The acquisition of U.S. Steel a little over a year ago is paying off for Japan-based Nippon Steel as market prices continue to surge from Section 232 tariffs.
U.S. Steel made an underlying business profit of 66.8 billion yen ($421 million), during the quarter that ended Sept. 30, according to Nippon Steel’s latest earnings published Thursday.
The subsidiary’s results accounted for Nippon Steel Slovakia, formerly known as U.S. Steel Košice, which underwent a change in name and direct ownership Oct. 1. Underlying business profit is a metric that excludes one-time and irregular costs.
U.S. Steel has rebounded this year following initial losses after it was acquired for $14.2 billion in June 2025.
The subsidiary reported a profit of 32.2 billion yen ($203.2 million) in the quarter that ended June 30, accounting for 30% of Nippon’s Q1 underlying business profit. Results more than doubled from that in the latest quarter, resulting in 313.3 billion yen (nearly $2 billion) during the first half of 2026.
Nippon executives have revised U.S. Steel’s guidance upward for their fiscal year 2026, which ends March 31, 2027, at least three times.
Underlying business profit expectations started at 100 billion yen in May, then 180 billion yen in August, before most recently reaching 230 billion yen or more, according to Nippon’s earnings.
“Overseas businesses are benefiting from the strengthening of local production and consumption through the acquisition of U.S. Steel, based on the promising outlook for the U.S. Market,” the company said in an earnings presentation.
Prices and costs
U.S. hot-rolled coil steel prices have continued to rise since the end of 2025. They are expected to surpass $1,400 by the end of fiscal year 2026, up more than $400 per ton year-to-date, according to Nippon. At the same time, oil and import prices remain relatively high.
While U.S. Steel has largely benefited from favorable market conditions, Nippon’s domestic business has been weighed down by typhoons and heavy rainfall in Japan. The company said it plans to pass on costs and price increases to customers and work to recover production and shipments from adverse weather conditions.
Nippon is also looking to expand production capacity in India and pursue actions in Thailand to offset dumping of Chinese steel imports.
“Initiatives are underway to further improve earnings, with the aim of achieving the FY2030 target of [300 billion yen] or more ahead of schedule,” Nippon said in an earnings presentation about U.S. Steel.
U.S Steel investment progress
Nippon said it has approved $6.7 billion in U.S. investments since taking over U.S. Steel, including a number of upgrades, equipment installations and expansions to improve operations and profitability.
Last month, it greenlit construction of a hot strip mill valued at $3 billion near Pittsburgh at the Edgar Thomson Plant. Along with this project, U.S. Steel plans to decommission its hot strip mill and reheat furnaces at its Irvin Plant, where the company currently ships steel slabs from Edgar Thomson to be converted into sheet products.
The company also completed a blast furnace relining at Gary, Indiana, in August. Most recently, it broke ground on a $1.9 billion direct reduced iron plant in Osceola, Arkansas.
Outlook
Overall, Nippon is expecting U.S. Steel and its overseas businesses to be significant earnings contributors this year.
The company revised its guidance to reach or surpass 770 billion yen ($4.9 billion) in underlying business profit during fiscal year 2026. That is up 70 billion yen from its previous forecast in August.
It is also expecting full-year sales to reach 11.7 trillion yen (nearly $74 billion).
