US Steel Stock in Focus as New Nippon Steel Exec Touts Takeover—Key Levels to Watch

Nippon Steel President Says Merger Would Boost U.S. Steel’s Competitiveness

Key Takeaways

• U.S. Steel shares are in focus after new Nippon Steel president Tadashi Imai reiterated his intention to push ahead with the politically sensitive acquisition.
• Imai said the acquisition would allow U.S. Steel to leverage the Japanese firm’s advanced technologies and provide access to its 2,000 steel patents in North America.
• President Biden, along with several other lawmakers and union leaders, have pushed back against the proposed deal, raising concerns over national security and potential job losses.
• The U.S. Steel share price may find support around $38.50 near a key trendline and resistance near the gap high at $50.20

United States Steel (X) shares remain in focus Monday after Nippon Steel (NPSCY), the Japanese steelmaker that agreed in December to purchase the U.S. steel company for $14.9 billion, reiterated its intention to push ahead with the politically sensitive takeover.

Nippon Steel’s new president, Tadashi Imai, told reporters late last week that a tie-up with the Japanese steelmaker, which has had a presence in the United States since the 1980s, would help U.S. steel accelerate its domestic growth. “I am convinced that we’re the most useful partner to help U.S. Steel grow in the United States,” he said, according to a Reuters report on Sunday.

Imai discussed how the acquisition would allow U.S. Steel to leverage Nippon Steel’s advanced technologies such as electromagnetic steel sheet and provide access to its 2,000 steel patents in North America, adding that the proposed merger would boost the competitiveness of U.S. Steel.

Last month, President Biden, along with several other lawmakers and union leaders, pushed back against the deal, raising concerns over national security and potential job losses. In relation to the latter, the Japanese firm has said there would be no layoffs or plant closures resulting from the transaction.

The takeover is politically contentious in an election year where both Biden, and his rival, former president Donald Trump, will be seeking the support of steelworkers and unions in critical swing states, such as Pennsylvania, the home of U.S. Steel. The proposed purchase is currently being evaluated by the Committee on Foreign Investment in the United States (CFIUS) and is likely be discussed when President Biden meets Japanese Prime Minister Fumio Kishida in Washington on April 10.

The U.S. Steel share price gapped above multi-year resistance on news of the Nippon Steel takeover but has since filled the area of no price activity as investors question whether the deal will gain regulatory approval. 

Looking ahead, it’s worth keeping an eye on the key $38.50 level—an area on that chart that may find buying interest near a trendline connecting the April 2022 swing high and recent mid-March low. If the stock moves higher from these levels, monitor the gap high at $50.20 as a possible area of resistance where sellers may decide to take profits.

U.S. Steel shares were up 0.4% at $40.96 in premarket trading Monday at around 7:00 a.m. ET.

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