Nippon Steel sees better year ahead for US Steel, no capacity cuts needed, CFO says

Nippon Steel CFO Takahiko Iwai said in an interview this week that the company sees no need to reduce capacity at its U.S. Steel subsidiary and expects the business to contribute to earnings in fiscal 2026, up from zero this year. The comments were made in Tokyo for Reuters and published on February 19, 2026. Iwai explained that the lack of capacity cuts is justified by growing U.S. steel demand, even as the company works to improve its high-cost structure through capital investment and technology transfer. While urgent steps are needed to improve the U.S. company’s high‑cost structure, capacity reductions similar to those implemented in Japan in the early 2020s are unnecessary because U.S. steel demand is growing, Iwai told Reuters in an interview this week. "U.S. Steel’s operation has been steadily improving through capital expenditure effects," Iwai said, adding that around 100 Nippon Steel staff had been sent to the U.S. to share best practices and advanced technology. He did not give an estimate for U.S. Steel’s expected earnings for the next fiscal year. Japan’s biggest steelmaker completed its $15 billion acquisition of U.S. Steel in June after protracted negotiations. In November it cut its earnings forecast for the U.S. business to zero from an estimate of 80 billion yen ($515 million) for the nine months to March 2026 following the acquisition, which Iwai blamed on weak market conditions, buyers holding back due to U.S. tariffs and transport disruptions caused by a cold snap. Next year’s result will be helped by facility improvements. "Big River 2 plant is now running at near full capacity and will have a full‑year impact next fiscal year," Iwai said. The new plant started operations in late 2024. Iwai said U.S. Steel’s biggest challenge is its high variable‑cost structure, stemming from years of underinvestment. Nippon Steel plans to build a structure capable of securing stable profits even during market downturns. Completing planned investments over four years to raise the share of high‑margin value‑added products should "significantly improve quality and cost competitiveness," he said. The U.S. is the world’s largest market for high‑grade steel and is less affected by Chinese competition than other markets, he said. Of the 2 trillion yen bridge loan secured for the acquisition, 1.3 trillion yen faces refinancing deadlines in June, excluding 700 billion yen already raised through subordinated loans and similar instruments, Iwai said, adding it is considering various options. He declined to comment on a Reuters report that Nippon Steel is considering selling as much as 500 billion yen of convertible bonds.