The management of Mitsubishi Rayon has determined that it is necessary to raise the price in the Japanese market of the Company’s product METABLEN, a modifier usedprincipallywith various plastics, by \30 per kilogram. We are now negotiating with our main users, and hope to put the price raise into effect from October 1, 2005.

  The Company last raised the price of METABLEN in 2004, but since then the market prices of its raw materials, including methyl methacrylate (MMA), styrene monomer and butadiene, have risen several times. In addition, the Company’s profitability has also been negatively affected by a steep rise in the price of fuels, and in distribution expenses. Every effort has been made to absorb this sharp increase through cost reduction measures. However, with cost increases reaching the current level, it has become impossible to absorb these losses on our own.

  Furthermore, the Company’s MBS production operations are working at full capacity utilization in an attempt to cope with expanding demand from countries all over East Asia, and we have no spare capacity in hand at the moment, with the result that inventory supplies of certain items are running very low.

  Against this background, we are forced to pass on the increase in our costs to our users in order to keep operations in the black.