CONF: Nippon Steel's US Steel deal targets growth

Li Yongjun, Chief Analyst  of CISA

The acquisition, initially agreed upon by both companies last December, is an all-cash deal valued at approximately $14.1 billion and was expected to be closed in the second or third quarter of this year, Mysteel Global noted.

However, the proposal has drawn resistance from both US president Joe Biden and Donald Trump, his likely challenger in the November 5 election, as well as the United Steelworkers (USW) union.

NSC is sticking to the buyout plan, reiterating during its earnings summary for fiscal 2023 delivered on May 8 that it intends to close the deal by year-end. "US Steel products will remain mined, melted and made in America and will continue supplying further sophisticated steel products to American industry," the Japanese mill said.

To win support from the USW, NSC has pledged to move its US headquarters to Pittsburgh, where U.S. Steel is based, offering specific commitments on job security and additional investments if the deal goes through.

"The underlying reason why NSC insists on the buyout of US Steel – despite the obstacles – is that NSC saw a long-term incremental steel demand in the United States," Li told delegates at the Hangzhou conference.

The US steel market is likely to experience an increase in demand going forward, Li emphasized, quoting data from the World Steel Association (WSA) that apparent steel use in the US reached 94.5 million tonnes in 2022, up from 80 million tonnes in 2020.

The rise in US demand is likely driven by non-residential construction, including factory construction, he added.

Written by Adele Pan, panqinjie@mysteel.com    

Edited by Russ McCulloch, russ.mcculloch@mysteel.com