ArcelorMittal (NYSE:MT), a metal production group, which makes 6-7 percent of the world’s steel, announced Wednesday they had accrued a third quarter loss, and slashed its dividends, due to a slowdown in China. The company posted a loss of 709 million during the July-September quarter against last year’s equivalent profit of $659 million and the second-quarter’s profit of $959 million. The figures this morning were far below those expected by analysts polled by Dow Jones Newswires, who had broadly expected a loss of $230m and sales of $20.56bn.

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“The already fragile global economy was further impacted in the third quarter of 2012 by the slowdown in China,” Chief Executive Officer Lakshmi Mittal said in the statement. “This resulted in very challenging operating conditions for ArcelorMittal (NYSE:MT), which are expected to continue in the fourth quarter”.

The world’s largest steelmaker experienced an increase in debt by 1.2 billion during the third quarter, to $23.2 billion, because of negative operating cash flow. For the first nine months of the year, the company reported a net profit of $261 million, compared to $3.2 billion for the first nine months of 2011. The company’s profit this quarter is the lowest since the fourth quarter of 2009.

To save on costs, the Luxembourg-based steel and mining giant slashed its dividends to 20 cents a share from 75 cents, which, according to Mittal, will save $1 billion. In a conference call with reporters, company’s chief financial officer, Aditya Mittal, said the main objective is to get the net debt down to $22 billion by the fourth quarter of this year, and to achieve that, the company had sold $2.7 billion worth of assets since the euro crisis began three years ago.

“I do not see ourselves selling these core assets, but clearly to strengthen our core business we may bring in captive customers,” he said on a conference call today. “Our strategy in our mining business remains to grow our production capability”.

Mittal acknowledged that risks still surround Europe and also cautioned about the change in leadership in China and about U.S.’s fiscal difficulties. Overall, on the global economic standpoint “we have reached the bottom,” Mittal said.

Europe’s economic crisis and slower Chinese growth have adversely affected the Steel-industry earnings. Posco, Asia’s third-biggest steelmaker by output, cut its 2012 sales forecast for the third time this year on Oct. 23. ArcelorMittal (NYSE:MT) now expects an operating profit of about $7bn for the whole of the year.