Russia's steel giant Magnitigorsk Iron and Steel Works (MMK) had dropped its plans to build a steel plant in the United States, Kommersant business daily reported Tuesday.

MMK did not believe U.S. steel demand was recovering, the report said.

"European governments are cutting budgets, closing different infrastructure and social projects to tackle the budget deficit," said the MMK Vice-President Oleg Fedonin.

The company announced plans to build a steel plant in the state of Ohio in September 2007 with an investment of some 680 million U.S. dollars.

If it had been implemented, the project would have made MMK the third largest Russian steel maker operating in the United States, after Severstal and Evraz Group.