Steel production will probably fall this year by the largest margin since the Second World War. Most folks in the steel business have gray and soggy outlooks for 2010. Most, but not Lakshmi Mittal.

Mittal is the chairman and largest owner of ArcelorMittal (NYSE:MT), the world’s largest steel company. Therefore, his words carry some weight in the steel markets. The fact that these words are so contrary to what everyone else seems to think is significant…

Mittal is singing a rosy tune that has the market atwitter. He thinks steel demand could grow more than 10% in 2010, which would be a strong rebound, indeed.

Whether Mittal turns out to be right or not will hinge on what happens in China. China makes up about half of the world’s steel demand. That’s where the controversy begins, because there is just a lot of uncertainty over China’s economy right now.

I think it’s noteworthy that even those who think Mittal is way too optimistic are still calling for a 5% increase in steel demand next year. The contraction in demand was so severe and happened so quickly in 2009, it is hard to imagine steel demand not rebounding some next year.

Source: Steel Sector: Still Suffering or Rebound Ready?