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ArcelorMittal to slash output and halt expansion

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Despite a 29 per cent growth in third-quarter earnings, ArcelorMittal, the world's largest steelmaker, said it would cut output by a third and put expansion plans on hold as a sharp economic slowdown dampened demand for steel.

The Luxembourg-based firm said yesterday it would slash its output of flat carbon steel by 35 per cent in the United States and 30 per cent in Europe in the fourth quarter. It would also reduce stainless steel supplies and output in Africa and Asia.

The production cut, twice the 15 per cent ArcelorMittal warned of in September, was made in order to speed up inventory reduction, the company said. It also forecast weak fourth-quarter earnings with a guidance of between US$2.5 billion and US$3 billion in earnings before interest, taxes, depreciation and amortisation, a sharp fall from the US$8.6 billion in the third quarter.

ArcelorMittal, which reported third-quarter net income of US$3.8 billion on sales of US$35.2 billion, said capital expenditure for next year would be reduced to US$4.5 billion from this year's US$5.5 billion.

Amid falling steel demand and prices, ArcelorMittal is joining competitors in China, Russia, South Korea and Japan in reining in production to 'rebalance supply and demand'.

'It is appropriate to pause our growth strategy until a more settled economic outlook,' chairman and chief executive Lakshmi Mittal said.

Even on the mainland, one of the new markets in which ArcelorMittal is looking for expansion, the company has begun cutting staff. It has focused mainly on trading officers at its Shanghai office and put a halt on a 200 million yuan (HK$226.16 million) acquisition deal recently, according to industry sources.

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