Indian-owned steel group Corus would cut its production by 30 percent over the next six months because of weakening demand in Europe amid the global downturn, the company said on Friday.
“The current slowdown requires us to adapt our operations to the changing environment with maximum speed,” Corus chief executive Philippe Varin said in a statement.
The Anglo-Dutch group, which was bought last year by India’s Tata Steel for US$13.7 billion, will temporarily shut down three blast furnaces in Britain and the Netherlands as part of the output reduction.
Last month Corus announced plans to reduce its third-quarter production by about 20 percent “in order to align its production levels with demand in the European market,” the group statement said.
“Corus has now decided to extend the production cuts beyond December. Corus expects to produce about 30 percent less crude steel than planned during the two quarters to the end of March 2009,” it said. “We are adopting proactive and responsible measures in the areas of production and costs to optimize our results. Meanwhile, our strategy for long-term growth remains unchanged.”
Slowing economies have slashed steel demand, damped prices and last month made mills unprofitable in China, the biggest producer of the metal. Cia Vale do Rio Doce, the largest iron-ore supplier, began output cuts last month and doesn’t expect a market recovery until next year.
Rio Tinto Group, the world’s second-biggest exporter of iron ore, is studying possible cuts to production of the steelmaking material in Western Australia as demand for cars and construction materials swoons.
“The global financial crisis is having an impact across the sector and we have seen a number of announcements in recent days from customers and producers reflecting that,” Gervase Greene, a spokesman for the London-based company, said in an interview from Perth on Friday. “We are still assessing the situation and have not yet made any decisions with regards to our current operations.”
Rio and BHP may be forced to cut prices by 15 percent next year, ending six years of gains, said the median estimate of 11 analysts surveyed by Bloomberg News on Thursday.
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