In response to the deteriorating global financial outlook and the destocking activities of steel customers, the world's largest steelmaker ArcelorMittal will further slash production by 15 percent, thus raising its total cutback rate to 30-35 percent.
According to Lakshmi Mittal, CEO and President of ArcelorMittal, "The crisis in the economy has come on us much more suddenly than anyone expected and we are facing a situation the world has not seen since the 1930s."
Therefore, the company will cut its steel output by nine million mt. The region to feel the greatest impact will be Europe where the company is closing down one blast furnace at each of its European steel producing facilities.
Meanwhile, in an effort to preserve cash, ArcelorMittal is also pulling back its $35 billion expansion plans and cutting back its capital expenditure. Accordingly, the company's capital spending next year is likely to be about $4.5 billion, down by half from the initial figure planned two months ago, while this year's capital investment will be about $5.5 billion, compared with $7 billion in the initial plans.
On the bright side, Mr. Mittal sees a possibility that steel demand and prices may see a rebound in the beginning of 2009, on the back of the production rollbacks announced by his company, as well as by other steel plants.