JPMorgan: Two EU cement stocks will benefit even in a bearish carbon price scenario

Investing.com – JPMorgan Chase states that two of Europe’s top cement stocks may remain among the best stocks in the sector even under more pessimistic carbon pricing scenarios. The bank believes that Heidelberg Materials and Holcim Ltd will be well-positioned before 2035 due to pricing discipline and decarbonization advantages.

Heidelberg Materials

JPMorgan Chase maintains an “Overweight” rating on Heidelberg Materials, emphasizing its position as one of the sector’s leading “decarbonizers.”

Even under a lower carbon price assumption of €40 per ton and a slower phase-out of free allowances, the broker estimates that Heidelberg Materials would only need to raise prices by about 10% cumulatively by 2035 to offset the incremental costs from the EU Emissions Trading System (EU ETS).

The key is that the overall sector’s price increases could exceed this level, potentially creating a positive price-cost margin.

The broker believes that Heidelberg Materials’ operational scale, investments in carbon reduction, and proven pricing discipline make it one of JPMorgan’s preferred European building materials stocks.

Holcim

Holcim is also rated as “Overweight,” with JPMorgan noting that the company has similar structural advantages. As another major player investing heavily in decarbonization and low-carbon cement solutions, Holcim is seen as well-positioned to withstand tightening regulations and carbon price volatility.

The broker expects that, even in a weaker carbon price environment, sector-wide pricing strength will support profit margins, and Holcim will benefit from disciplined supply and steadily increasing construction activity.

In JPMorgan’s view, this combination keeps Holcim among the top stocks in the European building materials sector.

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