China steel output falls 2.3 pct in 2015, first drop in over 30 yrs

SHANGHAI (Reuters) - China's crude steel output fell 2.3 percent to 803.8 million tonnes in 2015 from the previous year, government data showed on Tuesday, the first drop in more than three decades as the economy of the world's top producer slows.

Production also declined 5.2 percent to 64.37 million tonnes in December from the year before, according to the numbers from the National Bureau of Statistics, dented by faltering demand.

China's government is pushing to erode overcapacity in the steel industry, as the country aims to shift economic growth towards more consumption rather than heavy investment. The nation's massive steel sector is said to have a surplus capacity of about 300 million tonnes.

China's crude steel output is expected to decline for a second straight year in 2016 on continued weakness in demand, according to a government study. [nL3N13W1D5]

"We would expect output to fall further this year, as the government is aiming to solve overcapacity and step up structural reform in supply," said Yu Yang, an analyst with Shenyin & Wanguo Futures in Shanghai.

Steel prices tumbled over 35 percent in 2015, which has already forced many Chinese mills to slash output or shut permanently, with little indication of a strong rebound in steel demand.

China's economy grew 6.8 percent in the fourth quarter from a year earlier, the weakest since 2009, suggesting that the world's second-largest economy continued to lose steam late in the year. [nL3N14Z435]

(Reporting by Ruby Lian and David Stanway; Editing by Joseph Radford)