Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

Nippon Steel Corporation / Equity Bottom-Up

<ul>
<li>Guidance cut (Business Profit ¥500 bn → ¥450 bn) as U.S. Steel delivers no profit contribution, overseas spreads weaken, and one-off losses weigh on earnings; domestic operations remain resilient.</li>
<li>Integration drag : $11 bn U.S. Steel modernization plan and rigid U.S. labor terms keep margins diluted and free cash flow negative; deleveraging and ROCE recovery deferred to FY27+.</li>
<li>Valuation rich, patience warranted: Trading at ~19× EV/EBITDA (vs peer median ~10×) with ROCE &lt; 8%; maintain Hold / Underweight until synergy visibility and free-cash-flow inflection emerge post-FY26.</li>
</ul>


Guidance cut (Business Profit ¥500 bn → ¥450 bn) as U.S. Steel delivers no profit contribution, overseas spreads weaken, and one-off losses weigh on earnings; domestic operations remain resilient.
Integration drag : $11 bn U.S. Steel modernization plan and rigid U.S. labor terms keep margins diluted and free cash flow negative; deleveraging and ROCE recovery deferred to FY27+.
Valuation rich, patience warranted: Trading at ~19× EV/EBITDA (vs peer median ~10×) with ROCE &lt; 8%; maintain Hold / Underweight until synergy visibility and free-cash-flow inflection emerge post-FY26.


Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

Derivatives and Quantitative Strategist

Gaudenz Schneider

<ul>
<li>
Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.</li>
<li>
Highlights: Currently eight pair trade opportunities persist across three markets and four sectors.
</li>
<li>
Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.</li>
</ul>



Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.

Highlights: Currently eight pair trade opportunities persist across three markets and four sectors.


Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.


Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (12 Oct 2026)

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<ul>
<li>For the sixth consecutive year, China's steel output is declining (-3.9%YoY in Jan-May'26). World steel output is declining for the 5th consecutive year, but India/US/Germany steel output is rising.  </li>
<li>Like 1990-95 (post-USSR's fall), world steel output declined 33mn tonnes in 2020-25 led by China's 104mn decline -- caused by its overcapacity. Other countries' output grows, while China reins-in overcapacity. </li>
<li>Having accounted for 90% of increased world steel output in 2000-2020, China is focused on 'new industries'. FAI in steel will decline. Non-China steel producing countries/companies will continue to benefit. </li>
</ul>


For the sixth consecutive year, China's steel output is declining (-3.9%YoY in Jan-May'26). World steel output is declining for the 5th consecutive year, but India/US/Germany steel output is rising.  
Like 1990-95 (post-USSR's fall), world steel output declined 33mn tonnes in 2020-25 led by China's 104mn decline -- caused by its overcapacity. Other countries' output grows, while China reins-in overcapacity. 
Having accounted for 90% of increased world steel output in 2000-2020, China is focused on 'new industries'. FAI in steel will decline. Non-China steel producing countries/companies will continue to benefit. 


Steel as a Bellwether of Global Industrial Cycles: Climbing Out of China's Shadow

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Oct 2nd. The aggregated net margin trading position is USD30,228m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Mitsubishi UFJ Financial, Advantest, Fujikura, Lasertec, Simplex, Furukawa Electric, Tokyo Electron, Nagoya Railroad, Taiyo Yuden, Toyota Motor.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Oct 2nd. The aggregated net margin trading position is USD30,228m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Mitsubishi UFJ Financial, Advantest, Fujikura, Lasertec, Simplex, Furukawa Electric, Tokyo Electron, Nagoya Railroad, Taiyo Yuden, Toyota Motor.


JPX Margin Trading Weekly (Oct 2nd): Mitsubishi UFJ Financial, Advantest, Fujikura, Lasertec

<ul>
<li>
Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.</li>
<li>
 Highlights: In Japan, currently two pair trade opportunities persist across two sectors.</li>
<li>
Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.</li>
</ul>



Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.

 Highlights: In Japan, currently two pair trade opportunities persist across two sectors.

Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.


Japan: Relative Value Opportunities and Pair Trades (6 Oct 2026)

Japan

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

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Nippon Steel Corporation (5401 JP)

Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Rahul Jain

Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (12 Oct 2026)

Discover eight pair trade opportunities across three markets and four sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Steel as a Bellwether of Global Industrial Cycles: Climbing Out of China's Shadow

China's steel output is declining for the sixth successive year, while India, US, Germany see growth. China's FAI in old industries will slump...

Prasenjit K. Basu

JPX Margin Trading Weekly (Oct 2nd): Mitsubishi UFJ Financial, Advantest, Fujikura, Lasertec

We analyzed JPX margin trading positions report for the past week and highlighted Mitsubishi UFJ Financial (8306 JP), Advantest (6857 JP), Fujikura...

Ke Yan, CFA, FRM

Japan: Relative Value Opportunities and Pair Trades (6 Oct 2026)

Discover two pair trade opportunities across two sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nippon Steel: Integration First, Payoff Later — FY2025 Reset Delays the Synergy Story

​Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Rahul Jain

Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (12 Oct 2026)

​Discover eight pair trade opportunities across three markets and four sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Steel as a Bellwether of Global Industrial Cycles: Climbing Out of China's Shadow

​China's steel output is declining for the sixth successive year, while India, US, Germany see growth. China's FAI in old industries will slump...

Prasenjit K. Basu

JPX Margin Trading Weekly (Oct 2nd): Mitsubishi UFJ Financial, Advantest, Fujikura, Lasertec

We analyzed JPX margin trading positions report for the past week and highlighted Mitsubishi UFJ Financial (8306 JP), Advantest (6857 JP), Fujikura...

Ke Yan, CFA, FRM

Japan: Relative Value Opportunities and Pair Trades (6 Oct 2026)

​Discover two pair trade opportunities across two sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Business profit guidance cut due to lack of profit contribution from U.S. Steel, weakening overseas spreads, and one-off losses; integration drag...

Discover eight pair trade opportunities across three markets and four sectors using statistical mean-reversion methodology for actionable insights.

China's steel output is declining for the sixth successive year, while India, US, Germany see growth. China's FAI in old industries will slump...

Discover two pair trade opportunities across two sectors using statistical mean-reversion methodology for actionable insights.