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Salzgitter Stock Soars After JPMorgan Double-Upgrade on New EU Steel Tariffs
Summary
Shares of the German steelmaker jumped over 10% after JPMorgan upgraded the stock to Overweight, citing a new EU steel safeguard regime expected to boost domestic producers.
Shares of Salzgitter AG surged after JPMorgan issued a significant double-upgrade on the German steelmaker, moving its rating from Underweight to Overweight. The bank's bullish revision sent the stock climbing 10.7% to €53.15 in recent trading.
JPMorgan's Bullish Reversal
JPMorgan analyst Dominic O’Kane more than doubled the firm's 12-month price target for Salzgitter, raising it to €65.00 from a previous €31.40. The upgrade represents a major reversal from the bank's prior cautious stance on the company and the broader European steel sector.
The primary driver for the upgrade is the European Union's new steel safeguard regime, which took effect on July 1. JPMorgan highlighted the policy's potential to fundamentally reshape the market in favor of domestic producers.
EU Policy Shift Drives Sector Re-rating
The new EU trade rules are expected to have a significant impact on steel imports. According to JPMorgan's analysis, the policy includes:
Ad- A reduction of EU steel import quotas by approximately 40%.
- A 50% tariff imposed on any volumes that exceed these new, lower quotas.
O’Kane argued this structural shift will transfer a meaningful volume of business back to European producers and support higher steel prices in the second half of the year. The bank also cited the EU’s Carbon Border Adjustment Mechanism (CBAM) as an additional long-term tailwind. The call was not isolated to Salzgitter; JPMorgan also upgraded peers Voestalpine and ArcelorMittal, signaling a broad re-rating of the sector based on the new trade policies.
Company-Specific Tailwinds and Market Context
Adding to the positive outlook, JPMorgan noted Salzgitter's recent move to acquire full ownership of Hüttenwerke Krupp Mannesmann (HKM), which is expected to provide incremental volume upside. The deal was announced on July 9.
However, analyst sentiment is not universally bullish. Jefferies maintained a more cautious Hold rating with a €55 price target following the HKM transaction. Despite the day's sharp rally, Salzgitter's stock remains below its 52-week high of €67.60, suggesting the market is still pricing in some execution risk even as the fundamental outlook improves.