US Steel near lows after union calls Nippon Steel letter `meaningless piece of paper'

Metal worker using a grinder

Phynart Studio

US Steel (NYSE:X) hit session lows, falling as much as 3.9%, after the US Steelworkers union called Nippon Steel’s latest letter with commitments a “meaningless piece of paper.”

“Nippon called its March 27 letter a “binding commitment,” but it is instead nothing more than another collection of empty promises and open-ended language that would enable it to skirt obligations to workers and retirees,” USW President David McCall and USW Negotiating Committee Chairman Mike Millsap wrote in the letter on Tuesday.

The response from the USW comes after US Steel (X) shares rose 2.6% on Monday after reports that Nippon Steel (OTCPK:NISTF) last week sent a legal document with commitments to the United Steelworkers union. The commitment included an additional $1.4 billion in capital spending, as well as “no layoffs as a result of this transaction and no layoffs through at least the term” of the existing labor agreement, which expires in 2026, according to Bloomberg report on Monday. News of the letter was first reported by CTFN.

“In the response that we sent today, we were firm and clear: our union sees through Nippon’s proposal and will not support the transaction in exchange for a pack of empty promises. Nor will we be deceived by so-called commitments that have baked into them ways to release Nippon from following through,” the USW continued in its statement on Tuesday.

Bloomberg reported last month that USW leader David McCall explicitly outlined what the union wants: An in-writing, legal agreement that Nippon will honor all its labor contracts.

US Steel (x) shares continued an earlier slide on Tuesday amid a report that some US senators are concerned about Nippon Steel’s (OTCPK:NISTF) ties to China. Sherrod Brown (D-Ohio), who chairs the Senate banking committee, on Monday asked President Joe Biden to review Nippon Steel’s relationships in China, according to a Financial Times report on Tuesday, which cited a letter viewed by the paper.

On Sunday Nippon Steel (OTCPK:NISTF) said it will press ahead with its proposed ~$15B acquisition of U.S. Steel (X) as it remains convinced of the deal’s potential to boost the American firm’s growth, despite President Joe Biden’s calls to maintain U.S. ownership.

Roy Walsh

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