Britain"s largest steel-maker, Corus, is cutting production by almost a third until at least the end of March.
The company told workers yesterday it was extending the cutbacks it announced last month in order to cope with the global economic slowdown. On Thursday, Corus also said that 400 jobs would be lost at its distribution unit.
The company, Europe"s second-largest steel producer, said last month it would cut output between October and December by a million tonnes of crude steel, about 20 per cent of its total, to account for falling demand. Yesterday, it said it had decided to extend the production cuts beyond December and make about 30 per cent less steel than planned over the next six months. Blast furnaces at Scunthorpe and Port Talbot, as well as one at Ijmuiden in Holland, will be temporarily shut down.
The company"s chief executive, Philippe Varin, said: "The current slowdown requires us to adapt our operations to the changing environment with maximum speed. We are adopting proactive and responsible measures in the areas of production and costs to optimise our results."
Last night, Corus insisted that staff at the three blast furnaces would keep their jobs. A spokesman for the group, which in recent weeks has banned all overtime, said there were no plans for further redundancies at present but warned that the correction in the steel industry had been particularly severe. "There are no guarantees about anything. We have to be ultra-flexible," he added.
Corus employs about 83,000 people and has capacity to produce about 30 million tonnes of crude steel a year. However, most leading producers have been warning of very serious falls in demand because activity in the construction, manufacturing and, particularly, automotive industries is slowing sharply around the globe.
Steel companies have suffered very badly from a sudden drop in demand from China, where a buoyant economy had until recently been mopping up large parts of global capacity.
Figures to be released this month by the independent steel industry analyst, MEPS, will suggest that global production in 2009 is likely to increase at its slowest rate since the millennium.
MEPS forecasts that demand will rise by 2.2 per cent, to 1,410 tonnes, compared with a a 2.7 per cent increase this year and one of 10 per cent in 2006. The effects of slowing economic growth in China will be dramatic. Production is expected to grow by 15.9 per cent this year, having increased by 20 per cent in each of the past five years, while growth is likely to slow to just 4.9 per cent. China accounts for about one third of all steel demand in the world.
Corus is not the only major steel-maker to introduce a marked cutback in its operations. On Wednesday, the world"s largest producer, Arcelor Mittal, said it was doubling the production cutbacks it had previosuly announced and warned that its profits were likely to halve during the final three months of the year.