Nippon Steel lifts U.S. Steel contribution forecast to 180 billion yen

2026-08-04

U.S. Steel drives profit

Nippon Steel said on the 4th that the contribution to earnings from its U.S. steelmaker U.S. Steel for the year ending March 2027 is expected to reach 180 billion yen. It forecast consolidated net profit under IFRS of 290 billion yen, 17 times the previous year, and raised its previous outlook by 70 billion yen. As the domestic market remains weak, U.S. Steel has become the main pillar of earnings.

In its consolidated results for the April-June quarter of 2026 announced the same day, revenue rose 40% from a year earlier to 2.8211 trillion yen, and the final result was a profit of 75.2 billion yen. A year earlier, it had posted a loss of 195.8 billion yen, weighed down by a one-off loss of 231.5 billion yen related to the acquisition of U.S. Steel, but this time the turnaround at U.S. Steel contributed to the result.

Nippon Steel Chief Financial Officer Hisahiko Iwai said at the earnings briefing that 'U.S. Steel will serve as the group's driver as the profit engine.' U.S. Steel's underlying business profit, excluding inventory valuation losses, came to 32.2 billion yen in the April-June quarter of 2026. The full-year profit forecast was raised by 80 billion yen from the previous outlook to 180 billion yen.

Strong U.S. market conditions

Nippon Steel acquired U.S. Steel in June 2025 and consolidated it from the July-September quarter of 2025. This quarter was the first time the profit contribution became visible, as cost cuts by dispatched engineers, together with tariffs that shut out foreign products, lifted the U.S. steel market.

Rising demand for artificial intelligence data centers and infrastructure is also supporting the market, and steel prices continue to trend higher. According to U.S. Steel Benchmarker, U.S. steel prices stood at $1,219 a ton at the end of July, about 27% higher than in late July 2025 a year earlier. That is more than twice the global export price level.

U.S. Steel rivals are also posting strong results, with second-quarter net profit at U.S. market leader Nucor rising 1.9 times from a year earlier and that of Steel Dynamics, the No. 2 U.S. electric-arc furnace producer, up 1.8 times. However, Iwai said 'I expect some correction in the second half of the year ending March 2027' and stressed that Nippon Steel needs to execute synergies and investments, rather than rely solely on market conditions.

Domestic weakness continues

By contrast with the buoyant U.S. market, Japan's domestic market remains under pressure from weak demand and deteriorating conditions due to China's overproduction. The impact of the Middle East issue is also expected to reduce full-year underlying business profit by about 60 billion yen.

Domestic underlying business profit for the April-June quarter of 2026 fell 67% from a year earlier to 47.1 billion yen. It is expected to recover in the second half as steel price increases take hold on the back of higher raw material costs, but full-year profit is projected to fall 28% to 380 billion yen.

Investment to rebuild domestic business

Nippon Steel is also pushing ahead with investments to restore profitability in its domestic operations. In August, it will start up next-generation hot-rolling equipment at Nagoya Works in Tokai, Aichi Prefecture, using an investment of 270 billion yen. It aims to expand production capacity for high-grade steel for automobiles, which carries higher margins, and raise its market share.

At the end of July, it also announced the partial sale of shares in NS United Kaiun. The company is reviewing group affiliates to build a more efficient organization, and plans to strengthen its domestic earnings power while also exploring ties with external capital.

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