BRUSSELS (Reuters) – ArcelorMittal, the world’s largest steelmaker, cut its forecast for demand in its main market Europe on Thursday after lower steel prices depressed earnings at the start of the year.

The Luxembourg-based company, which makes about 6 percent of the world’s steel, announced on Monday it was temporarily reducing European steel output by 3 million tonnes on an annualised basis due to weak demand and increased imports.

“Our first quarter results reflect the challenging operating environment the industry has faced in recent months,” Chief Executive Officer Lakshmi Mittal said in a statement.

The company reported a first-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.65 billion, a 34 percent decline from a year earlier and below the company-compiled consensus of $1.68 billion.

Mittal said profitability had been hit by lower steel pricing due to weaker economic activity and global overcapacity, as well as by rising costs of raw materials.

ArcelorMittal shares were down 4.4 percent at 16.99 euros at 0815 GMT, making them one of Thursday’s weakest performers in the FTSEurofirst 300 index of leading European stocks and bringing their decline in the past three weeks to 20 percent.

Commerzbank analyst Ingo Schachel said the weakness of Europe was visible in ArcelorMittal’s numbers and would likely show up in results of other European peers.

“This is more macro-economic related and not overly company-specific,” Schachel said, adding that weaker than expected earnings figures had added to already negative sentiment triggered by ArcelorMittal’s Monday announcement on output cuts.

EUROPE, BRAZIL GROWTH DOWNGRADES

ArcelorMittal increased its growth forecast for 2019 global apparent steel consumption, which also reflects changes in inventory levels, to 1.0-1.5 percent from its February guidance of 0.5-1.0 percent.

The major change was its more bullish view of China, the world’s largest steel consumer and producer. However, ArcelorMittal has almost no business there.

Nearly half of ArcelorMittal’s steel is produced in Europe, with just under 40 percent in the Americas.

Excluding China, growth this year would be 1.0-2.0 percent, down a percentage point from ArcelorMittal’s earlier view. It now sees contraction of demand in Europe and has a more moderate view of expansion in Brazil.

It left its growth forecasts for the United States and the former countries of the Soviet Union unchanged.

The company said its dimmer view on Europe was due to weak manufacturing and declining automotive production, for which steel is a major input.

Industrial production in the European Union fell in November, December and January year on year and was up a modest 0.3 percent in February. March figures are due out next Tuesday.