Austrian steelmaker Voestalpine's chief executive called on Friday for European politicians to help come up with a plan to cut capacity in Europe's ailing steel industry in a controlled way, to avoid having to prop up the sector with government bailouts.

Wolfgang Eder, who is also president of the European steel association Eurofer, told Germany's Finanz und Wirtschaft newspaper that European steel production was unlikely to ever return to pre-crisis levels following a collapse in the building industry and dwindling demand from carmakers.

Steelmakers globally are struggling with falling demand in Europe and Japan and slowing growth in China, the world's largest producer and consumer, leading to massive overcapacity and price wars.

"The steel industry could fall back into the mistake of the 1980s, in which it would demand subsidies and keep obsolete plants running for social and political reasons," Eder was quoted as saying by the newspaper.

"The experience we made then was catastrophic."

The steel industry employs about 400,000 people in the European Union.

"I would advocate using the self-correction powers of the market in a controlled way," Eder said.

"That means we would need an industrial-political signal from Brussels that the steel industry should work on a plan to match capacity with current demand." (Reporting by Georgina Prodhan; Editing by Greg Mahlich)

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