World steel demand is likely to fall 14.9 per cent this year, making the decline by far the biggest in the industry since the end of the second world war, according to forecasts issued Monday by the World Steel Association.

The projection is considerably more pessimistic than the 10 per cent demand fall for 2009 that is the current central assumption by ArcelorMittal, the world’s biggest steelmaker, which reports its first-quarter results on Wednesday.

According to the WSA, the main trade body for steelmakers, the US is expected to experience a particularly large fall in steel demand of more than 36 per cent this year, with the European Union experiencing a fall of nearly 30 per cent.

The association’s projections underline the difficulties piling up for the world’s biggest steelmakers, which have had steep falls in output and profits.

ArcelorMittal is expected by analysts to turn in earnings before interest, taxation, depreciation and amortisation of about $9bn this year, well down on the comparable $24.5bn for 2008.

Michael Shillaker, an analyst at Credit Suisse, said he thought the projection of a 15 per cent fall in demand “far more realistic” that the 10 per cent decline that many steel industry observers have been pencilling in.

“I expect some kind of upturn from around September onwards, but it will be very mild,” said Mr Shillaker.

According to the new WSA figures, India will be the only major country to have an increase in steel demand this year – by about 1.7 per cent. Total world production and consumption in 2009 is expected to be slightly above 1bn tonnes, down from nearly 1.2bn tonnes in 2008.

In 2010, the WSA, based in Brussels, expects steel demand to climb marginally.

Steel demand has risen at a robust rate in the past few years, led by rapacious consumption in China. This led to a big increase in steel prices, pushing up profits for the world’s leading steelmakers.

The last time the world recorded a fall in steel demand was in 1997 when consumption fell 2.7 per cent.

In 1945, steel demand plummeted 27.3 per cent. The biggest year on year fall since then was the 8.7 per cent decline recorded in 1987.

Between 1930 and 1932, steel demand for three years in succession fell more than 20 per cent – the worst period for consumption of the metal since records began in 1900.

■ US Steel Corp announced drastic measures to shore up its balance sheet on Monday, including slashing its dividend by more than 80 percent, offering new shares of common stock and delaying payments to a retiree healthcare trust.

The company’s shares slumped more than 6 percent following the announcement, in which the steelmaker said it had amended the terms of its credit facility and term loans to eliminate existing financial covenants.

U.S. Steel also posted a first-quarter loss that was much bigger than analysts expected and said it expected to record an operating loss in the second quarter.

”We continue to face an extremely difficult global economic environment,” Chief Executive John Surma said in a statement. ”Extremely short lead times coupled with the uncertainty surrounding financial markets and key steel-consuming industries such as automotive and construction make it difficult to forecast beyond a very short horizon.”

To boost liquidity, US Steel said it was cutting its quarterly dividend to 5 cents a share from 30 cents a share, a move that will save $116m a year.

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