Deutsche Bank | The most pessimistic fears have been mitigated, but US tariffs have created great uncertainty about steel demand, given the complexity of breaking down the impact on end markets. In our new baseline scenario we reflect this situation (although without reaching a full-blown recession) and we cut our assumptions about demand and prices in the sector, reducing our EBITDA forecasts for 2026 by 7% on average. We also provide stress tests for profits and shares. Although we are close to interesting levels for some companies, a downturn in the physical markets could be a drag in the coming months, and history suggests that there would be further falls in a recession scenario (30% on average). We continue to be selective; we see the ability to protect FCF from the bottom of the cycle as a guide for seeking exposure. We upgrade Outokumpu to Buy. ArcelorMittal, Aperam and Voestalpine continue to be our top picks.
Assessment of tariff risks and update of figures; upgrade of OUT1 to Buy; Changes in recommendation and target price: Aperam – Buy, down from €40 to €38, ArcelorMittal – Buy, down from €32 to €30, ArcelorMittal (MT. N) – Buy, down from $33 to $32, Outokumpu (OUT1V. HE) – Hold until Buy, P.O. from €3.8 to €3.7, SSAB – Hold, P.O. from 55 SEK to 57, Salzgitter – Hold, P.O. €23 to €21, Voestalpine – Buy, P.O. from €34 to €33.
