India's largest steel producer SAIL [Get Quote] may cut production as demand for the commodity has declined, said a top steel ministry official.

"SAIL may have to lower output for some of its products as its offtake in October dipped by as much as 37 per cent," Steel Secretary P K Rastogi told PTI on phone from Hyderabad.

Sources said SAIL's Rourkela plant has lowered its normal production. It sold about nine lakh tonnes of salebale steel (average 1.40 lakh tonnes per month) during the first half of the current financial year against its annual target of about 17 lakh tonnes. It posted a net profit of Rs 800 crore (Rs 8 billion) till September 2008.

Owing to the declining demand for steel in the global market, the plant could manage to sell only about 90,000 tonnes of saleable steel in October 2008, sources in the steel plant said.

Other leading steel producers like JSW, Essar and Ispat have already announced cutting their productions by over 20 per cent.

Sajjan Jindal-led JSW Steel [Get Quote] said it would rationalise the product mix as per the current market conditions and modify the production programme to effectively reduce total production by around 20 per cent from November.

Ruias-promoted Essar Steel [Get Quote] and Vinod Mittal-led Ispat Industries [Get Quote] are already operating below optimum capacity. "It is true that our steel plants are operating at about 75 per cent of their capacities," an Essar spokesperson said.

An Ispat Industries official said that the company is adjusting its production as per the prevailing market conditions, but declined to give any figures.