U.S. Steel profit doubles to $421M as tariffs lift prices

U.S. Steel posted an underlying business profit of ¥66.8 billion ($421 million) in the quarter ended Sept. 30 — more than double the prior quarter — as Section 232 tariffs keep pushing American steel prices higher, Nippon Steel's earnings published Thursday show.

The result means the Japanese parent's $14.2 billion acquisition, closed in June 2025, is now generating serious cash after early losses. U.S. Steel earned ¥32.2 billion ($203.2 million) in the quarter ended June 30, which accounted for 30% of Nippon's Q1 underlying business profit. Add the two quarters together and the subsidiary delivered ¥313.3 billion — nearly $2 billion — in the first half of fiscal 2026.

Nippon executives have revised U.S. Steel's guidance upward at least three times this fiscal year, which ends March 31, 2027. The profit expectation started at ¥100 billion in May, moved to ¥180 billion in August, and now stands at ¥230 billion or more, according to the earnings materials.

What's driving the numbers?

Tariff-inflated prices are doing most of the work. U.S. hot-rolled coil prices have climbed steadily since the end of 2025 and are expected to surpass $1,400 per ton by the end of fiscal 2026, up more than $400 per ton year-to-date, Nippon said. Oil and import prices remain relatively high as well, adding cost pressure alongside the pricing tailwind.

For shippers and buyers of flat-rolled steel — automakers, appliance manufacturers, construction supply chains — the trajectory points to continued input cost inflation through at least March 2027. Nippon has no incentive to ease: it plans to pass costs and price increases on to customers.

"Overseas businesses are benefiting from the strengthening of local production and consumption through the acquisition of U.S. Steel, based on the promising outlook for the U.S. market," the company said in its earnings presentation.

The subsidiary's results now include Nippon Steel Slovakia, formerly U.S. Steel Košice, which changed its name and direct ownership structure on Oct. 1. Underlying business profit excludes one-time and irregular costs.

Where is the money going?

Nippon has approved $6.7 billion in U.S. investments since taking over, spanning upgrades, equipment installations and expansions. The capex commitments:

• A $3 billion hot strip mill near Pittsburgh at the Edgar Thomson Plant, greenlit last month. U.S. Steel will decommission the hot strip mill and reheat furnaces at its Irvin Plant, which currently receives slabs from Edgar Thomson for conversion into sheet products.
• A $1.9 billion direct reduced iron plant in Osceola, Arkansas, where groundbreaking has just taken place.
• A completed blast furnace relining at Gary, Indiana, finished in August.

The Edgar Thomson project reshapes the Mon Valley flows: slab traffic that currently moves between the two Pennsylvania plants will be consolidated once the new mill comes online. That has knock-on effects for regional rail and trucking volumes serving the two sites.

"Initiatives are underway to further improve earnings, with the aim of achieving the FY2030 target of ¥300 billion or more ahead of schedule," Nippon said of U.S. Steel in its presentation.

What about Nippon's home market?

Not everything is surging. Nippon's domestic Japanese business has been weighed down by typhoons and heavy rainfall, forcing the company to work on recovering production and shipments. Japan's disruptions stand in sharp contrast to the tariff-protected, price-rich U.S. market that U.S. Steel now anchors.

Beyond Japan and the U.S., Nippon is pursuing capacity expansion in India and taking action in Thailand to counter dumping of Chinese steel imports — a signal that protection-driven regional pricing is shaping its global footprint decisions, not just its American ones.

What does the full-year outlook look like?

Nippon now expects to reach or surpass ¥770 billion ($4.9 billion) in underlying business profit for fiscal 2026, up ¥70 billion from its August forecast, with U.S. Steel and overseas businesses flagged as the significant earnings contributors. Full-year sales guidance sits at ¥11.7 trillion, nearly $74 billion.

The arithmetic is blunt: a subsidiary bought amid political controversy 16 months ago is on pace to hit a multi-year profit target three years early, provided HRC prices hold above $1,400 a ton. Every upward guidance revision so far has followed the price line. If tariffs stay and imports stay squeezed, the next revision is likely to point the same way.