ArcelorMittal SA, the world's largest steel maker, on Wednesday posted a $903 million profit in the third quarter, its first after three consecutive quarterly losses, as it saw the first signs of a gradual recovery in demand.

Although the profit was still 76 percent below year-earlier levels, the company said the market was slowly improving after the global recession caused demand to plunge for steel used to make cars, machinery and buildings.

''We believe we are through the worst,'' ArcelorMittal's chief financial officer Aditya Mittal told reporters. ''We remain cautious, the economy is still weak, particularly in the developed world, and the recovery will continue to be slow and progressive.''

Third quarter profit was down from the same period last year, when the company made $3.82 billion. Sales were $16.18 billion, down more than half from $35.19 billion a year ago - and only a slight increase on $15.17 billion in the second quarter.

The company says it expects higher shipments and steel prices in the fourth quarter and would focus on further growth in developing markets - mainly South America and Asia - by restarting key expansion projects in Brazil and India and mining projects elsewhere.

ArcelorMittal is slowly restarting steel mills and furnaces that it stilled late last year. It was running at only 50 percent capacity in the second quarter, increasing that to 61 percent in the third quarter. It plans to take that up to 70 percent in the final three months of 2009.

The steel maker warned that sales are still ''substantially lower'' than a year ago and are less profitable because the economic crisis has also triggered a steep fall in selling prices.

Luxembourg-based ArcelorMittal's results outpaced rival U.S. Steel, which reported a third quarter loss Tuesday and predicted another, narrower loss in the fourth quarter.

Mittal said the United States is seeing both ''real and apparent demand'' as companies go beyond restocking and increase output. He said one sign of real growth is higher sales to car makers whose recovery has been largely fueled by the government's cash-for clunkers program.

He said it was unclear whether higher European demand reflects a solid manufacturing recovery. The company's European flat carbon and global stainless steel and services divisions continued to report a loss in the third quarter.

Emerging market growth does not fully compensate for sluggish growth in richer nations where the company has significant assets, Mittal said.

''The developed market economies are recovering; the level of recovery is still much lower that what it used to be in 2008,'' he said. ''The faster and stronger it is, the better for ArcelorMittal.''

The World Steel Association, a group of global steel makers, said earlier this month that it expected strong demand from China to help the steel market return to moderate growth of 9.2 percent next year, after an expected fall of 8.6 percent for 2009.

The company said it has met a target to make $2.2 billion in longer-term savings this year, which included a voluntary redundancy program that has helped it shed some 40,000 workers since the start of the economic crisis.

Mittal said the company would no longer prioritize efforts to reduce its debt as it tries to put more money into growth projects.

It has already cut net debt to $21.6 billion - down $10.9 billion from a year ago. Much of that was built up from an ambitious program to expand in emerging markets. ArcelorMittal has reorganized other debt and issued bonds and shares over the past year to increase capital flow.

Two American steelmakers posted sharply lower third-quarter results Tuesday, as demand for the metal used in manufacturing and construction remained muted amid the global economic downturn.

But orders improved from historically low levels earlier in the year, helped by rising demand from the auto industry.

Still, the market for steel - used in consumer goods ranging from pickup trucks to soup cans - pales in comparison to levels seen during much of last year, when surging prices helped steel makers reap record profits.

That rally ended abruptly last fall, when the global recession devastated some of the steel industry's biggest customers in the auto, construction and industrial equipment markets. Orders vanished, forcing companies like United States Steel Corp. and AK Steel Holding Corp. to scale back production and lay off workers.

The companies' results disappointed investors and some analysts, sending their shares down more than 7 percent. Shares of U.S. Steel fell $3.17, or 7.8 percent, to close at $37.41, while AK Steel shares sank $1.61, or 8.6 percent, to $17.18.

U.S. Steel, the largest U.S.-based steelmaker, reported its third consecutive quarterly loss and predicted another loss, though narrower, in the fourth quarter. It forecast stronger demand in North America, mainly due to orders from the auto industry and continued strong demand for tin. But it said output would remain flat compared with the third quarter.

While the Pittsburgh-based company said production and shipments rose significantly in the three months through September, Chairman and Chief Executive John Surma cautioned that orders have dropped in North America and Europe in recent weeks, partly due to seasonal slowdowns at factories.

''We currently have more of our facilities operating and more of our people back to work,'' Surma said in a conference call. But ''demand trends remain uncertain as both the U.S. and global economies struggle to recover.''

Although U.S. Steel expects better results in the fourth quarter, it also said it plans to idle two blast furnaces - one at its Gary Works in Indiana and one at its Granite City Works in Illinois - to adjust for weaker demand.

That was a disappointment, said industry analyst John Tumazos. Although U.S. Steel's improvement from the second quarter was ''very good,'' he said, ''the blueprint for profitability is not obvious unless the market strengthens more.''

AK Steel, meanwhile, returned to profitability after three straight quarterly losses and said it expects shipments to rise in the final three months of the year. But its average selling price is expected to fall because it forecasts a higher percentage of carbon steel sales relative to more expensive stainless and electrical steels.

AK Steel, based in West Chester, Ohio, is a supplier to the U.S. auto industry, which accounted for about a third of its revenue last year. Automakers ramped up production in recent months in response to the government's wildly successful Cash for Clunkers program.

In a note to investors, Morgan Stanley analyst Mark Liinamaa wrote that AK Steel's projection of a 24 percent increase in shipments in the fourth quarter indicates ''auto production level will indeed hold up through the quarter even though auto sales will decline from artificially inflated (third quarter) levels, resulting from Cash for Clunkers.''

U.S. Steel posted a loss of $303 million, or $2.11 per share, for the three months ended Sept. 30. That compares with a profit of $919 million, or $7.79 per share, in year-earlier period. Revenue tumbled 61 percent to $2.82 billion.

AK Steel earned $6.2 million, or 6 cents per share, for the quarter, compared with a profit of $188.3 million, or $1.67 per share, during the same period a year earlier. Revenue slid 52 percent to $1.04 billion.

(Steel Talk is compiled from various sources and is edited by Business Editor Paul Giannamore. His e-mail address is pgiannamore@heraldstaronline.com.)