Tumble in European steel production to impact on Cookson profits

Cookson, which makes the pipes and valves that control the molten steel as it flows through the steel mill, said core markets in its engineered ceramics division were bearing the brunt of the global economic downturn.

The FTSE 250 Index company warned full-year results will be materially below its previous hopes, triggering a 14 per cent slide in its stock market value to £1.5bn.

As well as its Vesuvius engineered ceramics arm, which accounts for around two-third of sales, Cookson has a fast-growing electronics arm, which manufactures the high-performance materials used in circuit boards. There is also a precious metals processing operation, based in Birmingham.

It noted that average monthly steel production volumes in July and August declined by 3 per cent, excluding China, when compared with the average monthly rate for the first half of the year.

Europe was 11 per cent lower and rather than the normal seasonal strengthening in September there have been signs of further weakening in steel production volumes, particularly in the US, Europe and Brazil.

The company has responded to the difficult trading conditions by cutting back on temporary workers and overtime, as well as through a hiring freeze and the limiting of discretionary costs.

There has also been a slowdown in production in markets such as automotive, wind turbines and construction.