JPMorgan shifts preference to downstream mining OEMs, with FLSmidth and Weir as top picks

Overview

This report focuses on the post-Q1 order divergence among European mining original equipment manufacturers. Upstream OEMs such as Epiroc and Sandvik showed strong order performance, while downstream OEMs such as FLSmidth, Weir, and Metso were weaker in the near term. JPMorgan believes the market has extrapolated this short-term divergence into 2027-2028 and underestimated the lagged catch-up potential of downstream OEMs in a mining upcycle, so it shifts preference toward FLSmidth and Weir.

Core views

The core view is: first, strong Q1 upstream orders do not imply a long-term structural outperformance, because the 2000-2025 history of mining OEM orders shows limited differences in through-the-cycle growth between upstream and downstream; second, downstream OEMs are more exposed to original-equipment orders and often have greater leverage when mining capex rises; third, FLSmidth has upside in 2027 product orders and margins driven by the South American copper project pipeline, copper prices, and improved permitting; fourth, concerns about Weir's pump business market share are priced too pessimistically, as its Warman brand, pump trial win rate, and high margins still support its investment case.

Analysis framework

The report combines Q1 earnings reviews, 2000-2025 mining capex and order history, comparisons with consensus expectations, segmentation of the upstream and downstream equipment chains, pump market share analysis, and a review of valuation and share-price performance to judge whether current market expectations for downstream mining OEM orders and valuations are too low.

Methodology notes

• Cycle analysisComparison of mining capex and OEM order cycles

  Use long-term mining capex and OEM order growth history to determine whether the Q1 short-term divergence is sustainable.

  The report reviews different mining cycles from 2000-2025, including China-driven boom, post-financial-crisis China stimulus, China slowdown, miner supply discipline, and green-demand phases, and concludes that long-term order growth differences between upstream and downstream OEMs are limited.

• Industry chain analysisUpstream/downstream mining OEM segmentation

  Upstream equipment is used for exploration, development, and extraction within mines; downstream equipment is used in mineral processing, pumping, comminution, separation, and refining.

  Epiroc and Sandvik are classified as upstream, while FLSmidth, Metso, and Weir are classified as downstream. The report argues that downstream orders usually lag, but they are more sensitive to original-equipment growth during upcycles.

• Market share analysisPump market competition and trial win rate

  Assess whether Weir is losing share through pump market share, trial win rate, and comparable order performance.

  Weir holds roughly 40%-50% share in the mining pump market, and its FY25 pump trial win rate was about 90%; the report believes its market position remains solid.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• FLSmidth

  Preferred downstream mining OEM, rated OW

  Strengths

  High exposure to large copper mining capex, South American projects, and mineral processing equipment; PC&V and service orders are strong; management is more upbeat about copper and gold project pipelines.

  Weaknesses

  Products orders fell 28% organically year over year in Q1, and near-term demand remains weak overall.

  Comparison

  Compared with upstream OEMs, FLSmidth's order recovery may lag; compared with Metso, the report is more positive on its copper-capex leverage.

  Risks

  Delayed copper projects, slower-than-expected permitting improvement, failure of product orders to convert, and margin improvement below expectations.

• Weir Group

  Preferred downstream mining OEM, rated OW

  Strengths

  Leader in the mining pump market with roughly 40%-50% share; strong Warman brand; pump trial win rate around 90%; margins above 20%; valuation around 17x 2027E P/E.

  Weaknesses

  Q1 organic orders fell 3%, mining OE fell 6%, mining AM fell 3%, and ESCO AM fell 5%; the stock is down 14% year to date.

  Comparison

  Weir's pump business cannot be directly compared one-for-one with FLSmidth's; Weir Minerals has a broader product mix; versus Metso and FLSmidth, Weir has an edge in large pumps and the aftermarket.

  Risks

  Intensifying pump market competition, mine disruptions, volatility in APAC and Africa aftermarket demand, and ESCO demand affected by geopolitical conflict.

• Metso Corporation

  Downstream mining OEM, rated OW but not a top pick

  Strengths

  Mineral processing and after-sales businesses show some resilience, with Q1 after-sales orders up 7% year over year.

  Weaknesses

  Equipment orders were flat year over year, and mineral orders were 1% below expectations.

  Comparison

  The report prefers FLSmidth and Weir, viewing Metso as lacking the same degree of upside catalyst.

  Risks

  Slow recovery in equipment demand, and competition with FLSmidth and Weir in processing equipment and pumps.

• Sandvik

  Upstream mining OEM, rated OW

  Strengths

  Q1 equipment orders grew 42% year over year, and mining segment orders grew 22% organically; even excluding large orders, growth remained 26%.

  Weaknesses

  Market expectations are already high, and tungsten prices are a concern for the Machining business.

  Comparison

  Upstream order momentum is stronger than downstream, but the report believes the outperformance ahead is already more fully reflected in consensus.

  Risks

  Tungsten export restrictions and regional price differences, a high base for upstream orders, and the performance of infrastructure-exposed businesses.

• Epiroc

  Upstream mining OEM, rated N

  Strengths

  Q1 order growth was strong, with equipment orders up 44%, and customer activity supported by high copper and gold prices.

  Weaknesses

  Rated N, indicating lower relative preference than FLSmidth, Weir, Metso, and Sandvik.

  Comparison

  Upstream momentum is clear, but the report believes downstream catch-up is being underestimated, so the relative preference shifts to downstream.

  Risks

  Slower order growth from high expectations, and exploration and replacement demand falling short of expectations.

Key data

• Q1 upstream OEM organic order growthAbout 23%Compared with about 5% for downstream OEMs, which led to renewed upward revisions to 2026E consensus estimates.
• 2026E consensus order growthUpstream about 15%, downstream about 6%The report believes this implies no downstream catch-up and may be too low.
• Average mining business order growth in 2000-2024About 10%Long term, the difference in order growth between upstream and downstream is limited.
• Order growth during the China-driven boomAbout 19%Corresponds to the 2000-2008 mining capex upcycle.
• Order growth during the post-financial-crisis China stimulus periodAbout 34%, sustained for three yearsShows strong order elasticity during mining upcycles.
• FLSmidth 2027 product order model assumption20% organic growthThe report believes there is still upside risk.
• Weir year-to-date share price performance-14%The report believes the market has overreacted to share changes and short-term order weakness.
• Weir pump trial win rateAbout 90%Used to support the view that its market position remains solid.
• Weir valuationAround 17x 2027E P/ECombined with margins above 20%, the report sees the quality and valuation as attractive.
• Company price reference dateClose on 2026-05-19The disclosure page lists prices such as FLS.CO Dkr494.40 and WEIR.L 2,436p.

Impact & implications

If the report's view is correct, the market is underpricing the order catch-up and margin improvement potential of downstream mining OEMs. FLSmidth may benefit from large South American copper projects, a recovery in product orders, and margin expansion; Weir may be re-rated as concerns about market share ease, supported by the high aftermarket content of its pump business and valuation recovery. By contrast, the upstream strength of Epiroc and Sandvik is already more fully reflected in expectations and share prices.

Risks

• Consensus may be correctly reflecting structural downstream weakness rather than merely delayed orders.
• A decline in copper prices, gold prices, or mining capex could weaken the order recovery for FLSmidth and Weir.
• Permitting improvements and large South American copper project conversions may take longer than expected.
• If Weir's pump market share is actually eroded by FLSmidth, Metso, or other competitors, the valuation recovery thesis will weaken.
• Q1 downstream order weakness may persist longer, preventing the 2027-2028 catch-up from materializing.
• Geopolitical conflict, mine disruptions, and regional demand volatility may continue to affect aftermarket orders.

What to watch

• Whether FLSmidth Products orders begin to improve in the second half of 2026 through 2027.
• Whether large South American copper projects move into approval and order-conversion stages.
• Whether copper, gold, and other metal prices, as well as miner exploration activity, continue to support capex.
• Whether Weir's pump trial win rate, Warman brand orders, and aftermarket growth remain stable.
• Whether the consensus gap between downstream and upstream OEMs narrows in 2027-2028.
• Changes in competition among Metso, FLSmidth, and Weir in pumps, crushers, HPGR, mill liners, and separation equipment.
• The extent to which Sandvik's tungsten-related businesses are affected by China export restrictions and European pricing.