ArcelorMittal, the world’s largest steelmaker, is to cut output by almost a third as the global economic downturn hits demand for steel used in construction and cars.

ArcelorMittal gave warning of tough times ahead and said it was necessary to "pause our growth strategy" and "rebalance supply and demand", until the outlook for the world's economies looked more settled.

The company had planned to increase steel shipments by a fifth by 2010 but will put its plans on hold for the time being.

Group profits continue to be resilient to the downturn, with an increase of 29 per cent to $3.8 billion (£2.4 billion) between July and September. Sales also continued to rise, up by 38 per cent to $35.2 billion.

The company has benefited from high steel prices this year, even though demand is now falling in lucrative core markets in Europe and the US. Sales in emerging economies, including Asia and Latin America, are more resilient, it said.

The production cut of 30 per cent is double the 15 per cent the company gave warning of last month. ArcelorMittal will start idling plants this month and next and could not say how long the slowdown might last.

“Things have worsened in the last three weeks and, as a result, we’ve had to accelerate our production cuts,” Aditya Mittal, chief financial officer, said.

Mr Mittal said the company planned to increase output again when demand returns next year but would not say when it expected that to happen. No big redundancies are planned at this stage.

French and Belgian plants have been told that they will slow down for at least a month this winter.

ArcelorMittal said that it is selling US steel stocks and expected the American market to stabilise by the end of this year. However, European prices will take longer to calm down, while worldwide demand for stainless steel would be flat during 2009.

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