By Maytaal Angel
LONDON (Reuters) - Global crude steel production fell 2.7 percent in March from a year ago as output decreased in every major region including China, which produces half the world's steel, figures from an industry body showed on Tuesday.
Prices are languishing near their lowest in nearly six years amid structural oversupply and a growth slowdown in China, whose economy has entered a more mature, less industry-intensive phase of development.
Global crude steel output fell to 138 million tonnes in March from 142 million tonnes a year ago, though it was still at its highest level since last June, according to figures from the World Steel Association (Worldsteel).
Output in China fell 1.2 percent in March from a year ago to 69.5 million tonnes, although that was still the highest monthly output since last May, the figures showed.
"While we expect China's steel production to contract by between 1-2 percent this year, there is little to suggest that a major rationalisation of the sector is under way yet," said Caroline Baine, senior commodities economist at Capital Economics.
"Some recovery (in global output) can be expected in coming months, notably in the U.S. ... as some of the decline was due to weather-related disruption. That said, U.S. producers have complained about lower-cost imports."
China's annual economic growth slowed to a six-year low of 7 percent in the first quarter, dampening demand for steel and worsening an already severe steel glut in the world's number 2 economy.
China produces about 100 million tonnes more steel a year than it consumes. Beijing is introducing measures to cut excess steel capacity but some are sceptical, partly because it cannot afford to hurt employment in such a crucial economic sector.
On Monday, Worldsteel said demand in China was expected to fall 0.5 percent this year from last to 707.2 million tonnes. The industry body expects another 0.5 percent contraction in steel use next year.
Outside China, the Worldsteel figures showed March output fell 0.9 percent in the European Union, 9.6 percent in the Commonwealth of Independent States (CIS), 9.8 percent in North America and 6.8 percent in South America.
The industry data also showed March capacity utilisation rates fell 4 percentage points to 71.6 percent, indicating worsening pricing power for mills because they have a collective capacity to produce more steel should demand improve.
(Editing by Alison Williams)
