Final Thoughts

Final thoughts

Written by Ethan Bernard

For something that wasn’t on the White House agenda in Washington this week, the proposed Nippon Steel deal for U.S. Steel is getting a lot of attention.

Japan’s Prime Minister Fumio Kishida came to the capital this week to meet with President Biden. With geopolitical tensions on high, the visit seems well warranted. With the number three economy in the world, and a major ally in the Pacific region, now seems a good time to shore up the alliance between the two countries.

Here in the US, though, there has been some vocal opposition to Nippon’s play for the Pittsburgh-based steelmaker, including from Congressional politicians, the United Steelworkers (USW) union, and even Biden himself.

Perhaps seeking to emphasize unity, Biden administration officials signaled that the sale of U.S. Steel to Nippon would not be on the official agenda for talks between Biden and Kishida. It appears, though, the issue was still on the agenda of some other parties, including the press.

As someone with some experience in these matters, I am well versed in the response of “No comment.” It can be employed verbally, in written/electronic form, or when one literally receives no response. The implication is clear: “We’re not going to be talking about this. Thank you kindly for your time.”

Art of diplomacy

That was not exactly what happened at a joint press conference between the two leaders in Washington on Wednesday, as SMU has reported.

A reporter asked Kishida about the deal, and if he thought politics were influencing President Biden’s decision to oppose it.

“We understand that there are discussions underway between the parties. We hope that these discussions will unfold in directions that would be positive for both sides,” he said through an interpreter.

I would call the general tone of Kishida’s remarks “standard diplomatic.” It’s not hard to surmise that the positive outcome he imagined was one in which the deal gets approved.

Biden then chimed in to answer the question too.

“I stand by my commitment to American workers. I’m a man of my word, and I’m going to keep it,” he said. “And with regard to that, I stand by our commitment to our alliance,” he added, referring to the broader US relationship with Japan.

Personally, I would say the general tone of this response is, “I’ve got your back, USW. I’ve got your back too, Japan. Can we talk about something else now?”

DOJ investigation

Also on Wednesday, a Politico article said that the US Department of Justice opened “an in-depth antitrust investigation” into the Nippon deal. A preliminary investigation was announced last month, Politico said.

The article said the review was not about foreign ownership of U.S. Steel but about AM/NS Calvert, a sheet mill in Calvert, Ala., that is a 50-50 joint venture between ArcelorMittal and Nippon Steel. The plant “competes directly” with U.S. Steel, according to the Politico article.

Politico cites “two people with direct knowledge of the matter” as the source of the information.

Note that the Committee on Foreign Investment in the US review process (CFIUS) is a separate matter. That review is about potential national security issues, not about antitrust matters.

What will happen?

One doesn’t need to don a trench coat and take out a magnifying glass to see that there are a lot of moving pieces to the U.S. Steel deal, especially with several opposing interests.

It’s almost like a game of Tetris. How do you make these pieces fit together? Or will they? And variables like the presidential election mean the game is only moving faster.

Perhaps Tetris is too simple an analogy. It’s more like 5D chess trying to hazard an answer about what might happen. As far I know, though, the 5D chess app is not yet available, at least not on my iPhone.

Ethan Bernard

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What's the tea in the steel industry this week? Here's the latest SMU gossip column! Just kidding... kind of. Yes, some of the comments we receive in our weekly flat-rolled market steel buyers' survey are honestly too much to put into print. Some make us laugh. Some make us cringe. Some are cryptic. Most are serious. We appreciate them all. Below are some highlights from our survey results this week. Some of the comments that we can share with you are also included, in italics, in the buyers' own words, with minimal editing on our part.