3 Min Read
* Steel supply growth outpacing demand - Argonaut analyst
* Inventory continues decline, lowest since late Jan
* China revokes licenses of 29 Chinese steel firms (Adds China mills shut, updates prices)
By Manolo Serapio Jr
MANILA, April 24 (Reuters) - Steel and iron ore futures in China ended slightly higher on Monday after falling as much as 3 percent intraday, pressured by lingering worries over weak demand in the world's top steel consumer.
China's crude steel output surged to a record 72 million tonnes in March as mills ramped up output, hoping an early-year rally in prices would be sustained as the country headed for its usually brisk second-quarter period.
But supply growth has so far outpaced consumption this month.
"Demand is okay. It's just that production is much stronger than demand," said Helen Lau, analyst at Argonaut Securities.
The most-active rebar on the Shanghai Futures Exchange closed up 0.2 percent at 2,927 yuan ($425) a tonne, after falling as far as 2,851 yuan.
Iron ore on the Dalian Commodity Exchange gained 0.3 percent to end at 503 yuan per tonne, after sliding as much as 3 percent earlier in the session.
Aiding investor sentiment, 29 Chinese steel firms have had their licenses revoked due to long-term production suspensions or failing to comply with state capacity and pollution requirements, suggesting Beijing remains intent on tackling its glut-hit industry.
A sustained decline in inventory of steel products among Chinese traders suggests demand remains firm, said Lau, but may be not as strong as many in the market had initially expected.
Stocks of five major steel products - including construction-used rebar - held by traders stood at about 12.9 million tonnes as of April 21, the lowest since late January, said Lau, citing data from Mysteel consultancy.
While Chinese mills may have not cut production so far, a "further decline in prices would be the catalyst," said Lau.
Coal used in steelmaking cut losses but still finished lower. Coking coal on Dalian fell 4 percent to close at 1,091.50 yuan a tonne, off a low of 1,072 yuan. Coke declined 2.4 percent to 1,599 yuan.
On Friday, iron ore for delivery to China's Qingdao port .IO62-CNO=MB climbed 4.4 percent to $68.22 a tonne, marking its biggest single-day increase since Feb. 13, according to Metal Bulletin. ($1 = 6.8858 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Kenneth Maxwell and Biju Dwarakanath)