UPDATE 1-Asia steel output growth offsets fall in EU, U.S. in Jan.

Wed Feb 20, 2013 12:17pm EST

* EU output down by 5 pct, U.S. posts 5.8 pct fall

* Higher production in China spurred by rise in prices

* Steel customers in the West not in a rush to buy

By Silvia Antonioli and Harpreet Bhal

NEW YORK/LONDON, Feb 20 (Reuters) - Stronger steel output in top producer China and in Asia as a whole, offset falls in Europe, the United States and most other producing regions in January, data from an industry body showed on Wednesday.

Global crude steel production rose 0.8 percent to 125 million tonnes in January from the same month a year earlier, data from the World Steel Association showed.

Output in China, which is also the top consumer of the alloy, rose 4.6 percent in January to 59.3 million tonnes, while Asia as a whole posted a 4 percent increase to 82.3 million tonnes.

"China's January figure is quite strong, sentiment has improved a little in the market lately. Higher steel prices in the last few months encouraged producers to boost output," said Jeremy Platt, a Chinese steel market analyst at British-based consultancy Meps.

"There has been restocking, although mainly based on speculation rather than on real demand as there still is a lot of uncertainly about how 2013 is going to pan out."

Meps said he expects Chinese steel production to be 755 million tonnes in 2013, or about 5 percent higher than last year.

Other Asian countries also posted solid growth in output. Japan was up 2.7 percent and India was up 3.8 percent.

OUTPUT FALLS ELSEWHERE

The upbeat figures from Asia were partially balanced by output falls in most other large producing areas, including Europe and the United States.

"Europe and U.S. have many more problems than China with demand at the moment," Meps steel and iron ore analyst Kaye Ayub said.

"Usually in the first quarter you have a bit of a peak in demand based on restocking but we haven't really seen this yet this year. There is a possibility that it may come later but for now people do not see the need to order that much."

The EU registered a 5 percent drop to 13.5 million tonnes in January. German production rose by 5.4 percent, while France posted a 1.3 drop and Spain registered a 2.5 percent decline.

Italy, the second-largest steelmaker in the EU, posted a much sharper drop, down by almost 20 percent, mainly due to a production cuts at the country's largest plant, ILVA.

U.S. steel output fell by 5.8 percent to 7.3 million tonnes.

"The U.S. steel market has been throwing some mixed signals recently... but domestic prices for construction oriented steel products have come down," Metal Bulletin Research steel analyst Kashaan Kamal said.

"With housing starts dropping 8.5 percent from December and the constant squeeze from cheaper imports, we expect the 5.8 percent drop in crude steel output in January to carry through into February, where we may see a similar year-on-year weakness in output."

Production in North America as a whole fell by 3 percent.

Steel output in the Commonwealth of Independent States (CIS) fell by 6.2 percent, Latin America posted a 3.2 percent drop, and Africa and the Middle East registered a 2.6 decline.

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