Arcelor Mittal : A Dawn of Bull Era

By Abhishek on 11:55 PM

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Arcelor Mittal : The world's largest steel maker, said on Thursday it will shut down its blast furnace number six at Seraing in Belgium until at least the end of February, Belgian media reported.

Public broadcaster RTBF said the move, which comes only eight months after the furnace was reopened, was due to the financial crisis and a decrease in demand for steel.

A spokesman for ArcelorMittal in London said he was unable to comment immediately on the report, which said ArcelorMittal had already taken similar steps at seven units in Europe.

RTBF said the firm preferred to decrease production in the face of a fall in the global demand for steel rather than reduce prices. It said the closure of the blast furnace would lead to layoffs, but not dismissals.

ArcelorMittal said earlier it was reviewing its expansion programme due to the economic downturn.

"ArcelorMittal's growth strategy remains unchanged," a spokesman said in a statement, adding, "However, the current market situation is prompting us to check the order of priority to be assigned to our different growth projects. We are currently reassessing these priorities."

Further details could follow when ArcelorMittal reports third-quarter results on Nov. 5.

Thursday's Financial Times reported that the company's eight-year $35 billion expansion plan was under review, including its $20 billion project for two new plants in India, on which work could be put back to 2012-2015.

The ArcelorMittal spokesman declined to quantify the size of the company's expansion plans.

Chairman Lakshmi Mittal said in September that the cost of the India project was running beyond $20 billion because of delays in securing regulatory approvals.

ArcelorMittal weathered the initial phase of the financial crisis as steel demand and prices were strong, but the company's shares have dropped 72 percent since their peak on June 6 as the commodity boom ended.

The company has already announced a 15 percent cut in European output as its main customers — the construction and the car industries — see sales slip.

Trade union representatives in France said management at the Fos-sur-Mer plant had told workers that it would reduce output and asked workers to take vacations of up to 16 days from November 1 and December 31. One furnace will cease work until the end of January, said Alain Nougue, a delegate from the CGT.

Another steel plant at Florange in eastern France would also stop output for the month of December, Jean-Marc Verin of the CFDT union said.

In Belgium, local press said workers had been told that ArcelorMittal plants at Genk and Chatelet would cease production for four weeks at the end of the year while facilities at Seraing and Ghent would decrease output levels.

French newspaper Le Figaro quoted French trade union officials as saying 13 European plants would temporarily stop work — including three in Germany. ArcelorMittal refused to comment on the reports.

European steelmakers warned Monday they are facing a difficult market climate as demand dries up and rival steel imports from China rise.

The Eurofer association which counts ArcelorMittal as a member said the market was oversupplied and might only rebound at the end of 2009.

Business and consumer confidence in the 15-nation area slipped to a 15-year low on Thursday as companies worried about falling sales and said they expected to employ fewer people.

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