World steel demand will fall 15%-20% this year, the steepest decline since World War Two, the head of ArcelorMittal told shareholders while angry workers sought to storm their meeting.
Lakshmi Mittal, chief executive of the world's largest steelmaker, told the annual shareholder assembly that Chinese demand was showing signs of improving and destocking in the United States was drawing to a close.
The World Steel Association forecast late last month that steel demand would tumble by 15% this year. Mittal said two weeks ago, when the company published first-quarter results, that he was a little less pessimistic.
In February he had forecast a 7%-10% decline, but since then the depth of the crisis, notably among key auto sector customers, has become apparent.
“The real estate market is totally not there. Infrastructure projects are also not going forwards,” Mittal said.
The company has responded by halving production for the first two quarters of this year, but it believes demand should start to normalize once destocking is complete worldwide, provisionally at the end of the second quarter.
“We do not believe the demand is at 50%. We believe this year demand will be down by between 15% and 20%,” Mittal said.
Outside the shareholders' meeting around 1,000 largely Belgian and French steel workers clashed with riot police in protest against the output cuts, which has resulted in only nine of 25 ArcelorMittal blast furnaces operating in western Europe.
ArcelorMittal announced in April that it would close furnaces at its plants in Florange, France, and Liege, Belgium. One of the two at each site had already been shut.
The angry workers, who want to know when production will resume, stormed past a police barrier and sought to smash open the door of ArcelorMittal's chateau-like headquarters with metal barricades. Others hurled fireworks, causing smoke to flood into parts of the building.
Mittal, responding to a French worker's question at the meeting inside, stressed that the production cuts were temporary and said output would resume first at the most cost-efficient plants.
Mittal also told shareholders that steelmakers had to ensure that, when the market did improve, production capacity was brought back at an appropriate speed so they did not make steel that could not be sold.
ArcelorMittal would also review its dividend policy once conditions had normalized. It halved its dividend for 2008 to $0.75. (Reuters)