ArcelorMittal, the world’s largest steelmaker, may increase output next year should a decline in inventories to “very low” levels lead to a rebound in demand, Chief Executive Officer Lakshmi Mittal said.
“Inventory levels are very low,” Mittal said today in an interview in Almaty, Kazakhstan, where he met with government officials. “If the demand starts improving in the first quarter or the second quarter, we will increase production.”
Russia’s OAO Severstal, Corus, the UK unit of India’s Tata Steel, and Posco, Asia’s biggest maker of stainless steel, have cut production as car makers and builders slash demand amidst a global economic slowdown. Worldwide crude steel production declined 12.4 per cent in October, according to the International Iron and Steel Institute.
“We cut output by 35 per cent, and it was very aggressive for us,” Mittal said after the scheduled meeting between Kazakh officials and foreign investors. “I don’t think there will be an additional production cut.”
ArcelorMittal, formed in 2006 through Mittal Steel Co’s $38.3 billion purchase of Arcelor SA, fell €1.205, or 7.2 per cent, to €15.60 on the Amsterdam Stock Exchange. The stock has tumbled 71 per cent this year, cutting the company’s market value to €22.6 billion ($28.6 billion).
Wishful thinking
“The visibility is quite poor, so to say that there will be a recovery next year sounds like wishful thinking,” Andrew Snowdowne, an analyst in London at UBS AG, said today. “Whilst we think a technical rally is possible, it’s too early to make that call now.”
ArcelorMittal said last month it may cut as many as 9,000 jobs, or 3 per cent of its global workforce. The company’s operations span the globe, with mills in Europe and the US, as well as investments in Asia and Africa.
Societe Generale today cut its 2009 profit forecast for ArcelorMittal by 23 per cent and lowered its price estimate to €25 from €30. The bank also reduced its projection for hot-rolled coil steel prices next year by 9 per cent.
