Reuters Summit-UPDATE 1-Steel Assn sees better demand by end 09

(For other news from the Reuters Global Mining and Steel summit, click on: here)

* World steel assn sees destocking coming to an end

* Steel production seen down around 20 pct in H1 2009

* China to recover, Western Europe looks grim (Adding more comments, details)

By Humeyra Pamuk

LONDON, March 9 (Reuters) - Global demand for steel is down around 20 percent at the moment, but with destocking nearing an end, the industry is likely to see some signs of recovery by the end of the year, a top industry official said on Monday.

"I would be very surprised if there were not green shoots out there by the end of the year," Ian Christmas, director general of the World Steel Association said at the Reuters Global Mining and Steel Summit .

"Stocks are very low and we see destocking coming to an end," Christmas said. "By the end of this year, I'm sure some steel companies will say 2010 is looking much better than we thought this time last year."

Steel demand and prices have collapsed since mid-2008 after consumption from the major steel-consuming sectors such as automotive and construction came down sharply, forcing producers across the globe to slash output sharply.

Christmas said the capacity usage across the sector was around 50 to 60 percent currently, with global production down 24 percent in January.

"Production will be off 20 percent in the first half," he said, but declined to predict for the whole year.

A Reuters poll in mid-February showed that global crude steel production is expected to fall by 9 percent to 1.210 billion tonnes this year, which will be the first drop in output since 1998.[ID:nLG664448]

"Everbody's overdoing the pessimism," Christmas said, referring to the industry, adding that he expected government stimulus packages to help boost spending and demand for steel.

"I still think that... compared with previous recessions, Asia has some more positive dynamics to it. Population growth, income growth is there," he added.

"The Chinese economy will come back and will have favorable impacts for the industry," he said.

China is the world's top steel producer with its some 500 million tonnes of annual output, which grew by 2.6 percent while the global output was down by 1.2 percent.

Christmas said he was rather pessimistic about Western Europe, where he predicted a recovery would take some more time, but was rather upbeat about the outlook for the United States.

"It is a more flexible economy," he said, referring to the world's largest economy, where steel production more than halved in January. (For summit blog: blogs.reuters.com/summits/) (Reporting by Humeyra Pamuk, Editing by Hans Peters)