Nippon Steel to Shortlist Two or Three States for New US Plant

(Bloomberg) -- Japan’s largest steel producer will shortlist two or three states for construction of a major new plant in the US and make a final decision on its location in early 2027.

Nippon Steel Corp. is seeking a site capable of supporting a steel plant with 3 million tons of annual capacity, Vice Chairman Takahiro Mori said in an interview. The plant, to be run by the company’s United States Steel Corp. subsidiary, will also need stable power supply at a competitive price.

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“What we are envisioning is something like Big River 2,” Mori said, referring to US Steel’s existing facility in Osceola, Arkansas. He said the decision on the shortlisted states would be made around the end of next summer.

The investment will be a key component of Nippon Steel’s 1 trillion yen ($6.4 billion) profit target. It should also help to recoup some of the $14.1 billion spent on acquiring the US firm, a deal that was finalized only in June after 18 months of negotiations embroiled in American politics.

Stable and low-cost electricity is important because the new facility will operate electric arc furnaces, an environmentally friendly but power-intensive steelmaking method. Nippon Steel will also consider tax incentives and infrastructure capabilities for handling large amounts of raw materials, Mori said.

The selection process will coincide with the expiration of US Steel’s four-year collective bargaining agreements with the United Steelworkers union in September 2026. Mori declined to comment when asked about any possible new deal, saying only that talks have not yet started. Nippon Steel and the union engaged in a fierce dispute over the Japanese company’s acquisition of US Steel, with both sides filing lawsuits – later dropped – against each other. Relations have since shown signs of improvement.

The US and India will remain key markets for Nippon Steel in a mid-term strategy that the company will revise by year-end, Mori said. The company will also ramp up its operations in Thailand, making the country “one of the major pillars” of its overseas business, he added.

Nippon Steel’s growth markets are overseas and will remain so, Mori said, as the domestic market in Japan is facing a persistent dual challenge of falling demand and an influx of low-cost Chinese products. “There is no end in sight,” to Chinese oversupply, he said.

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