Steel production probably will fall as far as it's going to by the end of March, the head of ArcelorMittal believes.

If so, orders could begin to increase later this year at ArcelorMittal Cleveland and plants worldwide. Since September, the industry has suffered the most rapid downturn in demand anyone can remember.

"We think we will reach the bottom of the cycle in first quarter 2009," Lakshmi Mittal, ArcelorMittal's chairman and chief executive officer, told investors in a Webcast following the recent release of the Luxembourg-based company's fourth-quarter 2008 earnings report.
Part of his message was grim. The world's largest steel company lost $2.6 billion last fall as demand collapsed.

Production also remains dramatically below what it was a year ago, but Mittal said he thinks steel making could begin a slow ascent before midyear.

Meanwhile, steel prices have fallen.

Industry newsletter Steel Market Intelligence reported Thursday that February's "average market basket" of steel fell 6.9 percent from the January price and 28.1 percent from September's all-time record.
ArcelorMittal, which now has 1,240 workers at its Cleveland plant, has laid off 450 of the union workers and said last week that it would reassign a third of the 300 salaried workers to other company installations.

Both company and union officials also gave strong hints that more members of the United Steelworkers Local 979 would get temporary-layoff notices in the coming weeks.
ArcelorMittal executives, from Mittal to Terry Fedor, the Cleveland plant manager, agree that this year's first quarter will be the steel industry's bleakest period in years. But they also indicated some reason for hope.
The company's 2008 annual report, released this week, does not specifically project that optimism, but it does detail some of the steps the company is taking to confront the current huge decline in steel production:

It is launching cost-reduction and productivity-improvement measures aimed at saving $5 billion over five years.
It has cut steel production by as much as 45 percent globally.
It is trying to reduce the huge inventory it has built up since September, during the months of minimal orders.

It is trying to cut its debt by $10 billion by the end of 2009.

In addition, ArcelorMittal has halted its aggressive growth strategy of buying many smaller competitors. Last year, ArcelorMittal produced 103 million tons of crude steel - about 11 percent less than in 2007 but still 10 percent of the world's total - and reported revenue of $124.9 billion.

"It's a very cyclical business, steel making, and we are well positioned to move our production up as soon as demand begins to grow," Fedor said in an interview last week.

He would not venture a firm prediction of when that will be. But he did say, "That could be in the second half of the year."

He, like others at ArcelorMittal, is waiting for that increase in orders his boss says eventually will materialize.

Source: Cleveland Plain Dealer, February 27, 2009