
preheated byexhaust gas

CCUS
Generateelectricity
orCarbon-freeelectricity

Reduction
furnace

Summary

Direct-reduction steelmaking

Coke C

Blast
furnace

Development
project

Sintered ore
Fe2O3**Japan Research and Development Center for Metals

Slag

Melting

DRI

EAF

Build a small test reduction furnace in
Chiba District Prefecture to develop a
direct-reduction ironmaking process
for reduced iron that uses hydrogen to
remove oxygen from low-grade ironore, aiming to cut CO2 emissions by
50% or more vs. blast furnaces.

Molten steel
agitation coil

Moltensteel
Bottom electrode(+)

Build a small test EAF in Chiba
District Prefecture to develop a highquality steel manufacturing method
incorporating high-efficiency meltingof scrap and reduced iron, reductionof impurities, etc.

Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

83

Overall Scale of GI Fund Projects▶︎ Development toward Stage Gate Reviews scheduled mainly in FY2025–2026▶︎ Studies also underway with a view to actual implementation in 2030–2040s
Medium-scale
tests

Develop technologies & conduct
small-scale tests

2021～2025

2026～2030

Large/full-scaletests

2031～2040★ Stage Gate
2041～2050

R&D Project 1: Develop hydrogen-reduction technology for blast furnaces(1) Develop hydrogen reduction
Use test blast furnacetechnology, etc., using on-site
Modify actual furnace
Designhydrogen★

(2) Develop low-carbon technology,
etc., using external hydrogen
Designand CO2 in blast furnace& build
exhaust gas★Implement

Test in actual furnace

Develop technologies

Use small test blast furnace
DesignCarbon-recycling blast furnace

Midsize test blast furnace

actual★ Build
furnaceSuper-COURSE50

Testing

Testing(Phase 1)(Phase2)

Testing in
actual furnace★Implement

R&D Project 2: Develop direct hydrogen reduction technology for reducing low-grade iron ore using only hydrogen
Develop technologies(1) Develop direct hydrogen
reduction technology

Design & build Use small test blast furnace

Carbon-recycling direct reduction steelmaking

DesignHydrogen reduction steelmaking(2) Develop technology forremoving impurities in EAFs
using DRI

Midsize direct reduction furnace

actual★ Build
furnace

Testing

Testing(Phase 1)(Phase 2)★Implement

Develop technologies
Large test EAF

Design & build Use small test blast furnace

High efficiency and high quality in large EAF

Design★

Test in actual
furnace

Test in actual
Testing ★Implement
furnace(Phase 1)

Source: METI
（https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_05_randd.pdf）(Phase 2)

Note: All schedules are projections

Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

84

Stimulating Demand for Green Steel▶︎ In the EU, green steel is branded and sold using a mass balance approach.
▶︎ Achieving 30% CO2 reduction by FY2030 will enable JFE Steel to supply up to 5M tons ofgreen steel per year using the same approach.
▶︎ To create a carbon-neutral world, government policies need to encourage behavioral
changes in both the supply and demand sides in order to drive changes in society andspark innovation for new industrial competitiveness.

Supply side

Demand side●

Huge capital investment is needed to introduce lowcarbon & ultra-innovative technologies. (1 trillion yen
in low-carbon investments by 2030)●

Green steel products do not directly benefit
consumers in terms of better quality, performance,
convenience, etc.

●

While JFE Steel will strive to minimize R&D cost
increases, some increase will be inevitable in theeffort to create new environmental value.

●

Ethical consumption appears to be on the rise, but inJapan awareness of environmental value is low.

●

Incentives are needed to encourage the recognitionof environmental value and the purchase of productsthat significantly reduce carbon.

●

Prospects for appropriate returns on suchinvestments also will be needed.

To support investment in low-carbon technology during the transition period until 2030 and toprepare for further large-scale investment during the innovation period, a green steel market must
be created at an early stage (transition period) and government policies must raise the public’s
awareness as well as encourage steel consumers to change their behavior.
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

85

Initiatives for Collaborating with Society••

Realizing carbon-neutral steelmaking is a top priority for JFE Steel, but generating
environmental value will involve large cost increases, so there are limits on what a single
company can do.
Mechanisms are needed so that society, as the beneficiary of green steel, helps to cover the
associated cost increases through government support, collaborative initiatives, etc.

Huge R&D and facility installation costs● Achieving CN by 2050 will be a major technological challenge requiring huge R&D outlays.
● Transitioning steelworks to carbon-neutral processes will require even greater capital investment.
● Long-term government support will be needed to shoulder the financial costs of achieving carbon neutrality.

Deliver environmental value and create markets during transition● Government support is needed for capital investment in low-carbon technologies by 2030
● A mechanism is needed to create a market where costs commensurate with green steel’s environmental value canbe shared with customers and society

Develop infrastructure for carbon-neutral steelmaking and fuel inter-company collaboration● Develop infrastructure for the low-cost, stable, large-scale supply of carbon-free hydrogen and electricity needed
for carbon-neutral steelmaking● Develop an execution platform for CCUS and green infrastructure implementation through collaboration withindustrial complexes, corporations, etc.

Economic policies targeting green-transformation investment and international competitiveness● Ensure international competitiveness of industrial electricity prices● Introduce tax system that encourages implementation of ultra-innovative technologies, such as the abolition ofdepreciable asset taxation and the avoidance of a carbon tax before the establishment of decarbonizing technologies● Carbon Border Adjustment Measure (CBAM) should be consistent with WTO rules. Ensure a level playing field incooperation with other countries
Copyright © 2022 JFE Steel Corporation. All Rights Reserved.

86

Copyright © 2022 JFE Holdings, Inc. All Rights Reserved
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