ArcelorMittal, the world's largest steelmaker by output, is banking on growth in auto makers' demand for steel to help mitigate rock-bottom iron-ore prices this year after reporting a narrower net loss in the fourth quarter.

The Luxembourg-based mining and metals group said on Friday that its net loss fell to $US955 million ($A1.24 billion) in the fourth quarter compared with a net loss of $US1.23 billion in the same period a year earlier, despite around $US1bn in charges related to asset impairments and currency-exchange losses. They included a $US621m write down at Chinese steelmaker China Oriental, where it owns a significant minority stake.

"Operating conditions remain tough [but] we expect steel markets to continue to improve, particularly for high value-added products such as automotive," said Lakshmi Mittal, chief executive of the family-controlled steelmaker.

After six years of consecutive declines, the European car market improved in 2014 and is set to grow 2 per cent this year, according to car maker Renault. Meanwhile US auto sales rose 14 per cent in January, pulling last year's winning streak into this year due to low gasoline prices and easier access to credit. ArcelorMittal is the world's number one supplier of flat steel to the global automotive sector.

ArcelorMittal's mining division, typically a reliable source of profit, turned in an operating loss last quarter following a 45 per cent decline in iron-ore prices which more than offset record high iron-ore output. Falling iron-ore prices generally boost a steelmaker's profit margins by lowering steelmaking costs but in the case of ArcelorMittal, it also dents its mining business' profits. ArcelorMittal is one of the world's largest iron-ore producers, selling nearly two thirds of its output at market prices to other steelmakers.

The iron-ore price drop largely offset the rewards of several years of cost cutting, particularly in Europe where it has closed loss-making mills in recent years to cope with excess steel production and anemic demand. The European steel division became the company's largest earnings driver before depreciation costs in the fourth quarter, posting its fourth consecutive quarterly profit after a year and a half of restructuring-impaired losses.

ArcelorMittal plans to generate between $US6.5bn and $US7bn in earnings before interest, taxes, depreciation and amortization this year, after generating $US7.24bn last year, up 5.1 per cent on year and slightly ahead of analysts' expectations. ArcelorMittal's chief financial officer Aditya Mittal said the guidance is based on current steel and iron ore spot prices, the latter of which is languishing at more than five and a half year lows.

Arcelormittal plans to boost total steel shipments by 4 per cent to 5 per cent this year, half of which will come from recent blast furnace restarts in Brazil and South Africa. It also expects to continue ramping up iron ore production, in line with other large miners such as Australia's Rio Tinto and BHP Billiton while cutting costs. This should help offset some of the iron ore price decline, but not all.

ArcelorMittal forecasts that global steel demand should grow about 1.5 per cent to 2 per cent this year, lower than its estimated growth for last year. Steel demand in all of its key steel markets should rise by more than 1 per cent, except for the Commonwealth of Independent States and the US

Arcelormittal expects flat to 1 per cent steel demand contraction in North America this year due to US inventory destocking after a steep restocking period last year.

Nevertheless, the steelmaker expects limited steel shipment growth there due in part to strong automotive demand, the chief financial officer said.

In the Commonwealth of Independent States, steel demand should contract by up to 6 per cent due to the continuing fighting in Ukraine. But the steelmaker has largely circumvented weak demand there by shipping steel to customers in North Africa and the Middle East.

The chief financial officer said that ArcelorMittal will continue to look at ways to optimize its portfolio of assets, as evidenced by the sale of its stake in a US mill last year. The company, however, is open to mergers and acquisitions: it remains interested in purchasing privately-owned Ilva, owner of Europe's largest steelworks, although the Italian government wants to restructure the business first before allowing it to be sold, he said.

ArcelorMittal reaffirmed its plan to cut its net debt to $US15bn in the medium term, having reduce it to $US15.8bn as of December end, its lowest level since the merger of Mittal Steel And Arcelor in 2006.