June 20, 2017 / 4:10 PM / in 4 months

Global crude steel output jumps 2 percent in May

LONDON, June 20 (Reuters) - Global output of steel, a gauge of economic health, jumped 2 percent in May, retreating from the 5 percent surge in April as demand for the alloy tapers off, industry data showed on Tuesday.

Producers churned out 143 million tonnes of crude steel in May versus 140 million tonnes a year ago, according to the World Steel Association (Worldsteel).

Output in China, which accounts for half of global steel production and a quarter of global steel exports, rose 1.8 percent to 72.3 million tonnes, said Worldsteel, whose members jointly account for 85 percent of global steel production.

The ramp-up in Chinese steel output has been spurred by high margins due to tighter supplies of construction steel after Beijing vowed to crack down on low-quality furnaces by the end of this month.

China cut some 65 million tonnes of steel capacity in 2016 and aims to cut another 50 million tonnes of outdated capacity this year, not including low-quality steel - spurring soaring steel margins and high production.

Industry participants are nervous that steel supply might yet exceed demand and weigh on prices. In January-March global steel production surged 5.7 percent from a year earlier, rising a further 5 percent in April.

Chinese steel futures, seen as a global benchmark, slipped on Tuesday after a four-day rise, on demand concerns as rains curb construction activity and the government presses ahead with measures to curb the property market.

Reporting by Maytaal Angel; editing by Susan Thomas

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