NN Steel’s Low‑CO2 Furnace Joint Venture Might Change The Case For Investing In Nippon Steel (TSE:5401)

• In November 2025, NN STEEL Corporation approved a joint venture with Nippon Steel to own and lease new low-CO2 electric arc furnace facilities at NN STEEL’s Funamachi Plant, supplying steel slabs and hot-rolled products between the partners.
• This joint venture advances both companies’ decarbonization and resource-recycling ambitions by expanding electric arc furnace capacity and aligning production with growing demand for lower-emission steel.
• Next, we’ll explore how this low-CO2 electric arc furnace joint venture shapes Nippon Steel’s investment narrative and long-term positioning.

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What Is Nippon Steel's Investment Narrative?

For Nippon Steel, shareholders need to be comfortable owning a cyclical, capital‑intensive business that is currently unprofitable but investing heavily in cleaner steel. The new low‑CO2 electric arc furnace joint venture with NN STEEL fits that story neatly: it supports the company’s broader ¥869 billion domestic decarbonization capex plan and could reinforce medium‑term demand for its slabs and hot‑rolled products. In the near term, though, the key catalysts still sit with earnings execution, progress on U.S. Steel regulatory approvals, and how quickly loss‑making operations can be brought under control. The JV itself is unlikely to move the needle on results over the next few quarters, but it does tilt the risk balance slightly toward project delivery, capital discipline, and the ability to keep funding investment while dividends are not well covered by earnings.

However, one risk investors should not overlook relates to those large, long‑dated decarbonization projects. Nippon Steel's shares are on the way up, but they could be overextended by 47%. Uncover the fair value now.

Exploring Other Perspectives

Explore 4 other fair value estimates on Nippon Steel - why the stock might be worth 32% less than the current price!

Build Your Own Nippon Steel Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Nippon Steel research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Nippon Steel research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Nippon Steel's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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