BRUSSELS: China’s steel demand will shrink this year and lead to a flood of exports, ArcelorMittal said on Friday, highlighting the growth problems facing the world’s top consumer and producer of the construction material. The company sees China’s steel demand including inventory changes sliding by up to 1 per cent compared with a previous forecast of growth between half a per centage point and 1 per cent. In dollar terms, ArcelorMittal only sells 1 per cent of its steel to China compared to 46 per cent to Europe, including Russia and Turkey. But Chinese exports will add to the glut of steel on the global market, where consumption is expected to total 1.6 billion tonnes and production 1.66 billion tonnes. China’s consumption this year is expected at around 730 million against its output at around 840 million tonnes. “In 2014 (Chinese exports) averaged about 90 million tones and our expectation is they will average about 100 million this year,” ArcelorMittal’s Chief Executive Aditya Mittal said on a conference call. Mittal added that the pace of exports from China in January was roughly 120 million tones on an annualised basis. Chinese authorities in an attempt to shore up growth and meet a 7 per cent growth target have cut interest rates and used fiscal stimulus to boost economic activity. But with little success. Only this week, China’s steel association said 43 per cent of its members lost money in the first half of this year. Chinese steel prices are at their lowest in more than 20 years. A composite price index of eight steel products compiled by the China Iron & Steel Association (CISA) showed prices are now nearly 35 per cent lower than they were 21 years ago. “The Chinese steel industry is really getting squeezed at this point in time,” Mittal said. This could mean they cut production. “That will be good for the global steel industry,” Mittal said, warning ArcelorMittal would fight any attempts by Chinese producers to dump subsidised steel on Europe. “We are working actively with other peers to make sure there’s a fair trade environment in the markets in which we operate.” European steel association Eurofer said Chinese exports to the EU rose 49 per cent year-on-year over the first five months of 2015 due to massive and increasing overcapacity. The European Commission opened an investigation into alleged dumping of cold-rolled flat steel by China and Russia in May and has imposed a series of tariffs to counter surging imports of various grades of steel, including stainless.