Global steel output rose in February amid trade tensions

By Maytaal Angel

LONDON (Reuters) - Global crude steel output rose 3.5 percent in February from the same month a year ago, as mills in top producer China boosted output despite signs of a mounting surplus and trade tensions between Beijing and Washington.

Global crude steel output hit 131.8 million tonnes in February, data from the World Steel Association (worldsteel) showed, as output in China rose 5.9 percent to hit 64.9 million tonnes.

The data will likely draw international scrutiny after U.S. President Donald Trump this month slapped hefty import duties on steel, aimed at dissuading China from exporting its excess metal at what he says are state subsidised prices.

Trump also aims to impose tariffs on up to $60 billion of imports from China, and Beijing has said it would take strong retaliatory measures to protect its rights.

Chinese rebar prices hit a near nine month low on Monday on worries over slowing demand from the construction sector, growing inventories and the potential trade war between the world's two largest economies.

"China are over-producing relative to the current level of demand. It was always a downside risk that China would start to slow. Financial institutions have cautioned things can't go on forever," said Jeremy Platt, analyst at steel consultancy MEPS.

"We're expecting prices to fall in the second half because of China, but equally we're not anticipating a crash."

China aside, worldsteel data showed output in India, which last month overtook Japan to become the world's second largest steel producer, rose 3.4 percent in February, while Japan's output fell 0.5 percent.

In the western world, output in the European Union fell 0.8 percent, while output in the United States rose 0.4 percent.

"The rebound in U.S. production was not too surprising given the prospect of a 25 percent tariff on U.S. steel imports and the recent stratospheric rise in prices. We expect production to pick up further over the coming months as higher prices encourage capacity restarts," said Capital Economics in a note.

The steel industry, worth about $900 billion a year, is a seen as a gauge of the world's economic health.

(Reporting by Maytaal Angel; Editing by Mark Potter)