UPDATE 1-China steel output surges back towards record

 

* Daily output of 1.692 million tonnes in Oct 1-10

* Close to previous record output of 1.693 mln T in August

* Early Oct output equivalent to annual output of 618 mln t

BEIJING, Oct 20 - China's huge steel sector pushed production back towards the record level set in August, data from the China Iron & Steel Association seen by Reuters showed on Tuesday.

China is by far the world's biggest steel producer, with last year's output equal to that of the next eight steel producing nations put together. And this year production has boomed while steel mills elsewhere reined in operations for the first half.

The CISA figures showed daily crude steel output rose to 1.692 million tonnes in the first 10 days of October, up from 1.646 million tonnes in the last 10 days of September, within a whisker of the 1.693 million tonne average seen in late August.

Early October's production was equivalent to annual output of 618 million tonnes, a Reuters calculation showed, compared with 500 million tonnes in 2008.

China has huge overcapacity in steel production and is now threatened by possible oversupply, with CISA estimating Chinese stockpiles at 40 million to 50 million tonnes, but official calls to clamp down on rampant production have had little or no impact.

Having been buoyed for much of this year by the government's $586 billion economic stimulus, China's steel mills are now seeing a light at the end of the tunnel for exports of steel products, which rose 19 percent in September compared to October.

But after collapsing in the first half of the year, exports remain far below 2008 levels, with September's shipments of 2.47 million tonnes almost two-thirds down from the previous year.

Output figures from CISA tend to be slightly below those given by the National Bureau of Statistics, which is due to issue production data for the month of September on Thursday.