Metals and mining companies slumped in European trading after OAO Severstal, Russia’s largest steelmaker, said it will slash output as much as 30 percent, showing the global financial crisis is eroding industrial demand.

ArcelorMittal, the world’s biggest steelmaker, declined 12 percent in Amsterdam. Severstal will cut output in the U.S. 30 percent, at the Cherepovets steel plant in Russia by 25 percent and in Italy by 30 percent, it said today in a statement.

Severstal joins Posco, Asia’s largest maker of stainless steel, and Voestalpine AG, Austria’s biggest steelmaker, in signaling reductions in planned output as demand for cars and buildings weakens and banks hold up project financing. Goldman Sachs Group Inc. cut its 2009 steel price forecast 29 percent.

“We have heard from the majority of steel traders and service centers that steel buying globally has almost ground to a halt and prices are coming down hard and fast,” New York-based Goldman analyst Sal Tharani wrote in a report yesterday.

Steel mills in China, the world’s biggest producers, are lowering demand for iron ore and asking miners to postpone deliveries because of slower sales and a lack of credit, Mt. Gibson Iron Ltd., an Australian producer, said yesterday.

“White goods and cars will be hit by the lack of consumer credit and as unemployment ticks up people will be less likely to buy these things,” Charlie Dove-Edwin, an analyst at MF Global Securities Ltd. in London, said today by phone. “You won’t see much pick up until 2010.”

Car Sales

Registrations of new cars in the U.K. declined 21 percent in September to 330,295 from the previous month, the London-based Society of Motor Manufacturers and Traders said Oct. 6.

Royal Bank of Scotland Group Plc lowered its price estimates for mining companies today. Anglo American Plc was cut 49 percent to 2,000 pence ($33.80), Xstrata Plc by 37 percent to 2,900 pence and Eurasian Natural Resources Corp. by 53 percent to 775 pence.

Mining company valuations have moved from “peak to trough in less than five months,” London-based RBS analyst Tim Huff wrote in a report.

ArcelorMittal fell 3.11 euros to 21.85 euros in Amsterdam. It was the second-worst performer on the 11-member Bloomberg Europe Steel Index, which declined 11 percent today.

ThyssenKrupp AG fell 7.5 percent to 15.50 euros in Frankfurt, and Outokumpu Oyj slid 5.8 percent to 7.98 euros in Helsinki.

Voestalpine, down as much as 3.8 percent, closed 14 percent higher at 18.40 euros as the Vienna stock exchange banned short selling until further notice. The company said yesterday it may delay plans to build a 5 billion-euro ($6.8 billion) steel plant on the Black Sea coast as it reviews the project’s financing.

Xstrata, Rio, BHP

Rio Tinto Group and BHP Billiton Ltd., the second and third- largest iron-ore suppliers, dropped 11 percent and 7.9 percent respectively. Xstrata Plc dropped 12 percent to 1,223 pence in London trading.

Severstal fell as much as 14 percent to $5.26 per global depository receipt in London trading, before paring losses to close at $6.00. Russia’s market regulator suspended trading on the Micex and RTS stock exchanges indefinitely.

OAO Magnitogorsk Iron & Steel, the third-largest Russian producer, said Oct. 7 it would reduce October output 18 percent from the monthly average. Posco also said it may make less of the metal this year than planned.

Eregli Demir & Celik Fabrikalari TAS, Turkey’s biggest steelmaker, may cut output and is seeking markets that can withstand the credit crunch as demand in the auto and building industries falls, Chief Executive Officer Oguz Ozgen said today in an interview in the southern city of Iskenderun.

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