JPM Mining Daily: Iron Ore +0.6%, Spodumene -2.0%, CYL Initiate at OW, EMEA Diversifieds, European Steel, KGHM & More

Research evidence excerpt

JPM Mining Daily: Iron Ore +0.6%, Spodumene -2.0%, CYL Initiate at OW, EMEA Diversifieds, European Steel, KGHM & More

at current commodity prices. However, we

retain a cautious bias pre-Q2 reporting as we expect: 1) cost-inflation driven earnings

disappointments; and 2) fluid geopolitical and commodity price risks. We see the greatest

cost-driven risks in Anglo American (UW) due to unique exposure to high Brazil and South

Africa iron ore freight rates. We sit -6% vs BBG consensus for H1’26 EBITDA and we place

Anglo on Negative Catalyst Watch for 23 July. Glencore (Neutral) also faces significant

exposure to >3x higher sulphuric acid costs in African Copper. For both Anglo and Glencore,

an update on the Collahuasi desalination plant suspension carries tail risk; we believe a

prolonged suspension would have implications for copper recoveries. Rio Tinto (Neutral) is

emerging as a value candidate, as the shares now trade at a ~25% discount to our £82.50/sh

PT, but we retain caution on Q2 cost impacts. We upgrade Kumba Iron Ore to Neutral: after

a ~25% fall since Feb the shares are now ~15% below our ZAR 314/sh PT.

European Steel

Q2’26 into the print: turn constructive as safeguards take effect. Double upgrade

Voestalpine & Salzgitter to OW, upgrade ArcelorMittal to Neutral

On 9 March we double downgraded our European Steel outlook to negative, forecasting that

events in the Middle East could trigger demand destruction and higher costs for EU Steel

producers. We anticipated these risks would supercede the benefits of new EU Steel

protectionism. Our thesis has not materialised and our EU Steel index is +10% over the

period. We expect Q2 reporting will refocus attention on the transformative impact of ~40%