Nippon Steel, ArcelorMittal Delay US Auto Sheet Plan

Nippon Steel Corp said on Thursday it and ArcelorMittal would delay plans to double automotive sheet capacity at their US joint venture in response to a deepening global economic downturn.

It is the first time a major steel project involving a Japanese steelmaker was put off in the wake of a rapid slowdown in sales at carmakers, key users of Nippon Steel's products.

Nippon Steel and ArcelorMittal, the world's two biggest steelmakers, had planned to spend $240m to add a new production line at I/N Kote, their joint venture in Indiana, to keep up with demand from Toyota Motor Corp and other Japanese carmakers operating there.

The joint venture is equally owned by the two. The operation was to start in 2010.

Nippon Steel said in a statement that the plans would be put off until demand in the US car market shows a recovery.

A slowdown in car and other metal products, a Chinese economy that has slowed to single-digit growth and tougher times for Russia and other emerging economies all bode ill for the steel sector, which has closed furnaces, slashed production and extended holiday breaks.

ArcelorMittal, the world's largest steelmaker, last month unveiled plans to slash up to 9,000 more jobs, saving $1bn a year as the US, Europe and Japan slip into what is expected to be a deep recession.

Nippon Steel has said it would double its planned output cuts in the October-March second half to 12% as demand slumped.

It also has plans to expand capacity in Brazil and China and is in talks on new plants in India and Thailand.

Reporting by Yuko Inoue, Reuters