OneSteel joins a number of steel companies worldwide that have, or will, cut production as construction and manufacturing softens.
Managing director Geoff Plummer said overall performance during the past four months had been "solid" but that the company expected a challenging second half for 2008/09.
"Australia domestic conditions have held up reasonably well so far, but we are now starting to see some softening in demand due to a lack of credit availability and reduced confidence levels and activity in some markets," Plummer told the company's annual general meeting on Monday.
OneSteel said it was implementing a number of initiatives including "adjusting production to reflect reduced demand" in anticipation of a more challenging half.
The group produced 2.6 million tonnes of raw steel during the 12 months to June 30.
The company said the most immediate impact of the crisis has been on its materials business due to its exposure to international market conditions.
OneSteel has maintained its iron ore sales forecast of five million tonnes for the 2009 financial year "subject to market conditions" and expects to achieve cost synergies of $60 million this year from the integration of the Smorgon Steel business.
"We expect international prices for steel and steelmaking inputs to remain volatile," Plummer said.
"Despite prices falling well below their peaks of a few months ago, we believe they are likely to be above historical standards over the medium to longer term."
