India’s Tata Steel says it is cutting steel output at its Corus unit in the UK and the Netherlands to cope with a fall in demand.

It plans to cut steel production by up to 20% over the next three months or by about 1 million metric tonnes.

Corus chief executive Philippe Varin said that demand for the raw material had been hit by the “consequences of the global financial crisis”.

No change in Tata’s production levels is expected outside Europe.

“We are taking appropriate steps to optimise our operations and protect our sound financial position over the next few months,” Mr Varin said.

The price of steel, along with the price of other raw materials such as oil and metals, has been falling in the past three months on fears that a global slowdown will lead to lower demand.

These fears have intensified in recent weeks as the impact of the financial crisis on the wider economy becomes clearer.

Corus is Europe’s second-largest steel producer, with annual revenues of more than £12bn.

News reported by The BBC