Nippon Steel sees better year ahead for U.S. Steel, says CFO

Nippon Steel's CFO said the company does not plan capacity cuts at U.S. Steel and expects the U.S. business to contribute to earnings in fiscal 2026, helped by stronger steel prices and technology transfers.

Nippon Steel's chief financial officer, Takahiko Iwai, told Reuters that the company does not see a need to reduce capacity at U.S. Steel and anticipates the U.S. business will contribute to earnings in fiscal 2026. The comment follows Nippon Steel's $15 billion acquisition of U.S. Steel, completed in June. Iwai cited stronger steel prices, technology transfer and facility improvements as reasons for the expected change. He also noted ongoing work to address U.S. Steel's high variable-cost structure. Key points: - The company expects the U.S. business to move from zero contribution this year to contributing to earnings in fiscal 2026, according to the CFO. - Nippon Steel has sent about 100 staff to the U.S. to share best practices and advanced technology. - The Big River 2 plant, which began operations in late 2024, is running near full capacity and will have a fuller impact next fiscal year. - U.S. Steel faces a high variable-cost structure attributed to years of underinvestment, and Nippon Steel plans investments to raise the share of higher-margin products over four years. - Nippon Steel secured a 2 trillion yen bridge loan for the acquisition; 1.3 trillion yen of that faces refinancing deadlines in June, and the company is considering options. - The CFO declined to comment on a Reuters report about a possible sale of convertible bonds and did not provide a specific earnings estimate for the next fiscal year. Summary: Nippon Steel reports operational improvements at U.S. Steel driven by capital expenditure, technology transfers and a new plant coming up to capacity, and expects the U.S. unit to contribute to fiscal 2026 earnings. The company is also addressing cost structure issues and planning multi-year investments; financing choices related to the bridge loan are pending and being considered as part of next steps.