After a prolonged period of weak conditions in the European steel market, the first signs of a shift in sentiment are beginning to emerge. J.P. Morgan has become more optimistic about the outlook for European producers, pointing to tighter import restrictions, the potential for higher prices and an improvement in margins.
For several years, Europe’s steel industry has been under pressure from a combination of unfavourable factors.
Weak industrial demand, high energy costs, competition from cheaper imports and a slowdown in construction have all limited producers’ ability to raise prices and weighed heavily on profitability.
Now, however, a different market narrative is beginning to take shape.
J.P. Morgan has upgraded European stainless-steel producers Aperam and Outokumpu from “Neutral” to “Overweight”.
The bank’s analysts expect a significant improvement in sector earnings over the coming quarters, with one of the most important drivers being a change in the competitive environment across the European market.
Europe Is Increasing Protection of Its Domestic Steel Market
Restrictions on steel imports into the European Union are becoming increasingly important.
New regulations are intended to reduce the inflow of cheaper material from outside the EU, which for years has put downward pressure on prices offered by European mills.
J.P. Morgan believes that in the case of stainless steel, the new measures could prove particularly significant for producers operating in Europe.
The mechanism is relatively straightforward.
If less competitively priced imported steel enters the European market, domestic producers regain some of their bargaining power. That, in turn, improves their ability to raise prices and — provided costs remain under control — rebuild margins.
Another factor changing the competitive environment is CBAM, the EU’s Carbon Border Adjustment Mechanism.
Its importance for the steel market is expected to increase gradually as the system becomes more deeply embedded in European trade policy.
The Biggest Change May Be in Sentiment
For equity investors, current earnings are only one part of the story.
What matters just as much is what the market expects companies to look like six or twelve months from now.
And this is precisely where an interesting change is becoming visible.
Until recently, the European steel sector was associated primarily with oversupply, cheap imports, high energy costs and weak demand.
Increasingly, however, investors are considering a scenario in which lower imports, improving steel prices and a potential economic recovery allow producers to rebuild profitability.
J.P. Morgan’s upgrades of European steel companies are one of the clearest signals of this shift in expectations.
That does not mean a new steel boom has already begun.
It does, however, suggest that investors are starting to see a possible path out of the sector’s cyclical trough.
Cognor Could Also Return to Investors’ Radar
Against this backdrop, Cognor Holding, one of the largest listed steel producers in Poland, becomes particularly interesting.
There is, however, an important distinction.
J.P. Morgan’s latest analysis focuses primarily on stainless-steel producers. Cognor operates in different segments of the market, so forecasts for Aperam or Outokumpu should not be translated directly into expectations for the Polish company.
What matters more is the broader trend.
Cognor is strongly exposed to the European steel market. If lower import pressure leads to stronger prices and better margins for European mills, the operating environment for the Polish group should also become more favourable.
Improving sentiment toward the sector itself may also matter for valuations.
Equity markets typically try to price in changes in the economic cycle before their full impact becomes visible in reported financial results.
For cyclical businesses such as steel producers, share prices can therefore start moving well before margins and earnings have fully recovered.
Cognor Has Already Been Raising Prices
The first signs of a more favourable pricing environment have also been visible in Poland.
Since the beginning of 2026, Cognor has raised prices for reinforcing steel bars.
This is significant because one of the biggest challenges facing European producers in previous years was their limited ability to pass higher production costs on to customers.
If import pressure continues to weaken, producers may regain greater control over pricing.
For Cognor’s profitability, however, the key variable will remain the spread between the prices of finished steel products and the cost of scrap, energy and other production inputs.
Higher steel prices alone do not automatically guarantee higher margins.
Even so, an improvement in the pricing environment is one of the essential conditions for a broader recovery in profitability.
Poland Could Provide an Additional Tailwind
Cognor may also benefit from its substantial exposure to the Polish economy.
The coming years are expected to bring strong investment activity in areas such as road and rail infrastructure, energy, transmission grids, industrial projects and defence.
Many of these projects are highly steel-intensive.
If stronger domestic steel demand coincides with lower import pressure across the European Union, local producers could find themselves in a significantly better position than during the most recent cyclical downturn.
This combination could be particularly important for companies with a strong domestic market presence.
The Market May Start Pricing in a Recovery Before It Appears in Earnings
The most important change may therefore be happening not in company results themselves, but in investor expectations.
Steel is a highly cyclical industry.
In sectors like this, share prices often begin responding before a clear improvement becomes visible in financial statements because investors attempt to anticipate the point at which prices, sales volumes and margins begin to recover.
J.P. Morgan’s growing optimism toward European steel producers may be one of the first signs of such a change.
For Cognor, that means the company could once again find itself on the radar of investors looking for exposure to a potential recovery in the European steel industry.
It is still too early to speak of a full reversal in the cycle.
However, several elements are beginning to form a more favourable picture: tighter import restrictions, stronger protection of the European market, rising prices and improving analyst sentiment.
If stronger demand is added to that combination, European steel could move from being one of the sectors largely avoided by investors to becoming one of the more interesting cyclical themes.
On the Warsaw Stock Exchange, Cognor remains one of the most direct ways to gain exposure to such a scenario.
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The opinions, scenarios and forecasts presented in this article may not materialise.
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