MT Arcelor Mittal New

By Alex MacDonald

LONDON--The losses that Chinese steel makers are racking up due to the continued sale of cheap steel at unsustainably low prices will likely impact the country's economy if the issue isn't resolved soon, ArcelorMittal's (MT) chief financial officer said Friday.

It is also affecting steel markets worldwide as Chinese steel makers export record amounts of steel to offset weaker demand at home, Aditya Mittal told reporters following ArcelorMittal's third-quarter results.

In the first nine months of the year, Chinese steel producers have accumulated $8 billion in losses, most of them in the third quarter, Mr. Mittal noted, citing figures from the China's steel association.

"Eventually...these losses will mount up, and are mounting, and if no solution is found, clearly that will have other consequences for the Chinese economy," said Mr. Mittal, CFO of the world's largest steel maker.

He said that China's cheap steel prices are "just not sustainable," with prices continuing to fall in the fourth quarter compared with the third. "That problem is being amplified and exported onto our market[s]," Mr. Mittal noted.

China exported 110 million tons of steel in the first nine months of this year, up 17% from 94 million tons in the same period a year before, according to Mr. Mittal. In September alone, Chinese steel exports hit a record monthly rate equivalent to 122 million tons on an annualized basis.

"These losses cannot normally exist in market-based steel economies and so we are focused on ensuring that no further dumping occurs and no further subsidies are granted to the Chinese steel industry."

He said that Chinese steel imports into the U.S. are starting to decline, an indication that U.S. steel trade cases are having a positive effect. Elsewhere, though, Chinese steel imports are increasing. In the European Union, Chinese exports rose 40% in the first nine months of the year compared with the same period a year before.

-Write to Alex MacDonald at alex.macdonald@wsj.com

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(END) Dow Jones Newswires

November 06, 2015 04:39 ET (09:39 GMT)

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