South Korean steel mills are moving to cut output this year as a global economic downturn is draining demand while inventories pile up, industry sources said Wednesday.

POSCO, the world's fourth-largest steelmaker, is planning to scale back output of stainless steel by 150,000 tons in the fourth quarter to cope with slowing demand.

* The price of nickel, used to make stainless steel, has dropped recently, but demand for the product has fallen sharply as well in line with the global economic slump, the steelmaker said.

* The financial crisis, which was ignited by the subprime mortgage rout in the United States, has slowed economic growth worldwide, causing recessions in the U.S., Europe and parts of Asia and dampening demand for metals. – Asia in Focus