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Thermwood

Revocation of Agreement on Alliance of Carbon Black Business

04 February 2005

Tokai Carbon Co., Ltd. and Mitsubishi Chemical have agreed to revoke the agreement on Alliance of Carbon Black Business disclosed in July 2004 and to withdraw the relevant application for close examination by the Fair Trade Commission.

While the proposed alliance has been subject to the examination after the said disclosure, the Commission suggested that the alliance might substantially restrict competition in the Japanese domestic market that is presently short-supplied. After all possible attempts to solve the problem, both companies have eventually come to a conclusion that the current circumstances would admit of no effective measure. Both companies will thus keep operating the business and sharpening the competitive edge independently of each other as before.

Tokai Carbon Co., Ltd., anticipate harsher competition in the carbon black industry in Asia including Japan where aggressive capacity expansions are being made in expectation of rapid growth in the automobile industry, the main consumer of carbon black.

A statement from Tokai stated that “based on this anticipation and in order to enhance customer satisfaction and corporate value through upgrading and diversifying our competence for competition, we will expand and reinforce our business bases mainly in rapidly growing Thailand and China, as well as accelerate development into high added-value products and new market areas under the basic policy of ""Powerful R&D"" and thus consolidate our position as the top manufacturer in Asia. In the meantime, we remain open to alliance as we think it is among alternative means to facilitate the achievement of this objective”.





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