Shares in Nippon Steel Corp slipped on Monday, the first day of trading since US President Joe Biden blocked the Japanese company’s planned US$14.1 billion takeover of United States Steel Corp.

Biden had already expressed his opposition to the deal, but he announced his decision formally on Friday, days after the case was referred to him by a US security review panel. In a written statement, he said the takeover would have placed a major steel producer under foreign control, creating a risk to critical supply chains.

US Steel and Nippon Steel said in a joint statement that there was no evidence of a national security threat, describing the decision as political. They intend to challenge the order, which would be a difficult path and one likely to significantly extend a months-long tussle over a US industrial giant that has raised tensions between the US and its close ally Japan. 

Nippon Steel shares were trading down 1.2% at 3,145 yen at 9:04am in Tokyo.

US President-elect Donald Trump, who takes office later this month, has also pledged to block the deal.

Without the tie-up, US Steel will have to find alternative sources of much-needed investment. 

Similarly, Nippon Steel — which made several concessions around employment, leadership and production capacity over the last months, in an effort to assuage White House concerns — will be forced to search for another target or growth market to help reduce its dependence on the waning Japanese market and compete more effectively with China.

Japan’s largest steelmaker had aimed to boost crude steel production capacity by 30% with the US Steel deal.

India is among countries likely to come into view. The government has set a target of almost doubling annual crude steel output capacity to 300 million tonnes by 2030, to meet surging demand. Moreover, the Japanese heavyweight already has a joint venture there, Arcelormittal Nippon Steel India Ltd.

  - Bloomberg