European steel's recent weakness offers good entry point, JPM says

** J.P. Morgan sees "low scope" for earnings beats at Q3 among European steelmakers, but sees the recent price weakness as an attractive entry point ahead of expected price hikes and earnings acceleration into Q4 and 2027

** It expects raw material and energy costs to weigh in Q3

** It forecasts sector EBITDA growth of about 35% in 2027 and 50% in 2028 compared with 2026

** JPM points out EU import quotas which hand pricing power to steelmakers and expects hot-rolled coil prices to rise to €800-825/t in 2027

** The broker expects restocking to start in late November or December, before the EU's carbon border tax (CBAM) becomes more punitive from January 1

** JPM ups ArcelorMittal MT.LU to "overweight" from "neutral" citing an attractive entry point after Q3 EBITDA consensus cut of about 10%, which "sets a lower bar for Q3"