China March steel output climbs to highest on record

BEIJING (Reuters) - China's steel output rose 1.8 percent in March to a monthly record of 72 million tonnes, stoking worries of a glut that continues to grow even as Beijing tries to rein in excess capacity in the bloated sector and demand remains flat.

March's monthly total easily beat the previous record of 70.65 million tonnes hit in March 2016, data from the National Bureau of Statistics showed on Monday.

In the first quarter, production totalled 201.1 million tonnes, up 4.6 percent from the same period a year earlier, the data also showed.

The growing production as Chinese mills bid to profit from prices that soared in 2016 and into this year are undermining the government's years-long push to cut capacity to make the steel industry more efficient and tackle smog.

Beijing's crackdown has mainly targeted low-grade products like rebar, used mostly for construction.

Rising inventory levels and recent falls in the prices, though, suggest output has been growing faster than China's actual demand.

The most-active steel rebar futures prices were down 1.15 percent at 2,918 yuan ($423.90) per tonne at 0243 GMT, on track for a 7.8 percent drop in April, their worst monthly performance since May last year.

Over 2016, steel rebar futures gained more than 70 percent, and they are still up nearly 10 percent so far this year.

Adding more uncertainty to the demand outlook, China has issued a flurry of measures to tame its red-hot property market, including restricting home sales by buyers and tightening mortgage checks.

The property measures could hinder any developing recovery in prices for steel rebar from the declines in March and April.

($1 = 6.8838 Chinese yuan)

(Reporting by Josephine Mason, Meng Meng and Beijing monitoring desk; Editing by Kenneth Maxwell and Tom Hogue)