JPMorgan has turned negative on European mining and steel stocks, saying that heightened tensions in the Middle East pose a risk to metal prices and industry profits and prompting a string of downgrades across the sector.
The Wall Street bank noted that geopolitical uncertainty combined with rising energy costs could dent global growth and reduce commodity demand, creating fresh downside pressure for industrial metals and the firms that mine and process them.
Analysts at JPMorgan now see "another >10% downside risk" for European mining and steel equities, despite the sector already sliding 9% in the prior week and becoming the weakest-performing group in MSCI Europe. The team drew a parallel to the market dynamics observed during the Russia-Ukraine conflict, when European metals and mining equities ultimately fell about 40% as elevated energy prices and tighter monetary policy slowed economic activity.
"We find it surprising that most industrial metals prices are -/+5% since 1 March, which appears benign in our view," the analysts, led by Dominic O'Kane, wrote.
As part of its revised baseline and downside scenarios, JPMorgan outlined specific price assumptions for base metals. The bank's downside case assumes copper at $9,500 per tonne in 2026-27 and iron ore at $90 per tonne. JPMorgan noted those levels sit roughly 24% and 8% below current spot prices, respectively.
On the corporate side, the bank downgraded several miners to reflect this more cautious outlook. Anglo American, First Quantum Minerals, Lundin Mining and Kumba Iron Ore were moved to Underweight, while Rio Tinto and Antofagasta were cut to Neutral.
JPMorgan also shifted its stance on European steelmakers. ArcelorMittal and Voestalpine were double-downgraded to Underweight, and Aperam was lowered to Neutral. In explaining the change for steel, the analysts said they were reversing a previously positive outlook for EU steel equities in 2026, and argued that current share prices appeared to reflect the potential upside from EU protectionism while downplaying downside risks from geopolitics and energy markets.
The bank highlighted that this escalation is arriving at a vulnerable juncture for the copper and iron ore markets. Global copper inventories have risen, Chinese physical premia remain weak, and JPMorgan's commodities team expects the copper market to move into surplus by 2027.
Given these conditions, the analysts warned that mining and metals stocks could forfeit much of their recent relative outperformance versus the broader European market if energy prices stay elevated and global growth slows as a consequence of the conflict.
Contextual note: The bank's recommendations and price scenarios form part of its changed sector outlook; the analysts emphasize downside risk even after recent market weakness and have applied these views across both mining and steel subsectors.