China's steel output rose 1.8 percent in May from a year earlier, data from the country's statistics bureau showed on Wednesday, with mills in the world's top producer buoyed by robust margins despite government efforts to curb excess capacity.

May's total of 72.26 million tonnes was just below April's monthly record of 72.78 million tonnes.

The ramp-up in steel output has been spurred by high margins due to tighter supplies of construction steel after Beijing vowed to crack down on low-quality furnaces by the end of this month.

"If we break down the monthly output into daily, we can see the production is gradually slowing down as demand is weakening," said Bai Jing, steel analyst at Galaxy Futures.

"But the margin of over 1,000 yuan ($147.11) a tonne on rebar is still high enough to entice mills to produce more," said Bai.

The world's largest steel producer and consumer cut some 65 million tonnes of steel capacity in 2016 and aims to cut another 50 million tonnes of outdated capacity this year, not including low-quality steel.

The most-traded rebar futures gained more than a quarter this year, peaking at 3,377 yuan a tonne in March, but dropped back to 2,930 yuan a tonne on Wednesday.

In the first four months, production totaled 346.8 million tonnes, up 4.4 percent from the same period a year earlier, Wednesday's data showed.

 

Source:reuters.com

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