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Evraz freezes Czech steel production due to low demand

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PRAGUE, Oct 12 (Reuters) - Russian steelmaker Evrazhas temporarily shut its Czech steel production line due to lowdemand and the company's effort to run down its raw materialsinventory, a spokesman said on Friday.

The economic downturn across Europe has hit theheavy-industry sector as companies and governments curbinvestment in equipment and infrastructure in a bid to cut debtand costs.

Evraz Vitkovice Steel, the Czech unit of Russia's secondlargest steelmaker, makes rolled steel products that are used tomake cars, build ships and tankers, or construct bridges. Therolling plant remains open.

"The duration of steel shop suspension depends on numerousfactors that are now being considered by the management,"Vitkovice Steel spokesman Jaromir Krisica said in an email,without elaborating.

European steel industry body EUROFER chief told Reuters inJune the European Union's steel industry may need to shut threequarters of its capacity in the next two decades because ofdeclining demand, rising costs and cheap imports.

The Vitkovice steel mill is a key customer of the Czech unitof ArcelorMittal which supplies it with raw materials.

ArcelorMittal is in turn an important customer for coalminer NWR from which it takes 34 percent ofits total coking coal production, according to daily HospodarskeNoviny.

Krisica said some employees were sent home with 80 percentof their average wages. Others were transferred to work in otherproduction departments or do maintenance work.

Vitkovice supplied 760,000 tonnes of steel slabs and 824,000tonnes of rolled products last year.

(Reporting by Jason Hovet, writing by Jana Mlcochova; Editingby Toby Chopra)

((jana.mlcochova@thomsonreuters.com)(+420 224 190 479)(ReutersMessaging: jana.mlcochova.reuters.com@reuters.net))

Keywords: EVRAZ CZECH/