China's steel output rose 4 percent to 68.51 million tonnes in October from a year ago, government data showed, as steel mills in the world's top producer further expanded production.

Total output for the first 10 months of 2016 edged up 0.7 percent to 672.96 million tonnes, data from the National Bureau of Statistics also showed on Monday.

Steel mills ramped up production for the third straight month since July to meet a pickup in demand as previously approved state construction projects start to build.

Steel prices have soared this year along with iron ore and coking coal costs and amid the government's campaign to reduce the sector's excess capacity.

The most active rebar futures contract hit a peak at 3,220 yuan ($471.79) per tonne in morning trade on Monday, its highest since May 2014.

"Steel mills are buoyed by high profit, therefore they are operating under high load and unwilling to cut production," said Liu Xinwei, steel analyst at Sublime China Information Group.

"Government's de-capacity policy does very little on current steel output, as the eliminated output comes from the mills that have already been shut for more than one year."

China's state economic planner said last week the country is ahead of schedule on its target of cutting 45 million tonnes of annual steel capacity by the end of 2016.

Beijing is aiming to eliminate 100 million to 150 million tonnes of annual steel output capacity over the next five years.

 

Source:reuters.com

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