JFE Steel Corp. and Guangzhou Iron & Steel Enterprises Holdings Ltd. have reached an agreement to jointly conduct a feasibility study on the potential construction of an integrated steelworks in the Nansha Development Zone in Guangzhou, Guangdong Province, China.

China’s high economic growth rate has resulted in increasing domestic demand for high-quality steel sheets and other steel materials. Guangdong Province, as one of the most economically developed areas of China, offers an extremely attractive environment in terms of both plant location and end market.

As a result, Guangzhou Iron & Steel Enterprises Holdings Ltd. has long planned to construct an integrated steelworks in the Nansha Development Zone, and it requested JFE Steel to participate in the feasibility study. The study will begin in August and will require one year to complete.

The feasibility study will examine such issues as the scale of production, required equipment and facilities, and project expenses. JFE Steel has made no decision about its ultimate participation in the project and will wait for the results of the feasibility study before making a final determination.

Last year, JFE Steel and Guangzhou Iron & Steel established a joint venture — Guangzhou JFE Steel Sheet Co. Ltd. — to manufacture and sell hot dip galvanized steel sheets, primarily to the automotive industry. The JV is currently building a plant in the Nansha Development Zone that is expected to begin commercial operations in early 2006.