BRUSSELS, Belgium (AP) - The world's largest steelmaker, ArcelorMittal, will slightly cut European production in the third quarter and keep prices steady to help contain a market bloated with Chinese imports, the company said Friday.
Europe's steel prices are the world's highest. This has attracted increasing Chinese trade, raising concern among European steelmakers and European Union officials about the possibility of Chinese steel being dumped in Europe.
EU officials have warned of sanctions unless Beijing acts to cool what they describe as too much output from China.
Despite robust European demand and a possible squeeze on costs in the second half of the year, ArcelorMittal said it would stick with current prices in the third quarter for flat carbon used for the body of cars, trains and ships, claiming it needed to maintain a sustainable market environment for customers and a healthy inventory level.
The company—currently being formed as Mittal Steel Co. NV takes over Arcelor SA—warned that its supply to the European market would fall by 3 to 4 percent by volume in the third quarter from the second quarter as mills had to shut down for repair and inspection work.
''This will contribute to reduce the level of inventory of the market, which is slightly inflated due to a recent surge of imports,'' it said.
ArcelorMittal said it saw robust demand across the region from strong economic growth in Western Europe as well as a buoyant Eastern European steel market while facing ''increasing tension'' on the raw material iron ore and scrap markets.
''Our forecast for auto, construction, mechanical equipment, power generation, oil and gas and the tube industry in Europe is very robust. We expect that this year will continue as strongly as it has started,'' said the head of the company's European flat carbon unit, Christophe Cornier.
ArcelorMittal controls about 10 percent of global steel production.
Although the deal uniting Mittal and Arcelor is not yet completed, the company has been operating as if it has under a new name and branding and recently reported combined earnings.
