UPDATE 1-ArcelorMittal may idle 3 European furnaces in Q3

* No decision has been taken yet, the company says

* Chief Executive Mittal says no cuts in immediate future

(Adds analyst comment, Chief Executive’s comments)

LONDON/BANGALORE, June 3 (BestGrowthStock) – ArcelorMittal
(ISPA.AS: ), the world’s largest steelmaker, said on Thursday it
was considering halting up to three European blast furnaces
(BFs) in the third quarter to meet lower demand.

“In Europe the third quarter is characterised by lower
demand due to summer vacation shutdowns. In order to be prepared
ArcelorMittal is technically in a position to reduce its
production by stopping up to three BFs in Q3,” the company said
in an emailed statement.

“No decision if and where and when has been taken,” it
added.

In India, the company’s chairman Lakshmi Mittal told
reporters on the sidelines of a conference that the company
would adjust production, “even if it requires idling of blast
furnaces”, but added that he did not see any output cuts in the
immediate future. [ID:nBMA007709]

A spokesman for the company said Chairman Mittal was
speaking from a global perspective while the possible idling of
European blast furnaces was a local move, reflecting a shift in
demand due to seasonality.

The $500 billion steel industry took a heavy beating during
the global recession in late 2008 and through 2009, which forced
steelmakers to cut output sharply and shelve investment plans.

As the industry recovered from a production trough,
ArcelorMittal raised output to 72 percent of capacity from 70
percent in the fourth quarter of 2009 and said that would rise
further to 80 percent in the second quarter. [ID:nLDE63R0X6]

LOWER DEMAND VS SEASONALITY

Analysts said the company’s move reflected good production
discipline and was supportive for European steel prices.

But they added it was not clear how much of the expected
demand reduction stemmed from seasonality or from weakening
consumption.

“At the end of the day, they (ArcelorMittal) see lower
demand, whether it’s seasonal or not,” said analyst Gavin Wood
at Nomura, adding that the third quarter has historically been
slower compared with the second quarter. “If it is seasonal,
then demand should recover again after a few weeks of idling.”

European steel prices along with Asian steel prices have
been drifting lower since mid-April as raw material prices fell
and buying has subsided after a strong restocking period. [STL/]

Analysts at Credit Suisse said production was normally down
around 10 percent over summer and the move was a good one from a
cost perspective.

“The way this is being done is a headline grabber and as
such may cause more short term nervousness re demand. Our
channel checks still suggest demand is good notwithstanding (a)
slower summer and nothing in this announcement changes this,”
the bank said in a research note.

Chairman Mittal also said debt problems in the euro zone had
raised concerns in the market but had also boosted the
competitiveness of the zone’s manufacturing industry.

“When the euro was strong, it was hurting the European
manufacturing business. Countries like Germany and France, which
are heavily exporting, we can see the improvement in their
businesses,” he said.

Stock Market News

(Reporting by Humeyra Pamuk in London, Anantha Laksmi and
Adveith Nair in Bangalore; Editing by Keiron Henderson)

UPDATE 1-ArcelorMittal may idle 3 European furnaces in Q3