Mumbai: World''s top steel makers Arcelor Mittal and Nippon Steel Corporation will enter into a new partnership next month on technology transfer and capacity expansion at their joint ventures, a Japanese business daily reported.

Mittal Steel chairman Lakshmi Mittal and Nippon Steel president Akio Mimura will meet in New York next month to sign the deal, the Nikkei said.

The two firms have long been talking about the pact following Mittal''s acquisition of Nippon ''s strategic partner in Europe Arcelor, to create the world''s biggest steel maker.

A Nippon Steel spokesman declined to comment on the report. Japanese TV Channel reported in May the two top executives are engaged in tough talks over conditions for using Nippon Steel`s car sheet technology, one of the Japanese company`s strongest competitive points.

Mittal wanted to use the technology globally, but appears to have eventually agreed to utilise the know-how only in Europe, the report said.

Mittal is pushing into the high-end, automotive sheet steel market in Brazil, where Nippon`s affiliate Usiminas is expanding production.

ArcelorMittal, meanwhile, will slightly cut output in the third quarter and keep prices steady to help contain an "inflated" European market bloated with Chinese imports, the company said.

Europe''s steel prices are the world''s highest. This has attracted increasing Chinese trade, raising concern among European steelmakers and EU officials about the possibility of Chinese steel being dumped on European markets. EU officials have warned of sanctions unless Beijing acts to cool what they describe as too much output from China''s overcapacity.

Despite robust European demand and a possible squeeze on costs in the second half of the year, ArcelorMittal said it would stick with current prices in the third quarter for flat carbon used for the body of cars, trains and ships, claiming it needed to maintain a sustainable market environment for customers and a healthy inventory level.

ArcelorMittal said it saw robust demand across the region from strong economic growth in Western Europe as well as a buoyant Eastern European steel market while facing "increasing tension" on the raw material iron ore and scrap markets.

ArcelorMittal controls about 10 per cent of global steel production.