JPMorgan has abandoned its earlier bearish stance on European steel and moved to a more optimistic outlook now that the European Union’s import restrictions are in force. The bank on Friday upgraded Voestalpine and Salzgitter from Underweight to Overweight and raised ArcelorMittal to Neutral from Underweight.
That represents a reversal from JPMorgan’s March 9 downgrade, when analysts cautioned that the Middle East conflict could sap demand and push up costs for EU steelmakers. The analysts, led by Dominic O’Kane, said that anticipated demand destruction and higher input costs have not materialised, and noted the European steel index has risen roughly 10% over the same period.
Market moves were immediate: Salzgitter shares jumped 10.3% in early trading in Germany, Voestalpine climbed nearly 7%, and ArcelorMittal rose about 5% in Amsterdam.
JPMorgan’s team said upcoming second-quarter reporting will draw investor attention back to the structural effects of the European Union’s new tariff-rate quota regime that began on July 1. Under the TRQ, the bank noted, roughly 40% of EU steel imports are curtailed and a 50% tariff applies to volumes exceeding the quota. JPMorgan estimates the policy has the potential to shift in excess of 10 million tonnes of demand toward European producers.
Those policy changes have already influenced pricing assumptions. Since July 1, EU mills have sought to lift prices, and JPMorgan raised its European hot-rolled coil (HRC) forecast for the fourth quarter to €725 per tonne from €700, while its 2027 HRC forecast was increased to €750 from €700.
On the sector outlook, JPMorgan continues to expect strong earnings momentum, forecasting EBITDA growth of more than 20% in 2027 versus 2026 and anticipating a European restocking cycle to begin by the end of the third quarter.
Looking at individual names, the bank assigned a €50 price target to Voestalpine and described the stock as a "laggard" that has fallen about 15% since June despite a relatively stable earnings profile driven by contract-based sales. JPMorgan’s forecasts include roughly 40% EBITDA growth for Voestalpine by fiscal 2028.
Salzgitter received a €65 target and was also characterised as a laggard, but one with high exposure to spot prices. JPMorgan highlighted that only about 20% of Salzgitter’s sales are covered by annual contracts, giving the company the "highest torque to spot steel prices" and the largest potential earnings swing as prices recover. The bank’s model projects 2027/28 EBITDA to be 30-50% above 2026 levels.
ArcelorMittal’s target was lifted to €57 from €45. The analysts, however, cautioned that they do not expect a positive earnings surprise from ArcelorMittal’s upcoming July 30 results; their EBITDA forecast of $1.93 billion sits roughly 5% below consensus. JPMorgan still retains a constructive view on the earnings trajectories for ArcelorMittal and SSAB through 2026-28, but its Neutral rating on those names reflects comparatively greater upside in Voestalpine and Salzgitter.
For the second-quarter reporting season across the sector, the bank does not anticipate widespread upside surprises, pointing to a 2-3 month lag between spot prices and reported revenue. JPMorgan said this lag should give way to a strong fourth-quarter earnings recovery as TRQ-driven pricing power builds.
Context for investors
- JPMorgan’s upgrades reflect an assessment that EU import controls materially change the supply-demand balance for local mills.
- Price forecasts for HRC have been nudged higher on the expectation that mills will seek to pass through improved pricing capacity.
- Company-specific outcomes will depend on contract mix: firms with larger spot exposure stand to gain more as prices firm.