Nippon and US Steel challenge blocked takeover

Nippon Steel and US Steel have launched a legal bid to overturn President Joe Biden’s decision to block the Japanese company’s takeover of the United States’ third-largest steelmaker.

The two companies must permanently abandon the proposed USD15 billion deal within 30 days of President Biden’s January 3 ruling on national security grounds. His decision was made after consideration of a Committee on Foreign Investment in the United States (CFIUS) investigation into the takeover. 

However, in legal proceedings filed today (January 6), Nippon and US Steel allege that the outgoing president’s decision was influenced by political priorities in the run-up to November’s presidential election. A separate legal filing alleges that steelmaker Cleveland-Cliffs, Cliffs’ CEO Lourenco Goncalves and United Steelworkers (USW) union president David McCall attempted to prevent the takeover. 

In a joint statement published today, Nippon and US Steel have said that it remains confident that they will “rightfully close the transaction”. 

• Insight from the United States steel market is featured in MEPS’s monthly International Steel Review. The publication also includes market commentaries, prices, price indices and six-month price forecasts from China, Japan, South Korea and Taiwan, as well as seven European steelmaking states. 

Both President Biden and president-elect Donald Trump voiced their opposition to Nippon Steel’s takeover of US Steel after it was first announced in December 2023. The USW union also opposed the plans, despite Nippon’s pledge of USD2.7 billion of investment in US Steel’s operations. It also committed to maintaining capacity at key facilities for at least 10 years in an effort to allay national security concerns. 

Reflecting on recent developments, MEPS International US steel market analyst Laura Hodges said: “US Steel's options following President Biden's decision to block the Nippon Steel-US Steel deal are limited. The most likely option is that US Steel moves forward with plans to close certain blast furnace capacity and focus on its Big River Steel minimill production in Arkansas.  

“Cleveland-Cliffs may submit an offer to purchase the blast furnace assets from US Steel, but there are antitrust concerns, and financing may be tough for a complete purchase following the recent acquisition of Stelco at the end of 2024.” 

Hodges added: “Today's legal actions, taken jointly by Nippon Steel and US Steel, only add more time for the US steel industry to understand what will happen next for US Steel.” 

US Steel is currently the third-largest steel producer in the United States – behind Nucor and Cleveland-Cliffs – and 27th in worldsteel’s tonnage ranking. The raw steel facilities at US Steel are divided into four components – integrated, minimills, European operations and tubular. According to US Steel’s 2023 annual report, the company’s capacity and utilisation rates were: integrated mills (13.2m short tons, 71%); minimills (3.3m short tons, 89%); European operations (5m short tons, 88%); and tubular (900,000 short tons, 63%). 

The US steel industry was the subject of intense political debate in the run-up to the 2024 presidential elections. As well as the ownership of US Steel, the influence of steel imports was highlighted by both President Biden and Donald Trump. 

In September last year Biden announced that the Section 301 tariff rate on certain steel and aluminium products would increase from 0-7.5% to 25%. Meanwhile, president-elect Trump has vowed to increase rates and introduce new tariffs on all goods imported into the US. His plans were recently explored in a US Election Special episode of MEPS’s Speaking of Steel podcast.