Nippon plans growth after finalising US Steel agreement

Nippon Steel has revealed plans to grow steelmaking capacity in the United States after completing its long-awaited takeover of US Steel.

According to worldsteel data, Nippon was the world’s fourth largest steelmaker in 2024, producing 43.64 million tonnes of crude steel. US Steel produced 14.18m tonnes last year. However, planned capacity developments could now grow the two companies’ joint annual output to 86 million tonnes.  

A joint statement issued by Nippon and US Steel, on June 18, announced the agreement on a USD14.1 billion deal. The conclusion of the takeover comes five months after President Joe Biden blocked the transaction on national security grounds.  

• This article was first published in MEPS's International Steel Review. The monthly report provides subscribers with steel prices, indices, market commentary and forecasts from key global steel markets. Contact MEPS for details of how to subscribe.

Both President Biden and President Donald Trump had voiced their opposition to Nippon’s takeover of US Steel in the presidential election campaigns. However, President Trump later ordered a second investigation by the Committee on Foreign Investment in the United States and ultimately gave his approval after Nippon agreed to sign a national security agreement before completing its acquisition. 

Nippon’s national security agreement 

The deal, which is expected to “protect and create” 100,000 jobs, includes a commitment to invest USD11bn in US Steel by 2028 and develop a greenfield project after 2028.  

Nippon will also ensure that US Steel’s headquarters remain in Pittsburgh, Pennsylvania, and that the majority of the company’s management and board – including its chief executive – are US citizens. Furthermore, a “golden share” in the new Nippon North America-owned operation will allow the US President to intervene in the event of any planned capacity cuts or attempts to offshore production.  

The significance of Nippon’s takeover of US Steel has increased since December 2023, when it first entered into a definitive agreement to buy the company. Now, it not only helps the Japanese steelmaker in its aim to grow the overseas share of its steel production to around 60% (from approximately 28%), but also President Trump’s goal of onshoring steel production.  

MEPS’s research indicates that market uncertainty has slowed steel buying in the US, this month, resulting in a further decline in US steel prices. The doubling of Section 232 steel import tariffs to 50%, on June 4, is expected to stall imports and tighten supply. However, without a demand recovery, steel producers will struggle to raise prices.  

Nonetheless, through US Steel, Nippon will maintain a foothold in a market that would have otherwise been increasingly difficult to access for overseas suppliers. 

Japan’s tariff barriers 

Japan was the US’s sixth-largest source of carbon steel imports in 2024, with volumes totalling over 1.03m tonnes. However, its tariff-free quota on exports to the US ended with the blanket reinstatement of 25% Section 232 duties in mid-March. In the first four months of this year, imports of Japanese-origin steel into the US declined by 6.3% year-on-year.  

Furthermore, Japan’s trade ministry revealed that the country’s total exports (of all goods) to the US fell by 11.1% year-on-year, in May. The decline followed a 0.2% quarter one reduction in Japan’s GDP.  

A further decline in Japanese exports to the US can be expected unless a trade deal is settled ahead of the July 9 end of a 90-day pause on the US’s “reciprocal” import tariffs.  

In April, South Korean steel producers Hyundai and Posco announced their plan to join forces to build a USD5.8bn EAF plant in Louisiana. Such overseas investments in US steel production may be seen as a way to mitigate the potential export volumes lost as a consequence of import tariffs. They may also serve to strengthen international relationships at a time of crucial US trade negotiations.