ArcelorMittal Expects Slower Growth in Chinese Steel Demand

By Alex MacDonald

LONDON--ArcelorMittal (MT), the world's largest steel maker, is forecasting slower growth in Chinese steel demand this year due to more muted construction demand growth stemming from a credit squeeze on property investments, the company's chief financial officer said Friday.

The Luxembourg-based company expects steel demand in China, the world's largest steel-consuming nation, to grow by as much as 4.5% this year after growing 7% last year, Aditya Mittal told journalists on a call.

Steel demand in the U.S. is forecast to grow by as much as 4.5% this year after more modest growth last year, the company said, while demand in the European bloc of 28 member states is forecast to rise by as much as 2.5% after contracting last year.

Mr. Mittal said that ArcelorMittal is still reviewing its Eastern European steel plants, but doesn't expect to embark on a major restructuring program of those assets.

"It remains an area that we are reviewing [but] assuming that the demand levels continue to improve as we are forecasting, perhaps there won't be an asset-optimization requirement in East Europe," he said. "We need to be careful when we're looking at our asset base so that we don't cut capacity and then in a few years...need that capacity in order to maintain [market] share as the market grows."

At its Asian, Africa, and Commonwealth of Independent States division, which comprises six steel plants and several captive iron-ore mines, the company plans to focus on improving operational performance rather than carrying out a major restructuring program because it expects emerging-market steel demand to pick up in the future, Mr. Mittal said.

The company is reviewing the lifting of trade sanctions on Iran to see whether it could sell more steel to the country, Mr. Mittal said. Before the 2010 trade sanctions, Iran was a large consumer of steel produced by ArcelorMittal's Kazakhstan steel plant.

Write to Alex MacDonald at [e-mail]

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