Brussels: ArcelorMittal SA, the world’s largest steelmaker, said that it would reduce output by nearly a third as a sharp economic slowdown puts the brakes on demand for the steel used to build houses and make cars.
Warning of tougher times ahead, ArcelorMittal said that it needed to rebalance supply and demand, putting on hold an ambitious expansion plan that would have increased steel shipments by a fifth by 2010.
The company posted third-quarter profit of $3.8 billion in the July-September period, up 29% increase from $3 billion a year ago. The company said that until recently demand had been high in markets outside the European Union and the United States.
Sales surged 38% to $35.2 billion.
The company did not give details of the plants where it will reduce production but French and Belgian workers have said the company told them it will freeze output for at least a month this winter.
Chairman and CEO Lakshmi Mittal said that he was still optimistic about the steel industry’s medium-term growth prospects but said that it was appropriate to pause their growth strategy without having a more settled economic outlook.
ArcelorMittal says that it is selling off stocks of US steel and expected the market to stabilize by the end of this year. But European prices would not calm until next year, it said, while worldwide demand for stainless steel would be flat during 2009.
The company also wants to pay off $10 billion of its debt by the end of 2009. That would cut the increasing cost of servicing the debt it borrowed to help fund Mittal NV’s purchase of Arcelor in 2006.
It also said it would try to save an extra $1 billion by selling more and streamlining its business costs over the next 5 years.