(Aug 15): US Steel Corp is beating peers in the stock market as investors speculate that political and labour opposition to its US$14.10 billion (RM62.58 billion) takeover by Nippon Steel Corp may be easing.

Shares in the Pittsburgh-based firm are up more than 6% in the past month, recovering more of the ground lost when US President Joe Biden and presidential candidate Donald Trump voiced opposition to the deal. In the same span, competitors Cleveland Cliffs Inc, Nucor Corp and Steel Dynamics Inc have posted double-digit declines.

The divergence coincides with Biden stepping down as a candidate in November’s election, and the emergence of Kamala Harris and running mate Tim Walz. While it’s unclear what stance Harris-Walz will take on the Japanese firm’s planned takeover, investors are betting the new Democratic ticket may keep the door ajar.

“The creep-up factor in my mind hasn’t really anything to do with fundamentals — it’s more so to do with the likelihood or not that this deal closes,” said Keybanc Capital Markets analyst Phil Gibbs. “There’s probably been more hope or optimism that the deal could potentially close under a Harris administration.”

Nippon Steel agreed to buy US Steel in December, but opposition from the United Steelworkers union and both Trump and Biden left investors uncertain about the fate of a deal that’s still navigating federal foreign investment review. 

To be sure, the USW has maintained its opposition, issuing a stern statement on Monday accusing the firms of selling out workers and communities. In an email, USW International president David McCall said the deal “clearly prioritises executives and shareholders at the expense of workers and retirees. Our union finds it totally unacceptable and sees no path towards the deal closing”. 

Wolfe Research analyst Timna Tanners, however, said some union members are warming to the deal, as they weigh the possibility of a well-resourced global owner offering greater job security in a softening local market. Earlier this month, Tanners raised the odds the takeover succeeds after the election to about 50% from a prior 25%, with the best bet under a Harris White House.

Harris has given no public indication of a softer stance than Biden’s. Walz, as the governor, has visited US Steel operations in Minnesota, but also has not spoken publicly about the deal. The campaign declined to comment. 

Nippon Steel has acknowledged it may have a better chance to garner support after the elections on the assumption that the USW will have less political leverage. The top steelmaker of Japan recently hired former US secretary of state Mike Pompeo to help complete the proposed purchase.

While US Steel shares are trading largely on politics, other North American steelmakers are declining in response to weakening market conditions, according to Keybanc’s Gibbs. 

Uploaded by Tham Yek Lee