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Steel production may rise in early 2009: ArcelorMittal news
06 December 2008

After having cut production by  a third (Slowdown forces ArcelorMittal to cut output by up to 35 per cent)  and announced plans for massive layoffs ArcelorMittal to lay-off 16 per cent of US workers, ArcelorMittal, the world's largest steel maker, is now looking at raising productionin the first quarter of 2009.

L N Mittal, chairman, ArcelorMittal, told Bloomberg in an interview, in Almaty, Kazakhstan, where he met with government officials, that the inventory levels are very low and "If the demand will start improving in the first quarter or the second quarter, we will increase production.''

Similar sentiments have been echoed by Ku-Taek Lee, chairman of the World Steel Association and Chairman & CEO of POSCO.

In a statement he said, ''We are in a period of high economic uncertainty. The impact on steel markets is becoming more apparent as we move into the later part of this year. We are currently reviewing our forecasts for 2009, which had been prepared this summer before current events. However, we continue to expect growth in steel demand in 2009 and for the medium term, above the world GDP growth rate.''

Worldwide crude steel production declined 12.4 per cent in October. The world's largest independent steel trader Stemcor does not expect a recovery in steel demand growth until the last quarter of next year. Some analysts think this is wishful thinking as the are no signs of early recovery to the manufacturing sector. 

BRIC nations to drive demand
Over the past decade, the BRIC countries (Brazil, Russia, India, and China) have accounted for 75 per cent of world steel consumption growth. China is the biggest growth driver. The country's steel consumption grew at a compounded annual growth rate (CAGR) of 20 per cent between 2000 and 2007.

The per capita steel consumption in India is one of the world's lowest, at roughly 43 kg per head. The Indian government has been aggressively upgrading the country's infrastructure to support economic growth.

Brazil consumes roughly 22 million tons per year, half of which goes to Sao Paolo, which suggests that more construction is forthcoming outside of Sao Paolo.

Russia's per capita steel use reached 280 kg in 2007, representing an annual growth of seven per cent since 2001. As these nations industrialize, the steel consumption of their 3 billion citizens will probably move up in the long run.

Country Rank 2007 2006 % 07/06
China 1 489.0 422.7 15.7
Japan 2 120.2 116.2 3.4
United States 3 97.2 98.6 -1.4
Russia 4 72.2 70.8 2.0
India 5 53.1 49.5 7.3
South Korea 6 51.4 48.5 6.0
Germany 7 48.5 47.2 2.8
Ukraine 8 42.8 40.9 4.7
Brazil 9 33.8 30.9 9.3
Italy 10 32.0 31.6 1.2
Source: World Steel Association

Steel makers in Europe, Asia and the US have cut production as demand slumped amid the global economic recession. ArcelorMittal has started cutting jobs or closing factories in North America and Europe and may cut as many as 9,000 jobs, or 3 per cent of its global workforce, after reducing output as demand slumped.

The job cuts, in sales and administration, are part of the company's bid to reduce spending by $1 billion.

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Steel production may rise in early 2009: ArcelorMittal