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ArcelorMittal in Spanish furlough talks as steel demand falters

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Coils of steel are seen at the ArcelorMittal Factory in Florange

MADRID (Reuters) - ArcelorMittal has started negotiations with unions this week on a broad furlough scheme for the 8,300 workers at its Spanish mills in the face of weakening demand and soaring energy prices, a company spokesperson said on Friday.

The world's largest steelmaker expects to reach an agreement within a couple of weeks to allow it to idle any of its plants in Spain for any period of time until the end of 2023, the spokesperson added.

ArcelorMittal's Sestao steelworks near the northern city of Bilbao, which has an annual capacity of 700,000 tonnes, is already idle and the company also intends to shut one of its two blast furnaces in the Asturias region, with capacity of 2.3 million tonnes, from Sept. 28.

The company owns 11 plants in Spain, though it doesn't plan to idle the three in Alava and Navarra, where it produces steel pipes.

European steel producers are facing falling demand, particularly from automakers, as the economic climate deteriorates. Customers prefer to buy cheaper steel from outside Europe, where energy prices haven't risen as fast and labour costs are lower.

Soaring carbon permit prices have also made European steelmakers less competitive, the spokesman said.

ArcelorMittal on Thursday said it intended to reduce its fourth-quarter output in Europe by 1.5 million tonnes from the same period last year. In Spain, its output last year was 6.1 million tonnes.

The company said it is also working on a furlough scheme in France.

(Reporting by Inti Landauro; Editing by David Goodman)