ArcelorMittal , the world's largest steel producer, is prepared to cut steel output by up to 15% - and in some cases even more - to make sure supply remains in line with weaker demand, the company's senior executives said Wednesday.
ArcelorMittal's Chief Executive Lakshmi Mittal said the company was prepared to cut production by up to 15% in certain markets in response to weaker demand.
He said the company had already cut steel output by 15% to 20% in Ukraine and Kazakhstan but hadn't yet decided what cuts it plans to implement in western Europe and U.S., where demand has fallen significantly.
Any cuts would likely be focused on long products, where prices have dropped steadily over the past two months compared with flat products, he said.
"The construction industry has slowed down due to credit crisis and there's also impact on some retail customers and housing markets," Mittal said.
But Mittal remained positive about the steel market, noting he still expects demand to grow 5% in 2008 as a whole, with an expected rebound in Chinese demand in the fourth quarter.
Weaker Chinese demand has already prompted small- to medium-sized steelmakers to cut production. In the industrial province of Hebei, private-owned steelmakers have pledged to shutdown 30% of their production until September, Mittal said.
We have been predicting for some while, that steel production would be cut soon. Whilst even within the last month, the steelmakers including ArcelorMittal, have been bullish about demand, it's been clear to those of in the industry that demand is not down, it's collapsed. We are not optimistic about any early upturn in the market, as the world financial situation continues in turmoil, so we can expect more producers to cut production to protect prices.