Steel sector

The EU officialized the rumors in the press that were disclosed last week. 

Quotas on import of steel with no tariffs will be halved (10% vs 20% ie 10 m tons less) while tariffs applied on imports ex quotas will double from 25% to 50%. 

This is good news for the steel players in Europe but the stocks already bounced last week when the press printed the news. 

While the drop in quotas may appear small in absolute size and the tariffs' impact limited, we believe it will be enough to create a tipping point for the price of steel in Europe.  

Of course, the more you sell in Europe, the more you will benefit from this expected increase in price. Voestalpine, Salzgitter and SSAB are the most exposed stocks. 

The same mechanism will likely be adopted for Stainless steel, which is excellent news for both Outokumpu and Aperam.

The sector will also likely benefit from the CBAM mechanism in 2026. 

The steel sector is benefiting from this change in the legal environment. The sector already had a great run (see table below) but our expert still believes momentum will keep pushing shares higher. While the demand in Europe is lackluster, the expected rise in prices is likely to boost topline and margins.   

Aperam (Stainless, €2.2bn mkt cap) still offers an attractive profile in his opinion with an expected sharp recovery in earnings in 2026 and a nice 6%+ dividend yield.