In response to growing demand for railway wheels in North America, Sumitomo Metals has decided to increase the production capacity of its Osaka Steel Works (Osaka, Japan). This latest decision follows a facility upgrade completed in August 2006 (amount invested: approx. 600 million yen; increase in production capacity: 30,000 units per annum) and will enable the Company to achieve a productive output of 240,000 railway units per annum.

Although approximately 1.5 million freight cars are in service on the railways of North America, several factors have driven up the demand for wheels both for new freight cars and for replacement of the wheels of existing freight cars. These factors include the rising price of petrol prompting a shift from road to rail transport, an increase in the volume of freight from Asia boosting shipments by rail, and the tightening of standards governing the replacement of wheels.

Demand for wheels in North America is estimated to be in the region of 1.4 to 1.5 million units per annum; yet the Company has been requested by major users to increase production, as manufacturers in North America are only about to supply around 1.2 million per annum and the market recognizes the excellent quality of our forged steel wheels. In response to these demands, the Company will increase the production capacity of railway wheels.