Near-Term Softness, Medium-Term Upside; Earnings at an Infection Point

Research evidence excerpt

Near-Term Softness, Medium-Term Upside; Earnings at an Infection Point

nning 20% below normalized levels but supported by low import penetration (~20% mkt time since 2024, marking a return to value

share under S232), stable utilization rates (85%), and HRC pricing that remains up c.17% YTD. creation and providing greater confidence

The near-completed NAS expansion should further enhance earnings power, increasing flat that earnings and profitability are moving

product capacity by 20%. However, we expect a softer Q3 as seasonal demand slows and onto a positive trajectory.

nickel prices decline, with LME nickel falling ~5% over the past week to its lowest level since

late 2025, dragging stainless steel and scrap prices lower.

We estimate 400-500kT of stainless steel

Europe - Easing Price Pressure; Policy Tailwinds From 2H26: EU prices bottomed in Q4 imports to be reallocated among EU

(€2,350/t) and are showing some recovery, albeit being underpinned more by cost increases producers with ACX maintaining its mkt

than demand recovery. Nickel volatility (-4% YTD) and higher stainless scrap (~15% higher) share (10%), thereby increasing production

squeeze margins. The effect of CBAM & looming new safeguard measures reduced imports by ~50kT vs normal levels.

by >40% you; however, demand remains weak, as geopolitical turmoil and higher energy and

freight rates delay trades and investments.

Valuation: Our PT of €18 is based on 7.2x EV/

While EU stainless operations remain a cash drag and loss-making over 1H26, we believe an EBITDA (1x premium to 10yr avg) and €792m

increase in utilization rate to 70% (higher volumes) and margins up by €50-100/t should lead 2027E EBITDA (5yr avg 2021-2025 is €765m).

to approach breaking even by end of 2026.