Jefferies reiterates its buy recommendation on Thyssenkrupp with a target price of 13 euros. “Despite the macroeconomic uncertainty and the increasing risk surrounding the sale of Steel Europe, the steel branch of the German metallurgy group. “If the fundamentals of steel in Europe structurally improve, the crisis in the Middle East delays the recovery,” explains the research bureau.
As a result, Jefferies lowers the adjusted EBIT estimate for 2026 by 2% to 830 million euros (against a FactSet consensus of 794 million euros), reflecting the deepening macroeconomic uncertainty linked to the conflict in the Middle East. Although energy prices have risen, the short-term impact on costs remains limited, supported by hedging strategies and tariff compensation. In addition, its base scenario still assumes that the conflict will not be prolonged, but the high uncertainty is enough to delay the recovery of profits. Thus, Jefferies raises its EBIT forecast for 2027 by 4%, anticipating a recovery more concentrated towards the end of the period, supported by better macroeconomic visibility and normalized operational leverage.
Steel Europe: The stalemate in negotiations is a negative
Furthermore, the broker points out that “investor sentiment regarding the sale of thyssenkrupp Steel Europe has deteriorated further. Negotiations with Jindal Steel International (the international branch of the Indian group Naveen Jindal) seem to be at a standstill.” However, key operational and strategic milestones have already been achieved, including the exit of HKM (Hüttenwerke Krupp Mannesmann = German metallurgical company located in Duisburg) in June 2026, a union agreement (November 2025), and an adjustment in production capacity (from around 11 to 8.7 – 9 million tons), significantly improving the asset’s competitiveness.
Meanwhile, thyssenkrupp continues to progress with the DRI (direct reduction of iron) project in Duisburg – a 3 billion euro investment with a capacity of 2.5 million tons, financed around 70% by public funds – thus highlighting long-term decarbonization strategic options.
In 2026, thyssenkrupp Steel Europe is expected to incur restructuring costs amounting to several hundred million euros (800 million euros according to J.P. Morgan’s estimate), while absorbing approximately 50% of the group’s investments (Capex) (1.4 to 1.6 billion euros) and 5.3 billion euros in pensions, thus keeping short-term free cash flow (FCF) under pressure.
The resurgence of conflict with Iran has reintroduced volatility in gas and electricity prices, weighing on investor confidence.
Jefferies notes that “energy costs generally represent 5 to 10% of the steel sales costs in Europe, implying that the direct negative impact on EBITDA is relatively contained and partially offset by operational levers and cost pass-through over time.
Conversely, the price of steel is the main driver: it is estimated that each 50 EUR/ton increase in steel prices in Europe raises Steel Europe’s EBITDA by 25 to 30%, thereby largely offsetting any energy cost volatility.
