Arcelormittal, the world's top steelmaker, said on Wednesday the recent drop in Chinese steel prices would prove temporary as the real economy in the world's top steel consumer remained strong.



"The inventory build up (in China) caused some price drop, which is bad news," Lakshmi Mittal, chairman and chief executive of Arcelormittal, told reporters after an investor meeting.



"We have to understand that China's cost of production is high and still we have to see how it balances out whether the cost of production will push them to increase their price. But we think it (the fall) should be temporary," he said.



In China, physical steel prices have tumbled around 10 percent after hitting a 10-month high in August, when the output from the world's top producer and consumer of the metal, jumped to a new peak of 52.3 million tonnes.



Steel makers across the globe have begun to restart some of the capacity they idled during the global economic downturn, as order intakes had improved -- a move some industry participants see as premature. Mittal disagreed, saying: "I don't see the startups as too soon."