ArcelorMittal, the world’s largest steelmaker, forecast higher profits this year, driven by higher steel sales and margins, and an increase in iron ore production as Europe ended two years of decline.

The company, which makes six to seven per cent of the world’s steel and is a broad gauge for the health of global manufacturing, said global steel consumption should increase by between 3.5 and four per cent in 2014 from about 3.5 per cent last year.

The steelmaker forecast a slowdown in consumption growth in China, Brazil and the former Soviet states, but saw US market expansion of four per cent and a modest improvement of around two per cent in the European Union after declines in 2012 and 2013.

Chief executive Lakshmi Mittal said the Luxembourg-based company was cautiously optimistic about 2014, a view reflected by other peers and steel users.

High-strength steel maker SSAB said sector prospects were slightly better and that Europe had bottomed out, while the Nordic region’s biggest builder, Skanska, said the outlook was improving.

The construction sector, which consumes about half the world’s steel, was among the hardest hit by the global financial crisis, but is recovering at least in the US, where cheap shale gas is driving growth.

Chief financial officer Aditya Mittal said volumes so far this year had grown across the business, except North America, although the latter appeared to be purely temporary from an exceptionally cold winter.

Mittal said purchasing managing indices in Europe were on average at two year highs and that steel demand in the continent was rising beyond just a restocking effect.