Reuters reported that Lucchini is producing steel at about 65% of its capacity, down from 80% a year ago, due to weakening demand.

A source at the company said that "Things are not looking too good in Europe. The outlook is pretty negative: raw materials prices are still too high and clients have no liquidity."

Lucchini is among a number of European companies that have been forced to cut capacity due to sluggish demand and a deteriorating economic outlook. The Lucchini group, which included an Italian and a French business unit, produced about 2.4 million tonnes in 2010.

In 2005, Severstal acquired a majority stake in the Italian steel producer, previously owned by the Lucchini family, through recapitalization.

(Sourced from www.reuters.com)