PARIS, July 4: European steel manufacturers have reduced their production levels in 2005 in response to a global slowdown in demand and an increase of production capacity in China, the main export market during the record year of 2004. One by one last week, Europe’s largest manufacturers announced cuts in production for the third quarter of 2005, following on from reductions in the second quarter.
The world’s largest producer Mittal Steel said on Wednesday that it would reduce production by a million tonnes in the third quarter in order to “re-establish a balance between global offer and demand” and “help reduce stocks”.
A day later, German group ThyssenKrupp announced a cut of 120,000 tons of stainless steel production in the third quarter, the equivalent of 20 per cent of its European capacity, following a 500,000-ton cut in the second quarter.
Finally, the world’s second-largest producer Arcelor followed suit and unveiled its own production cutbacks. Stainless steel production has been reduced by 15-20 per cent since April, the company said on Friday.
Two factors explain the move to drastically pull back production: China, which was an insatiable importer of European steel during 2004, is becoming less dependent on imports as its own production comes on stream, and worldwide stocks have built up that are beginning to depress prices.—AFP
