Barclays lowers earnings forecasts for EU steelmakers due to weak demand and costs

Analysts warn: without decisions on CBAM and tariffs, industry profits will continue to decline

Barclays has lowered its earnings forecasts for Europe’s leading steel companies for 2025, citing weak demand, low prices, and rising costs. In a new research note, the bank revised its EBITDA estimates for ArcelorMittal, Aperam, and Outokumpu down by 2-6%, which is 5-11% below the Bloomberg consensus.

Against the backdrop of a difficult reporting season, metallurgical stocks lost an average of 4.3% on the day the results were published, even despite meeting their targets. The main reason is the weak outlook for the future.

Barclays left its rating for ArcelorMittal at “neutral” with a target price of €27 per share. The EBITDA forecast for 2025 has been lowered by 6% to $6.5 billion. The bank points to problems in North America: $40 million in shutdown costs and $140 million in tariff costs. The earnings per share (EPS) forecast has been reduced by 13% to $3.88.

Aperam has a “negative” rating and a target price of €25 per share. Despite slightly better-than-expected results in the second quarter, the company provided a weak forecast for the third quarter. EBITDA for 2025 has been reduced by 6% to €413 million, and EPS by 17% to €1.07.

Outokumpu also received a “negative” rating, with a target price of €3 per share. The company exceeded expectations in Q2 by 9% thanks to rising raw material prices, but Barclays warns of falling sales volumes and a new mining tax in Finland, which could reduce annual profits by €30 million.

Barclays emphasizes that without decisions on CBAM, tariff protection, and international trade, further declines in the profitability of European steel industry are expected.

As a reminder, steel production in the EU in January-June 2025 decreased by 3.3% compared to the same period in 2024, to 65.4 million tons. Global steel production decreased by 2.2% y/y, to 934.3 million tons.