ArcelorMittal sees fall in Chinese steel inventories
Sunday, 01 Nov 2009
DJ reported that ArcelorMittal sees that albeit Chinese steel demand remains strong but China, which is building up excessive inventories, is likely to de stock in the fourth quarter.
Mr Aditya Mittal CFO of ArcelorMittal, said in a conference call with journalists said that “In terms of China, some production cuts have been reinitiated. We do expect the excess inventory to correct in the fourth quarter.”
He said that “Around 20% to 30% of China's steel production is running at cash cost. This is not sustainable.”
Mr LN Mittal CEO of ArcelorMittal expects that Chinese steel producers will most likely cut production in response to weaker prices rather than increase exports to get rid of excess production.
But Mr Mittal said that he does not have concrete evidence to back his conviction. He said "We have not officially heard of cut production but we have heard that some of the mills will move to maintenance due to seasonality.”
He however cautioned that "Overproduction remains a threat in China.”
He added that “Chinese steel exports pose a threat to not only neighboring countries in South East Asia but also to the US and Europe where the recovery so far has been fragile.”
