Supply constraints and strong demand would put a firm floor under prices and profits for the steel industry until at least 2011, Lakshmi Mittal forecast yesterday.

Mr Mittal, the main shareholder of ArcelorMittal with a 45 per cent stake, said the steel industry was in a "strong and sustainable position" for the next three to four years.

"While there is a slowdown and softness in some markets, in particular in southern Europe and the US, I don't see any major weakness in overall levels of demand," the chairman and chief executive of the world's largest steelmaker told the Financial Times.

The forecast came after the company said net income in the second quarter had more than doubled, a performance well above analysts' estimates. Second-quarter net income at the group surged 114 per cent to $5.8bn (£2.9bn) after $2.7bn in the equivalent period in 2007. Sales were 39 per cent higher at $37.8bn, from $27.2bn.

Mr Mittal scotched fears that the steel industry might be about to move into a period of fragility on account of what some worry could be a significant slowdown in the world economy.

He said that while demand in emerging economies such as China, India, South America and the Middle East remained strong, global demand was likely to expand by 3-5 per cent a year in the next five years, against an average growth rate of 7 per cent in the past seven years.

"A projection of 3 per cent growth in the next few years is probably pessimistic, while 5 per cent is realistic," he said.

"If you accept my growth estimates, that means the world will have to find another 50m-75m tonnes of steel capacity every year for some time."

While demand was likely to push ahead at a steady rate, the Indian billionaire said it was becoming "increasingly difficult and expensive" to increase capacity through new mills.

Higher costs of iron ore – the main material for steel – were adding to the supply problems, as was growing concern about the large amounts of carbon dioxide emitted by steel plants.

The imbalance between demand and supply would "create a strong pricing dynamic for the industry as a whole" in the coming years, said Mr Mittal.

The ArcelorMittal share price climbed 8.15 per cent to €57.72. – The Financial Times