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UBS upgraded ArcelorMittal to Buy from Neutral with a €71 price target, raised from €61, sending the steel producer's shares up 4.6% in Friday's trading. The bank said it expects a large rally in European Union steel prices over the next six months and noted the shares have shed nearly 20% of their value during the past month, leaving the stock oversold and sensitive to any positive catalyst. UBS analyst Andrew Jones calculated that ArcelorMittal shares are fairly valued at roughly €750 per ton spot hot-rolled coil, but free cash flow yields rise to 6% to 8% at €820 to €850 per ton HRC despite substantial growth capital expenditures, with every €10 per ton increase in the European price adding about $325M to the company's EBITDA and about $250M to free cash flow. Jones added that ArcelorMittal Eisenhüttenstadt resumed operations at its blast furnace this week, signaling a gradual normalization of European production capacity after a period of curtailments and disruptions. While noting risks to North American HRC pricing and import risk in Brazil and India, Jones said ArcelorMittal is gaining most of the market share from import displacement and is the most liquid play on the European growth theme.

UBS upgraded European steelmakers Salzgitter, ArcelorMittal and voestalpine to buy from neutral on Friday and kept its buy rating on SSAB, saying new EU import quotas that remove about 9 million tonnes of annual imports will tighten supply after a recent pullback in the shares. The broker set price targets of 71 euros for ArcelorMittal, 71 euros for Salzgitter, 64 euros for voestalpine and 120 Swedish crowns for SSAB, implying upside of 31%, 61%, 51% and 21% respectively, and named Salzgitter its top pick because its earnings are about 2.5 to 3.5 times more sensitive to higher EU steel prices than the other three. EU safeguard measures that took effect July 1 cap duty-free steel imports at 18.3 million tonnes a year, with a 50% tariff on anything above the quotas, while blast furnace restarts mainly by ArcelorMittal bring back about 7.6 million tonnes of announced capacity, partly offset by cuts at Taranto and at HKM, which Salzgitter owns. UBS raised its EU hot-rolled coil price forecasts by 2%, 11% and 10% for 2026, 2027 and 2028, now expecting about 820 euros a tonne in 2027 and 805 euros in 2028 against a spot of about 745 euros, and said import parity is above 900 euros a tonne, about 20% above spot, with 1,000 euros not ruled out if demand improves. The broker warned third-quarter results will not show the upturn, forecasting earnings below consensus for ArcelorMittal, voestalpine and SSAB on weak summer demand, the delayed effect of lower prices in May and June and higher energy costs, with Salzgitter the exception at 9% above consensus on higher steel shipments.

Sankyo Tateyama hit limit up. In its first-quarter earnings released the previous day, operating profit came to 2.64 billion yen, a sharp turnaround from the 1.16 billion yen loss in the same period a year earlier. Against the unchanged full-year forecast of 4 billion yen, which is 2.6 times the prior year's result, the progress rate has reached 66%, signaling expectations of a substantial earnings beat. The strong results were driven by higher sales linked to the aluminum ingot market, price revisions, foreign exchange effects in its international business, and increased volumes, particularly in the automotive sector.