US President Donald Trump’s tacit seal of approval for a “partnership” between US Steel and Japan’s Nippon Steel is being heralded as a boon for the automotive sector by steel market observers. However, details about what exactly a partnership means in a $14 billion one-way investment scheme remain scant.
“I think the purchase means a little more clarity in the market, which is always good. However, the deal isn’t finalized. What’s a ‘partnership?’” one auto steel consultant said.
USW reacts to uncertainty around US Steel Nippon Steel partnership
More questions than answers
In Trump’s initial announcement on May 23 on Truth Social, he characterized the deal as a “planned partnership” between US Steel and Nippon.
According to the most recent data from worldsteel, Nippon is the globe’s fourth largest steelmaker, while US Steel ranks 24th.
“This will be a planned partnership between United States Steel and Nippon Steel, which will create at least 70,000 jobs, and add $14 Billion Dollars [sic] to the U.S. Economy [sic],” Trump wrote. “The bulk of that Investment will occur in the next 14 months.”
The original deal was a $14.1 billion outright buy of the company, alongside $800,000 in debt assumption.
Political leaders weigh in
US Senator Dave McCormick of Pennsylvania followed up the Truth Social post with an official statement on May 23.
“I have made clear my top priority in any agreement is protecting the jobs of workers in the Mon Valley. In addition to securing renewed investment in Pennsylvania steel jobs and the local economy, while ensuring that US Steel remains under US control,” he wrote. He later clarified during a televised interview that the US would receive a so-called “golden share” in the company. This would give it unspecified latitude on board decisions.
“There’ll be a golden share that will essentially require US government approval of a number of the board members. That will allow the US to ensure production levels aren’t cut,” McCormick said in the interview on Tuesday May 27.
Labor union seeks clarity on partnership details
A Wednesday May 28 press release from the United Steelworkers labor union, a staunch opponent of the original Nippon buy, said it does not yet understand what President Trump’s Truth Social post implies.
“At this time, we cannot say whether the ‘planned partnership’ described in Friday’s message on Truth Social or news reports since then represents any meaningful change from the merger proposed in 2023. Under the merger, Nippon Steel would acquire US Steel and make it a wholly owned subsidiary,” the union wrote. “And, no details have been provided about how or when this money would be spent over the next 14 months. There was a claim made in Friday’s Truth Social message — a timeframe that aligns closely with the expiration of the Basic Labor Agreement in 15 months.”
Industry response to US Steel Nippon Steel partnership investment potential
A value-added investment
The auto steel consultant pointed out that US Steel and Nippon share synergies in advanced automotive grades.
“USS has some good/great assets — namely ProTec and Big River Steel. These can produce value-added grades,” the consultant said. “Nippon is a global leader in these value-added grades and should help increase efficiencies at [US Steel]. A major win. Also, Nippon Steel devotes significant resources to [research and development] — also boding well for their US investment.”
A distribution source — and former steel buyer for a major automaker — said a refreshed US Steel with Japanese tech and financial backing will be welcomed by most every automaker.
“If this does become a reality, it gives the automotive, appliance and industrial guys a huge plus,” the distributor said. “GM, Ford, Stellantis and the transplants will be really about this. The Nippon Steel connection will be a welcome for our Japanese friends.”
Future of advanced steel grades in light partnership
On the sidelines of the Great Designs in Steel symposium held on May 21 in Novi, Michigan, several market observers pointed out that the ongoing shift toward more advanced steel grades means auto sheet is becoming de-commoditized.
Mills and auto companies now frequently work hand-in-hand to develop proprietary grades with guaranteed supply. Pricing is never a straightforward enterprise due to the years of development tied up in the steel and the targeted component.
