"ThyssenKrupp Steel AG has held up well in a difficult environment. And we have moved a step closer to meeting our ambitious target of 12% ROCE (return on capital employed) by 2004," Executive Board Chairman Dr. Ulrich Middelmann told German journalists at the Annual Conference of the International Iron and Steel Institute (IISI) in Rome, Italy. Crude steel production in fiscal year 2001/2002 (ended September 30) was more than 16.7 million metric tons, slightly lower than the previous year`s figure of 16.96 million tons.

In the Carbon Steel unit, business in the reporting year proved more difficult than expected, but the Stainless Steel and Special Materials units exceeded expectations. Exact figures will be published in ThyssenKrupp AG`s initial overview of the fiscal year on December 5, 2002 and at the Annual Press Conference on December 20, 2002.

At the turn of the year 2001/2002 the picture for the steel industry in Germany was still very cloudy. Short-time working dominated the scene in the Carbon Steel unit for over four months, with negative implications for earnings. However, things started to improve again in the second quarter 2002, albeit primarily for stock cycle reasons. Order intake, sales and capacity utilization returned to normal levels. "In addition, prices in all business units have now recovered from their lows. This will be reflected in sales in the fiscal year just begun," said Dr. Middelmann. Three price increases totaling 80 euros per ton have been implemented for flat carbon steel this year, and a fourth will follow at the start of 2003. Prices for stainless steel have also been raised again.

ThyssenKrupp Steel is optimistic about fiscal year 2002/2003. "All the indicators point to a slight improvement", explained Dr. Middelmann. Impetus from the economy should permit further revenue improvements. Volumes should stabilize at the relatively high level achieved at the end of the fiscal year. In addition to market impetus, however, the company will be doing its homework. This will include portfolio streamlining and further efforts to improve productivity. For example, it is intended to sell the stainless quarto plate business to the Finnish company AvestaPolarit.

At the same time, ThyssenKrupp Steel expects to acquire the 75.5% of Spain`s Galmed S.A. currently held by Arcelor. The company already owns 24.5% of the hot-dip galvanizer, which began operation in 1993 and has a capacity of 400,000 tons per year operating as a pure contract galvanizer. The Arcelor group has to sell its stake under merger conditions imposed by the Brussels competition authorities. Galmed is another logical building block in the company`s internationalization strategy, as demand for hot dip galvanized product is growing strongly in Spain, in both the automotive and construction sectors. All the major European, US and Japanese car manufacturers have plants in the Iberian Peninsula. ThyssenKrupp Steel submitted a purchase offer at the end of September.

The move advances the strategy of internationalizing the downstream business (coating, processing and service). Crude steel production (upstream) is concentrated in Duisburg with a total capacity of 17.3 million tons (including 6 million tons at Hüttenwerke Krupp Mannesmann). A further hot-dip galvanizing line will start operation in China in mid-2003. Together with Chinese partner Angang New Steel Co., ThyssenKrupp Steel has invested USD180 million in the joint venture TAGAL. In Brazil, ThyssenKrupp Steel is a partner in the GalvaSud joint venture, which began operation at the start of 2001.

The tailored blanks business is also becoming more international with the establishment of production sites in Italy, Mexico and China. ThyssenKrupp Steel is world market leader by a distance in this segment. Tailored blanks, made of laser-welded sheets of different thicknesses and grades, were developed by Thyssen in 1984 and are today firmly established in the automotive industry. The innovative high-tech products in this line have been continuously developed and improved at ThyssenKrupp Steel. The aim is to hold market share at 35 to 40% in Europe and to continue to expand worldwide.

Another success factor will be the Stainless Steel business unit`s investment in China. The joint venture Shanghai Krupp Stainless began operation in November 2001. The start-up phase exceeded all expectations and work is now underway on the planned expansions. By 2005 cold-rolled capacity is to be expanded from 72,000 t to around 390,000 t at an investment cost of USD367 million. Phase one involved an investment of USD249 million.

The year 2002 was marked by the Section 201 safeguard measures taken by the George W. Bush administration in March 2002 in favor of the US steel industry. There is a long tradition of US business at ThyssenKrupp Steel. With a volume of just under 363,000 tons per year and a value of 200 million euros it makes up only 2% of sales, but it mainly involves high-value products which American customers cannot source on the domestic market. Therefore, they - like the German Government and the European authorities - have supported ThyssenKrupp Steel in obtaining exemptions from the Section 201 tariffs. To date, 136,900 tons have been exempted. "That is disappointing, but we hope that the balance will be approved in the new round due to start in November," commented Dr. Middelmann.

Initially there was great concern that the volumes not accepted by the US market would stray on to the European market. However, the EU Commission reacted quickly and in exemplary fashion. The safeguard measures it introduced have taken effect, as shown by statistics for the German steel industry: rolled steel imports in the year to date have been lower than last year, while exports in the first half of 2002 were slightly higher than a year ago.

Another special issue is being imposed on the steel industry by politicians in Brussels. Emissions trading is threatening to become a major problem. The Commission intends to begin the trading system in 2005 and measure the CO2 emissions of large industrial and power producing facilities. The production sites concerned will have to request approval for the emission of greenhouse gases from national authorities. The member states will allocate annually decreasing emissions rights to each plant; unused quotas can be traded, allowing companies to buy additional rights on an artificially created market.

The EU Commission`s draft directive, which does not adequately take into account the German steel industry`s recognized environmental achievements, is bound to restrict steel production in Germany because in a highly competitive market it will be impossible to finance the purchase of CO2 emissions permits via the market price of steel. Dr. Middelmann: "In principle, emissions trading will result in a kind of cartel, punishing those able to produce more than their allocated amounts and rewarding those unable to sell their goods."

Contact:

ThyssenKrupp Steel AG

Erwin Schneider
Tel.: +49 203 / 52 - 2 56 90
Fax: +49 203 / 52 - 2 57 07
e-mail: erwin.schneider@tks.thyssenkrupp.com

Dietmar Stamm
Tel.: +49 203 / 52 - 2 62 67
Fax: +49 203 / 52 - 2 57 07
e-mail: dietmar.stamm@tks.thyssenkrupp.com