Nippon Steel Sees US Steel as Earnings ‘Driver’
Reporting its results Tuesday for the three months ending June 30 (its Q1 FY 2026), Nippon Steel forecast US Steel as “the primary earnings driver of the Group,” as markets in Japan and elsewhere are slow. In fact, US Steel is now seen contributing a business profit of ¥180.0 billion (about $1.14 billion) or more in FY 2026, which is up from Nippon’s previous forecast of +¥80.0 billion, or $506 million—a more than twofold upgrade.
“US Steel is driving the Group’s earnings thanks to higher steel market prices in the US, and by realizing synergies and measures to improve profitability, mainly through the resumption of blast furnace operations,” Nippon explained.
Addressing its current business environment and upcoming business actions, Nippon Steel said in a statement: “In fiscal 2026, changes in the external environment, including the impact of the situation in the Middle East resulting in both a rise in raw materials and fuel costs and a decrease in steel exports to the Middle East, have begun to show their effect mainly in Japan.”
Forecasting its FY 2026, Nippon Steel continued: “Meanwhile, led by US Steel, the primary earnings driver of the Group, we aim to secure underlying business profit (BP) of ¥700.0 billion (¥250.0 billion in H1 and ¥450.0 billion in H2) or more.” That equates to about $4.4 billion at current exchange rates.
The company said it is acting to “dramatically increase profit by implementing the global growth strategy,” and for US Steel, specifically, that involves:
• An increase in operating synergies to $0.3 billion per year in 2026.
• The restart Granite City/B blast furnace following the revamp of blast furnace #14 at the Gary Works, etc.
• Strategic investment plans reached approximately $3.7 billion cumulatively, including the most recent finalized project to install Quench & Tempering Line at Fairfield.
Addressing the current environment, Nippon Steel said: “While demand for AI and electric power remains strong, base demand in the manufacturing and construction industries in Japan and overseas continues to be sluggish.” It added that the political and economic situation remains unstable, and there are concerns that the situation in the Middle East will lead to a further economic slowdown.
“The widening supply/demand gap is expected to persist due to the continued high-level exports of low-priced steel products resulting from China’s excess production capacity, and the expansion of steel production capacity in emerging countries,” Nippon Steel continued, noting that against this backdrop, trade measures and the formation of economic blocs are expected to develop.
“Depending on the extent of their impact, market disparities between regions are expected to widen further (market conditions in regions including North America and Europe are rising moderately, while market improvements in other countries and regions are limited),” Nippon said.