Steeply rising prices of key raw materials necessitate this step

Tokyo, June 7, 2011: Shin-Etsu Chemical Co., Ltd. (Head Office: Tokyo, President: Shunzo Mori) announced that it will increase the price in Japan and overseas of rare earth magnets, one of its main products, effective for shipments made starting from July 1, 2011.

The prices of neodymium and dysprosium, the key raw materials for rare earth magnets, continue to rise steeply due to mining restrictions and the cutting of export quotas for rare earth minerals by China, which is the main world supply source for these materials. Until now, the selling prices of rare earth magnet products were decided on a sliding scale tied to the change in the prices of rare earth elements, and a price revision was implemented every three to six months.

However, the recent prices of neodymium and dysprosium are increasing at an abnormal pace of 3 times in a 2-month period, and the existing price-revision period became no longer in accordance with the actual situation.

For this reason, Shin-Etsu Chemical has decided to make price revisions on a monthly basis, effective for shipments made starting from July 1, 2011, and the prices of rare earth magnet products will be revised based on the most recent prices of the raw materials. With this price revision announcement, the increase in the price of rare earth magnets will be over 40%.

To help the company cope with the rising prices of the key raw materials for rare earth magnets, Shin-Etsu Chemical is already carrying out an in-company recycling process, and moreover, we have started recovering rare earth magnets from scraped automobiles and air-conditioners.

In addition, we are making all-out efforts to assure the stable procurement of raw materials for rare earth magnets. We are working toward this goal by making use of our technologies for the separation and refining of rare earths, in cooperating in the development of new mining, and at the same time, going forward with mass production of these magnets using the grain boundary diffusion method that will halve the usage of dysprosium.

However, in order to continue to supply rare earth magnet products, this change in the price-revision period for sales of these magnets has become unavoidable.

Rare earth magnets are highly functional permanent magnets that have more than 10 times the magnetic energy of ferrite magnets and are used in such applications as hybrid cars, home appliances such as energy-saving air-conditioners, hard disk drives (HDD) for PCs as well as for various motor applications for industrial equipment and other applications. In the future, it is anticipated that demand for applications in energy-saving-related areas, such as for electric vehicles and wind-power generation, will further increase.

For inquires about this matter, please contact: Shin-Etsu Chemical Co., Ltd.

Public Relations Dept.

Tetsuya Koishikawa

Tel: 03-3246-5091, or from outside Japan: 81-3-3246-5091

Fax: 03-3246-5096, or from outside Japan: 81-3-3246-5096

e-mail sec-pr@shinetsu.jp

www.shinetsu.co.jp