By Alex MacDonald and Alessandro Torello

LONDON--The European Commission convened its third meeting Tuesday with senior steel industry executives, trade unions and European Union lawmakers to deliver an action plan by June to safeguard the bloc's ailing steel industry as it grapples with challenging economic conditions.

"At the moment there is excess steel capacity in the sector....Restructuring has to be anticipated and supported," the European Commissioner for Industry and Entrepreneurship Antonio Tajani said in a speech to mark the start of the third round table on the European steel industry.

The region has a production capacity of about 210 million metric tons of steel, but about 40 million tons to 50 million tons remains unused due to protracted weakness in steel demand. The EU steel sector has also been buffeted by the need to import all of its steelmaking raw ingredients and more stringent environmental laws which makes it cheaper to produce basic steel products abroad.

Mr. Tajani said "The steel sector is absolutely crucial to the European economy so I will do my utmost to ensure that the European Commission" implements an action plan to safeguard the industry.

He said the commission plans to deliver its action plan by June and urged steelmakers not to take further action regarding steel plant closures until the recommendations have been made.

The recommendations involve providing funds to help re-train employees and mitigate the social costs of redundancies and channelling more funds into research and technology in order to make the steel industry more competitive.

Europe's steel industry, which employs about 360,000 people and generates about 170 billion euros ($227.5 billion) in sales annually, is suffering from anemic steel demand due the frail state of the region's economy which continues to suffer from the EU sovereign debt crisis.

EU crude steel demand is nearly 30% below the pre-financial crisis high of 2007 and is forecast to have contracted by almost 9% in 2012, according to ArcelorMittal (MT), the world's largest steelmaker.

ArcelorMittal has responded to weak demand and excess production capacity by temporarily idling blast furnaces, and announcing the permanent closure or mothballing of certain loss-making operations in Belgium and France. In December it took a $4.3 billion write-down on the value of its struggling European division, following similar moves by ThyssenKrupp AG (TKA.XE), which recently announced plans to cut 3,800 jobs and dispose of its electrical steel operations.

From a policy perspective, the commission will look at what can be done to avoid setting absolute caps on emissions and energy production, to ensure the industry remains competitive. It will also review its trade agreements, with the aim of promoting open and liberalized trading conditions, while seeking to improve the efficiency of its internal secondary raw materials market.

The round table includes representatives from 13 EU member states, including Wolfgang Eder, president of the industry body Eurofer; Bart Sam, deputy general secretary of labor union industriAll, as well as senior government officials from Germany, France, Spain, Italy Belgium and Luxembourg among other countries.

Representatives from the steel industry include executives from ArcelorMittal, ThyssenKrupp (TKA.XE), Salzgitter AG (SZG.XE), and Voestalpine AG (VOE.VI).

Write to Alex MacDonald at alex.macdonald@dowjones.com and Alessandro Torello at alessandro.torello@dowjones.com

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