Sanyo Special Steel Co., Ltd.
IR Briefing Regarding the Business Results for the FY2021 2Q
Q&A Summary

Date: Friday, October 29, 2021
Attendees : Katsuhiro Miyamoto, Representative Director and President
Kozo Takahashi, Director, Member of the Board and Managing Executive Officer
Takashi Yatsunami, Executive Officer* Please be noted that the actual Q&A session was in Japanese and this English
translation is prepared for reference purpose only.
----------------------------------------------------------------------------------------Q．Your competitors have revised their business forecast downwards, and seem to struggle. On theother hand, Sanyo has revised its business forecasts upwards. Could you tell us what thedifference between Sanyo and other special steel companies is?
A．Some of the difference might have been how we view the prerequisites including energy and raw
material prices. Our previous forecast may have been more conservative. The significant
difference may have been the scale of global deployment and the positive performance of ourmajor global affiliated company Ovako in Northern Europe, with a business scale close to Sanyo.
Q．Sanyo has recently announced a base price increase. Is the positive effect of base priceincrease included in the FY2021 business forecast? Could you share us the progress of pricenegotiations?
A．On September 3, we announced to raise the sales price, including base price. We have alreadynotified our customers and distributors the reason and rationale of sales price increase and havestarted to receive understanding and consent of customers including those in the area of bearings
and automotive. To some extent, the positive effect of sales price increase is embedded in ourFY2021 business forecast.
Q．You mentioned that the FY2021 ordinary income excluding one-offs would be about 16 billion yen.
Considering the escalation of energy prices, leading to higher electricity cost, and the rise ofmaterial prices including electrodes, how do you consider the possibility of further profit increase
in FY2022?
A．Currently, the prices of crude oil, coal, and natural gas are soaring, which will be reflected inelectricity and gas prices in the latter half of FY2021, and of course, in FY2022. In addition, both
Sanyo and Ovako are receiving inquiries almost equivalent to their production capacity.
Therefore, both Sanyo and Ovako have no choice but to further raise the sales price. We would
like to utilize the tight supply and demand situation and secure an appropriate profit margin,enabling us to further develop into the future.

Q．The electricity mix of Northern Europe differs greatly from that of Japan. Could you tell us about
the impact of soaring crude oil, natural gas and coal prices on Ovako?
A．Prices of crude oil, coal and natural gas are skyrocketing worldwide, but electricity prices inNorthern Europe are less affected than those of Japan, Germany and the United Kingdom,
because of the difference in energy mix and the higher dependence on hydro and wind power
generation. We consider Ovako to be relatively advantageous to other European competitors,
who are more reliant on thermal power generation.
Q．Do you think the climate surcharge in Ovako is accepted by the customers? How do you
consider the introduction of similar energy surcharges in Japan?
A．Ovako's concept of climate surcharge has been well received by the top management of manycustomers, though we may need a little bit more time to be agreed on actual business basis.
However, we are quite confident that Ovako’s proposal will be accepted considering the need ofcustomers to display they are applying green steel to their products. We value the significance ofOvako to be the first carbon free manufacturer in the industry.
As for the introduction of climate surcharges in Japan, we consider it to be premature for the time
being. Prior to the introduction of climate surcharge, we will aim to shorten the time lag of theiron scrap surcharge system, and to apply surcharge to more alloys.
Q．Could you share us your view on the impact of the current decline in domestic automobile
production on demand for specialty steel?
A．Recently, most automakers have reduced production by 20 to 30%, but we hear many voices thatthey plan to recover the production by the end of this year. Demand for special steel is expected
to remain stable and strong as demand in areas of industrial machinery, construction machineryand semiconductor manufacturing equipment are quite robust.
Q．If you compare the forecast for the second half of FY2021 to the first half of FY2021, sales priceand product mix are expected to be positive by 8.1 billion yen and raw material and fuel prices areexpected to be negative by 10.3 billion yen. How much do these figures include the effect ofsales price increase? Is it correct to assume that sales price increase will affect you morepositive in FY2022?
A．The effect of raising sales price is partly included in the forecast for FY2021. We expect that thesales price increase will be realized to some extent towards the end of FY2021, though the total
amount of its effect in FY2021 is not that significant, and the positive effects do not catch up with
the increase of raw material and fuel prices. In FY2022, we consider the raw material and fuelprices such as energy, iron scraps, alloy, etc. to be even higher than today. We may need toamend sales price further upwards to offset the increase of the raw material and fuel prices.
Q．The Inventory Circulation Diagram (about Bearing Products, page 44) shows FY2021/2Q is in the“Stock Loading Phase”, but automobile production in Japan has started to decrease. How doyou view the balance of the inventory and shipment of bearing products in the future?
A．It is true that decrease in automobile production has partly started to impact our orders. We
consider the impact of destocking in the supply chain will materialize from September to Octoberor November 2021. On the other hand, we consider that automobile production will recoversooner or later since shortage of automotive parts from Southeast Asia will be solved in the near
future, and hence, early next year, we consider the destocking to be over.

Q．MSSS stopped operation in the first half of FY2021 due to the halt of oxygen supply. Could you tellus the current situation in MSSS?
A．The supply of oxygen to MSSS was halted due to state order giving priority to oxygen supply to
medical institutions, because of the brutal spread of COVID-19 infection in India. The supply ofoxygen to MSSS restarted from June 2021, reflecting the alleviating situation of COVID-19
infections, and MSSS’s operation has fully recovered from July 2021. In addition, Japanese
representatives returned to India in late August 2021. We expect to secure positive income inFY2021 mainly attributable to reducing cost and improving sales margin and product mix.

This document does not constitute an offer or invitation to subscribe for or purchase any
securities and nothing contained herein shall form the basis of any contract or commitment
whatsoever. This document is being furnished to you solely for your information and may notbe reproduced or redistributed to any other person. No warranty is given as to the accuracy
or completeness of the information contained herein. Investors and prospective investors insecurities of any issuer mentioned herein are required to make their own independent
investigation and appraisal of the business and financial condition of such company and thenature of the securities. Any decision to purchase securities in the context of a proposedoffering, if any, should be made solely on the basis of information contained in an offering
circular published in relation to such an offering. By participating in this document, you agree
to be bound by the foregoing limitations. This document contains statements that constituteforward looking statements. These statements appear in a number of places in thisdocument and include statements regarding the intent, belief or current expectations ofSanyo Special Steel Co., Ltd. or its officers with respect to its financial condition and resultsof operations, including, without limitation, future loan loss provisions and financial support tocertain borrowers. Such forward looking statements are not guarantees of future
performance and involve risks and uncertainties, and actual results may differ from those insuch forward looking statements as a result of various factors. The information contained inthis document, is subject to change, including but not limited, to change of economicconditions, financial market conditions, and change of legislation / government directives.
Any statements in this document, other than those of historical facts, are forward-looking
statements about future performance of Sanyo Special Steel Co., Ltd. and its groupcompanies, which are based on management’s assumptions and beliefs in light ofinformation currently available, and involve risks and uncertainties. Actual results may differ
materially from these forecasts.