ArcelorMittal Galați furnace shutdown threatens 2011 economic growth

The decline in ArcelorMittal Galați steel production will have a direct negative impact over Romania’s economic growth, but is also a negative signal about the world economy trend. The global steel demand is again showing signs of decline, meaning that the economy has not regained its health, yet.
The recent decision by billionaire Lakshmi Mittal to close one of the two furnaces that are operational at the biggest steel plant in Romania, ArcelorMittal Galați, is likely to threaten Romania’s already fragile economic growth expected for 2011, considering the group’s domestic operations are worth about 2% of Romania’s GDP.
Given the 24% higher steel volume that ArcelorMittal produced in the first half of this year and the soaring sheet metal prices over the past year, by around 55%, the company’s turnover is likely to go beyond 1.2bn euros at the end of 2010 despite the dramatic production cut towards the yearend.
Lakshmi Mittal geared up for investments of several hundred million dollars in Galați complex for its modernisation ahead of the crisis, but investment plans were put on ice amid the plummeting market.