Europe's demand for steel will be halved in the first six months of this year as the global economic slump hurts key sectors such as car builders and construction, EU steel makers said Thursday.

Eurofer an group representing ArcelorMittal SA, ThyssenKrupp AG, Corus Group and others said the European Union industry has been hit hard by falling exports and tight credit supply.

"The outlook for the steel-using industries in 2009-2010 is very grim: all sectors will be seeing strongly reduced output levels, particularly in the first half of this year," it said.

Steel is used to build cars, machinery and household goods and to construct buildings and bridges. A slump in consumer demand has decimated car sales while the bursting of a housing bubble has caused the construction sector to contract sharply.

Eurofer said steel users are still saying that they have far more stocks of steel than they need and this meant that orders at steel mills would stay "at unprecedented low levels for the time being."

"The latest forecasts show apparent steel consumption falling by 40 to 45 percent year on year in the first half of this year and by almost 30 percent in the whole of 2009," it said.

It saw no joy ahead, saying its outlook for 2010 was depressed and real steel consumption would remain low even as some customers ordered new steel as stocks ran out.

It said some planned economic stimulus programs might help by paying for more infrastructure and public buildings such as schools and hospitals but that the impact on steel makers would be small as demand remained low in other sectors.

Eurofer last month said that one in six steel workers have lost their jobs or are working shorter hours. It claims some 72,000 jobs or 17 percent of the European Union's 440,000-strong steel work force have been hit by the downturn.