Steelmaker ArcelorMittal freezes production at Warsaw facility

WARSAW Thu Jan 31, 2013 4:17am EST

WARSAW Jan 31 (Reuters) - ArcelorMittal, the world's biggest steelmaker, said it had decided to suspend production temporarily at its steel plant and rolling mill in Warsaw because of decreasing demand.

The company said that the industry in Poland has been struggling for months with a decreasing number of orders for reinforcing bars used in construction.

"This situation is mainly due to the illegal practices in steel trading in Poland and VAT frauds on reinforcing bars imported to Poland from neighbouring countries," ArcelorMittal said in a statement.

Poland's construction industry is also struggling and several large builders have been battling to avoid bankruptcy because of unprofitable road contracts. Developers have also seen a drop in demand for new homes.

Arcelor said that it would close the Warsaw steel plant and rolling mill for nine and 11 days respectively, starting from Jan. 29.

The company has cut operations in Europe after European demand for steel dropped 8 to 9 percent last year. Last week it announced the shutdown of its facilities in Belgium and plans to close two idled blast furnaces in France.

However, ArceloMittal's chief executive this month said that he expected global steel demand to grow by between 2 percent and 3 percent this year, mainly because of expanding U.S. and emerging markets, with European consumption seen nearly flat.

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