The Ibex 35 steel companies start the year on opposing paths. While Acerinox advances 4.6% since the first of January, ArcelorMittal 4.9% is left, which places the latter at the bottom of the Spanish selective.
A priori, the European steel sector faces the same ominous panorama as last year and that takes its toll equally on companies focused on the production and transformation of the iron and carbon alloy. But investors imposed a punishment on ArcelorMittal in the sessions starting in January for the process of closing factories that the company began in South Africa in 2023 and that is coming to an end now. On the Johannesburg Stock Exchange, the share falls 14.5% in 2025 and drags down the value in the rest of the markets in which it is listed, including the Spanish one.
The reason for the closure, according to the company, is due to the high logistical and energy costs in the region’s steel company, which, although it does not represent an important part of the company’s overall income, was one of the largest steel suppliers on the African continent. But what penalizes ArcelorMittal’s price in the short term could be an advantage in future years, since the business in South Africa was in losses and affected the group’s entire operating result. The business in the southern cone country is expected to post losses of 4.06 and 4.4 rand per share (up to $0.24 at the exchange rate) in 2024, more than double the previous year.
In fact, the market consensus collected by FactSet places ArcelorMittal with the best purchasing advice of the sector in Europe and within the Stoxx 600 index. And, just behind, is Acerinox. Acerinox is responsible for leading the group’s increases with an increase of 4.6% that exceeds the evolution in 2024 of the Swedish foundry Boliden and the Polish metallurgical company KGHM, which advance around 4% in a sector that, average, rises 0.2% in 2025.
The two Ibex 35 companies appear in the majority of analysis and investment firms’ strategies for 2025. The global steel supply continues to be too high for the quantity of steel demanded currently and China still shows no signs of recovery in national consumption, according to Bloomberg. However, a new catalyst appears for the metallurgical industry that may be the incentive that European steel companies need to stop being one of the most punished sectors in the last two years, only surpassed by listed automobile companies.
Companies with exposure to the US market have an advantage due to the penetration of their business in a market with a strong dollar that can even seek parity against the euro. Similarly, the looming tariff war between China and the United States may contribute to higher steel prices. “We expect an acceleration in demand, and trade protectionism, to support a price rebound. The question is whether China will intervene. We remain selective, which is why our top choice in carbon steel is ArcelorMittal, for its strong portfolio and mid-market growth. cycle that offers significant upside potential,” commented Deutsche Bank analyst Bastian Synagowitz.
Bankinter warns, however, that the results for the last quarter of the year may still be weak as business in the United States is seasonally bad. “We revised the estimates downwards, especially in the short term, but we maintain the purchase recommendation, since we consider that the company has ability to generate operating cash and, therefore, maintain a dividend yield of around 6% with potential in the medium term due to its strategic movements [venta de activos en Asia y mayor exposición a EEUU]”, commented from the investment bank.
Assuming that the vast majority of European steel companies are still trading cheaper than the average in recent years due to the decline they have accumulated on the stock market, the average PER (times that the net profit is included in the listing price) of the sector is by 9.6 times by 2025, according to FactSet. For ArcelorMittal and Acerinox this multiplier is 5.4 times and 8.4 times, respectively, which implies un discount compared to the rest of the sector.
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