Thyssenkrupp's Stock Hinges on Steel Sale and Tariff Tailwinds

Thyssenkrupp shares rise on new EU steel import quotas & tariffs, but remain pressured by stalled divestment to Jindal Steel. Key update expected in May half-year report.

Thyssenkrupp shares are caught between two powerful forces: a stalled divestment and a newly fortified European market. The stock, trading at €8.67, reflects this tension, having gained over 11% in the past month but remaining down more than 10% year-to-date.

A significant breakthrough came from Brussels in mid-April. The European Union agreed to overhaul steel import rules, a move set to provide structural relief for beleaguered producers. The annual duty-free import quota will be slashed by roughly 47% to 18.3 million tonnes. Any imports exceeding that limit will face a punitive 50% tariff, double the previous rate. These measures, designed to replace expiring WTO safeguards, include stricter origin controls to prevent circumvention by steel from countries like China or India.

The market response was immediate. While Salzgitter led gains in Germany's MDax, Thyssenkrupp shares rose nearly 4%. This adds to a recovery that began from a 52-week low of €7.15 in late March, with the stock climbing approximately 21% since then. Despite the rally, the share price remains below key technical levels, needing a nearly 9% gain to reach the 50-day moving average at €9.48 and sitting well under the 200-day average of €9.92.

This regulatory support arrives at a critical time. The European steel sector is operating at just 65% of its capacity and has shed around 100,000 jobs since 2008. Thyssenkrupp itself felt the pressure acutely, announcing in March a full production halt from June to September at its Isbergues plant in France, a decision affecting some 1,200 jobs. The new EU rules, pending formal ratification expected as a formality, will only take legal effect after June 30.

Parallel to these market developments, the company's strategic focus is split. Its Materials Services division is expanding in North America, acquiring a majority stake in Mexican service center Aceroteca Trading to shorten delivery times and capitalize on nearshoring trends. This unit contributed €132 million to operating profit last fiscal year.

Yet, the core strategic headache remains the partial sale of its steel division, Steel Europe. Negotiations with the preferred bidder, India's Jindal Steel International, have hit an impasse. The parties are locked in a dispute over the necessary investments required before any ownership transfer and are debating financial support during the current industry downturn. Supervisory Board Deputy Chairman Jürgen Kerner has ruled out a months-long stalemate, but a swift resolution appears elusive.

All eyes are now on May 12, when Thyssenkrupp releases its half-year report. This update is anticipated to provide clearer insight into the progress, or lack thereof, with Jindal. For the stock to achieve a sustainable breakout, analysts suggest a decisive update on the steel sale is the missing catalyst, even as the EU's tariff shield begins to take shape.