The German industrial group Thyssenkrupp has spent years as the poster child for the country’s painful industrial restructuring. On Friday, however, the company delivered a reminder that sometimes the market’s mood can shift faster than any turnaround plan.
Shares climbed 6.0 percent to close at EUR 15.20, brushing against the 52-week high of EUR 15.30 touched earlier in the same session. The catalyst was straightforward: Deutsche Bank lifted its price target to EUR 18 from EUR 16 and reaffirmed a “Buy” rating. Analyst Bastian Synagowitz pointed to structural tailwinds from European trade protection, arguing that shielding domestic steelmakers from cheaper imports restores pricing power to an industry that has spent years battling overcapacity and import pressure.
A Rally Built on Policy, Not Transformation
What makes the move noteworthy is not the jump itself but its origin. Thyssenkrupp has not reinvented itself in recent months — the wind at its back is coming from Brussels, not from its own restructuring efforts. The contrast with Volkswagen, which is pushing through a painful overhaul involving tens of thousands of job cuts, could hardly be starker. Two very different paths to the same destination: survival in an industry that is reshaping itself.
The need for that protection is evident in the demand picture. The global appetite for long steel products has weakened since June, according to industry group Irepas, while geopolitical tensions in the Black Sea and the Strait of Hormuz continue to disrupt supply chains. The OECD projects global demand growth of just 0.9 percent annually through 2030, with steel industry capacity utilisation expected to slip from 76 percent this year to 74 percent by 2028. In such an environment, EU trade safeguards are less a matter of cosmetics than of survival for European producers.
The Numbers Behind the Surge
The stock’s momentum is undeniable. Thyssenkrupp has gained 63 percent since the start of the year, including a 21 percent advance over the past 30 days alone. The relative strength index stands at 68.8, signalling that the shares are technically close to overbought territory — a pullback after such a run would hardly surprise.
The fundamental question is whether the operational improvement can sustain a higher valuation. Roughly three weeks ago, the group raised its profit guidance. Adjusted operating profit rose 18 percent to EUR 183 million in the third quarter, while adjusted EBIT for the first nine months climbed 62 percent to EUR 591 million. Management narrowed its full-year adjusted EBIT guidance to a range of EUR 600 million to EUR 900 million.
But the quality of those earnings deserves scrutiny. The quarterly net result of EUR 34 million — a sharp swing from the EUR 255 million loss a year earlier — includes a EUR 131 million book gain from the sale of the HKM stake to Salzgitter. Strip out that one-off, and the underlying operational improvement looks considerably thinner.
Mixed Signals From the Segments
The picture across divisions is uneven. The automotive segment saw third-quarter sales fall 3 percent to EUR 1.7 billion, a warning sign of the group’s exposure to the economic cycle. At the same time, management lowered its revenue guidance, now expecting a decline of 1 to 3 percent against the prior year — an indication that the earnings improvement stems from cost cutting rather than growth.
There are also operational risks that have nothing to do with demand. Extreme low water levels on the Rhine are threatening raw material supplies to the Duisburg steelworks. Chief financial officer Axel Hamann has assured that customer supply is not endangered, but the group has set up a taskforce to monitor the situation — a sign that the risk has not been eliminated. Should water levels deteriorate further, production in Duisburg could be hit just as the operational recovery is gaining traction.
Should investors sell immediately? Or is it worth buying Thyssenkrupp?
The strategic picture is equally fluid. Failed talks with Jindal Steel earlier this year over a stake in Thyssenkrupp Steel Europe demonstrated that the restructuring of the steel division is anything but straightforward. The spin-off approach now being pursued remains one option among several, not a done deal.
The Bull Case and Its Limits
Optimists can point to broad analyst support. The DZ Bank raised its rating from Hold to Buy in mid-month with a new target of EUR 16, while Bank of America lifted its target to EUR 22. That range of targets — from EUR 16 to EUR 22 — suggests that even after the recent rally, some see further upside.
The planned listing of the materials division tk accelis, scheduled for late October, could simplify the group structure and free up capital. If the efficiency programme delivers lasting cost reductions and the steel division holds its margins despite a difficult market, the path toward higher price targets would be clear.
Looking Beyond the Steel Cycle
While the near-term share price story is tied to trade policy, Thyssenkrupp is also working on a project that points toward the next decade. In Duisburg, a pilot plant under the Carbon2Chem initiative is planned to convert CO2 from blast furnace gases into sustainable aviation fuel via methanol. The investment decision has already been made.
The project gains relevance from a new ASTM standard that, since late July, permits methanol as a feedstock for alcohol-to-jet processes with a blend ratio of up to 50 percent. The EU’s quota for sustainable aviation fuel is rising in stages: 2 percent from 2025, 6 percent from 2030 and 70 percent by 2050.
These two narratives — the politically protected steel market of today and the CO2 valorisation of tomorrow — are running in parallel at Thyssenkrupp. For investors, the question is which one is more durable. Trade protection can be diluted as soon as diplomatic relationships shift. Carbon2Chem, by contrast, is a long-term industrial project whose economics have yet to be proven.
The next concrete test arrives with the tk accelis listing at the end of October, which will show whether the group’s capital markets story holds up without the support of one-off effects. Until then, the rally rests on a foundation that is real but narrower than the share price movement alone might suggest.
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