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LONDON, Sept 17 (Reuters) - The world’s largest steel maker, ArcelorMittal ISPA.AS, said on Wednesday it planned to cut production as much as 15 percent to support prices.
“In some markets the cut could be higher than 15 pct,” said Lakshmi Mittal, chairman and chief executive of ArcelorMittal. He told a news conference production in Ukraine and Kazakhstan had already been reduced by 15-20 percent.
Mittal said the cuts would primarily focus on long steel products, where the prices have plummeted over the past couple of months, and would take place in regions like Europe and the United States.
“The construction industry has slowed down due to credit crisis and there’s also impact on some retail customers and housing markets,” Mittal said.
But he was still optimistic for the rest of the year, saying he expected overall growth for 2008 to reach 5 percent and China to return to the market.
“Overall we still see a 5 percent growth in demand because the first three quarters have been strong,” he said.
For 2009, he expected continued strong demand, mainly from emerging markets and specifically Russia and China.
“China will rebound in the fourth quarter,” he said, adding the demand would come back to its strong levels in the first half of the year.
Steel demand and output from China, the world’s largest producer, dropped during the Olympic games as construction projects were put on hold and factories were shut down to reduce pollution.
On iron ore pricing, Mittal seemed keen to stick with the current benchmark pricing system, which Australian miners BHP BHP Billiton BLT.L and Rio Tinto (RIO.L) are slowly trying to abandon.
“ArcelorMittal believes this benchmark price is a good solution and brings much more stability to the raw material supplies,” he said.
“If they go on variable pricing like every three months, that could really disturb the stability of raw material pricing,” he said.
In contract talks for 2008, Australian miners managed to receive a price hike of up to 96.5 percent for their iron ore from Chinese customers.
Mittal said he did not expect a similar hefty price rise for 2009 contracts but added that iron ore prices would remain high.
Reporting by Humeyra Pamuk; editing by Andy Bruce