While ArcelorMittal has little presence in China, the Chinese market is the largest producer and consumer of steel, and the country's slowing economic growth has led to a flood of exports, prompting the company to forecast 2015 core profit (EBITDA) of $5.2 billion (3.43 billion pounds) to $5.4 billion (3.56 billion pounds), down from previous guidance of between $6 billion and $7 billion.

While analysts polled by Reuters had already disregarded the company's previous guidance, the new outlook is below current expectations of $5.5 billion.

For 2016 the group struck a more optimistic tone, saying it would need $1 billion less cash next year thanks to reduced capital expenditure, the suspension of its dividend and lower interest costs, helped by reduced debt.

After falling sharply in the opening minutes of Friday trading, the group's shares were up 2.1 percent at 0905 GMT.

They have shed about 45 percent of their value since the start of the year, underperforming the STOXX European Basic Resources Index, which is down 20 percent over the same period.

"While a guidance cut was expected, I think the market is relieved about the guidance of positive cash flow in 2016," Commerzbank analyst Ingo Schachel said.

Last week Japan's top two steelmakers, Nippon Steel & Sumitomo Metal and JFE Holdings, also reduced their full-year profit forecasts, blaming slumping prices in Asia and a slow recovery in demand at home.

ArcelorMittal's third-quarter core profit (EBITDA) fell 30 percent year on year to $1.35 billion, broadly in line with the $1.36 billion expected in a Reuters poll of eight analysts.

CHINESE EXPORTS

The rise in Chinese steel exports has been fuelled by a drop in domestic demand, which the China Iron and Steel Association (CISA) said was down 5.8 percent for the first nine months of the year, with Shanghai steel futures falling to record lows.

"We believed Chinese exports would be declining because we felt they were unsustainable," ArcelorMittal finance chief Aditya Mittal told a conference call.

"On the contrary, we see they are declining in the U.S., but continuing to increase in other markets."

The company gave no details on the prices of Chinese exports but described them as unsustainably low. Last week Nippon Steel's executive vice-president, Katsuhiko Ota, described steel prices in Asia as "abnormal".

ArcelorMittal previously expected Chinese exports to be 100 million tonnes this year, but Mittal said that in the year to September they had been above 110 million tonnes on an annualised basis.

The company also forecast on Friday that global steel consumption would be lower this year than last, cutting its outlook on a worsening view of the U.S., Brazilian and Chinese markets.

(Editing by Philip Blenkinsop and David Goodman)

By Robert-Jan Bartunek