*Slashes Oct production at U.S, Italian mills by 30 pct
*Cuts production at flagship Russian plant by 25 pct
*Reviewing full-year guidance
*Considering whether job cuts are needed
(Updates with jobs, adds quotes, background)
By Alfred Kueppers
MOSCOW Severstal (CHMF.MM), Russia's largest
steel maker, is this month slashing production by 25-30 percent
at plants in Russia, Italy and the United States as the global
financial crisis hits demand for its products.
Severstal, majority owned by billionaire Alexei Mordashov,
is also considering whether job cuts are needed as it joins the
ranks of international steel makers battling a sharp reduction
in orders from the construction and automotive sectors.
"We will need to balance the workforce with production. We
have not yet finalised this assessment," Olga Antonova, head of
Severstal's press service, said on Friday.
Russia's steel giants, which have spent record profits
snapping up assets all over the world, have lost over three
quarters of their value since peaking in May and are coming
under more pressure as consumers tighten their belts.
The cuts are not confined to Russia. ArcelorMittal
(ISPA.AS), the world's largest steel maker, last month
signalled its readiness to reduce output by up to 15 percent as
prices fall and demand falls faster than expected.
Severstal said in a statement it would cut October output
at its U.S. and Italian mills by around 30 percent. Its
flagship plant in the Russian city of Cherepovets will reduce
crude steel production by 25 percent this month.
The company, which this year posted a record first-half
profit of $1.94 billion, also said it was reviewing its
full-year guidance. In September, it forecast full-year 2008
crude steel output of 23 million tonnes, which would be a 31
"We consider these measures to be prudent management in a
time of rapidly changing market conditions," Severstal Chief
Financial Officer Sergei Kuznetsov said in the statement.
"We are maintaining close discussions with our customers to
support their near-term requirements."
Severstal follows rival Magnitogorsk Iron and Steel Works
(MAGN.MM) in cutting production. Magnitogorsk has said it will
reduce October rolled steel output by at least 15 percent and
could shed 3,000 jobs at Russia's biggest steel plant.
Severstal stopped short of announcing job cuts.
The Moscow Times, citing a United Steelworkers union
contract coordinator, reported on Friday that 800 workers at
two plants in Ohio would be put on part-time shifts until
further notice. Severstal declined to comment on the story.
To see an ANALYSIS on the Russian steel sector, please
double-click on [nL974052]
(Editing by Robin Paxton and Victoria Bryan)