ArcelorMittal SA said Wednesday that it was not planning to reduce steel prices across the board despite a move to cut prices in South Africa. The world's largest steelmaker has raised prices this year on soaring costs for energy and iron ore, as it also faced less competition from lower-priced Asian rivals. ArcelorMittal shares sank in South African trading on Tuesday after a company official was quoted in a news report as saying that it would cut prices for steel used in construction - the first price cut from a major steel business. A South African tribunal fined the company for price fixing last year. The company said Wednesday that prices in South Africa reflected “specific currency developments and price mechanisms.” “Globally ArcelorMittal will generally maintain its third-quarter pricing levels into the fourth quarter,” it said. It insisted that it was “making good progress” in agreeing substantial price increases for 2009 supply contracts with car makers, packaging and home appliance customers. If demand slows, the company said it would hold back production to maintain stable pricing. “ArcelorMittal believes that due to the cost increases in raw materials and steel equipment, steel pricing will continue to remain structurally strong,” it said. Demand for the steel that is used to construct buildings, cars and appliances continued to surge in Asia, Russia and the Middle East, and to grow strongly in Europe, more than compensating for lower sales - but higher prices - in the United States. A slowdown in cheaper Chinese steel exports also has helped as energy costs rise and the government curbs overcapacity, cutting the competition for ArcelorMittal and others in key markets such as Europe. This has allowed the company to charge European customers a fifth more for steel than during the first quarter. Europe is ArcelorMittal's largest market and pays the world's highest steel prices. The company said in July that more expensive steel is not yet hurting demand from car makers and machinery manufacturers and may only add 0.5 percent to the retail price of a car. ArcelorMittal produces some 10 percent of the world's steel.
