April 17, 2018 / 7:51 AM / a year ago

UPDATE 1-Chinese iron ore, steel retreat on strong March steel output

* China’s daily steel output in March hits highest since Sept

* Production restrictions may be weaker than expected -analyst

* Tangshan carrying out pollution measures (Adds closing prices, comments)

BEIJING, April 17 (Reuters) - China’s iron ore futures extended losses and hit a 10-month low on Tuesday on worries of a supply glut as the average daily steel output in March climbed to the highest level since September.

The world’s biggest steel maker last month churned out a total of 73.98 million tonnes of steel, up 4.5 percent from a year earlier, data from the National Bureau of Statistics showed on Tuesday.

Average daily steel output in March reached 2.39 million tonnes, the highest level since September and up 2.8 percent from combined January-February level and also year-on-year, according to Reuters records.

“Output data is adding insult to injury as market has been under pressure due to weak demand,” said Richard Lu, analyst at CRU consultancy in Beijing.

The most-traded iron ore futures on the Dalian Commodity Exchange closed 1.6 percent lower at 439 yuan ($69.93) a tonne on Tuesday, having dipped to their weakest level since June 27 at 434 yuan a tonne earlier in the day.

Construction steel rebar contracts for October delivery on the Shanghai Futures Exchange also settled down 0.6 percent at 3,384 yuan.

“Increase of steel output indicates production restrictions may be weaker than expected,” said Lu.

Tangshan has ordered steel mills to cut 50 percent of sintering capacity over and above the existing output restrictions in place until November as a bout of foul air was expected to blanket the country’s top steelmaking city and the surrounding Beijing-Tianjin-Hebei region from Monday.

Emergency measures in Tangshan are effective from April 15. It has not set a date for the measures to be lifted.

Other steel raw materials rose after the release of official output data. The most-active coking coal futures recovered some losses with prices up 0.5 percent to 1,126.5 yuan a tonne, while coke contracts for September delivery gained 1.3 percent to 1,787 yuan a tonne. ($1 = 6.2779 Chinese yuan) (Reporting by Muyu Xu and Josephine Mason; Editing by Sunil Nair)

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