Nippon Steel Faces Profit Slump Amid U.S. Market Strain

Japan’s largest steelmaker, Nippon Steel, warned of a 14% decline in annual profit for the current fiscal year, citing severe challenges in the U.S. market and rising operational costs. The company projected an underlying profit of 680 billion yen ($4.5 billion) for the year ending March 2026 — down from 793.7 billion yen a year earlier.

The outlook notably excludes the performance of U.S. Steel, which Nippon Steel acquired in June through a $15 billion deal. The company said it left the American unit out of forecasts due to unexpectedly weak U.S. market conditions, equipment-related cost increases, and “heightened uncertainty” surrounding the region.

U.S. Steel contributes nearly 40% of Nippon Steel’s global steelmaking capacity, which totals 66 million tonnes annually. Despite current setbacks, Nippon Steel sees the acquisition as central to its long-term goal of reaching 100 million tonnes in annual output worldwide.

Earlier this week, U.S. Steel unveiled a $14 billion multi-year investment plan with Nippon Steel, with about $11 billion earmarked through 2028. The Japanese firm believes these investments will strengthen U.S. operations over time, even though near-term profits are under strain.

For the six months ended September, Nippon Steel swung to a loss of 113.4 billion yen, compared with a 243.4 billion yen profit in the same period last year. The company also forecast a full-year net loss of 60 billion yen, 50% higher than its earlier projection, after booking a 21 billion yen loss linked to its exit from Brazilian steelmaker Usiminas.

Nippon Steel is now realigning its focus toward its key growth markets — the U.S., India, and Thailand — while offloading non-core assets to reduce risk. The sale of its minority stake in Usiminas to partner Ternium marks part of that strategic shift.

Despite near-term losses, Nippon Steel remains committed to its global expansion and decarbonisation efforts, betting that its long-term investments in the U.S. will eventually restore profitability and solidify its leadership in the global steel industry.