Trump said the agreement will preserve American ownership of US Steel and will help the iconic company benefit from Japan’s steelmaking expertise.
“US Steel is a very important company to us. It was the greatest company in the world… 80 years ago, and we don’t want to see that leave. It wouldn’t actually leave, but the concept, psychologically, not good,” Trump said.
“They’ve agreed to invest heavily in US Steel as opposed to own it, and that’s very exciting,” he added.
Prime Minister Ishiba said Japan will invest $1 trillion in the US but provided no indication of how much Nippon Steel might invest in US Steel.
“They’re doing it as an investment, no longer a purchase. I didn’t want it bought, but investment I love,” Trump said.
“And we’ll meet with the head of [Nippon Steel] next week, a very great company, and they’ll work out the details and I’ll be there to help mediate and arbitrate,” Trump said.
LNG shipments
As part of the agreement between the US and Japan, President Trump pledged to begin shipments of liquefied natural gas (LNG) via a new pipeline in Alaska, a move he touted for also being able to bring trade between the two nations closer to an equal balance and away from Japan’s long-standing trade surplus.
The 807-mile proposed pipeline Alaska LNG would connect natural gas reserves in Northern Alaska to Nikiski for export, according to project developer Alaska Gasline Development Corporation (AGDC).
Assuming a standard 0.5-inch wall for the 42-inch line pipe specified for the 807-mile line, that means the line would consume about 472,577 short tons of steel.
Fastmarkets last assessed equivalent product steel ERW line pipe (X52), fob mill US at $1,250-1,300 per short ton on January 8.
The total steel value of the line, then, could range around $590 million-614 million.
Trump issued an executive order on January 20 requiring the federal government to prioritize the development of the Alaska LNG pipeline.
“Alaska LNG will annually strengthen the US balance of trade by approximately $10 billion, create thousands of jobs, and eliminate up to 2.3 billion tons of carbon emissions over the project’s 30-year authorization,” AGDC president Frank Richards said after the order was issued.
Market chatter
A steel distributor supported Nippon Steel’s potential investment as a positive for the company and the US.
“I have no doubt that Nippon is committed to making US Steel a success. They definitely need all that Nippon has to offer,” the distributor said.
“It’s unfortunate that a foreign entity needs to be the one that [invests in] US Steel, but if that’s the only offer, it needs to be allowed so they can be a continuing company,” they added.
Nippon Steel’s investment in US Steel is by no means a sure thing, the distributor said.
“Trump being the businessman and dealmaker, he may be able to get a couple [American] steel companies interested and broker a deal to have them buy US Steel instead,” they said.
United Steelworkers (USW) union president David McCall issued a statement reiterating opposition to any Nippon Steel investment in US Steel.
“While we await the details of the proposed investment, we encourage President Trump to continue safeguarding the long-term future of the domestic steel industry by instead seeking American alternatives,” USW stated.
Nippon Steel’s proposed $15 billion acquisition of US Steel was blocked by former President Joe Biden due to national security concerns in January, and the Committee on Foreign Investment in the United States ruled that the order blocking the deal would not be effective until June 18 to give Japan a chance to appeal it in court.
Alesha Alkaff in Boulder, Colorado, contributed to this story.
