* Lower steel demand growth to pressure iron ore prices
* Steel production seen rising 1-2 pct in 2013, vs 3.1 pct
* Half of China's iron ore mines unprofitable at price of
(Adds comments from Baosteel chairman, details)
SHANGHAI, June 4 Growth in China's steel demand
is expected to slow to a near-standstill in 2013, adding to
pressure on iron ore prices after a 17 percent fall in May, the
head of the country's biggest listed steelmaker said on Tuesday.
Spot iron ore prices have tumbled to around a seven-month
low after poor economic data and fears of weaker steel output
sparked concern that prices could fall further in the second
half when new mine supplies are expected to come onstream.
Baoshan Iron & Steel Group (Baosteel) chairman Xu Lejiang
said the company sees China's steel production rising just 1-2
percent in 2013 from a year ago.
That compares with a growth rate of 3 percent in 2012 and
average growth of 10 percent a year between 2006 and 2011.
"China's urbanisation drive and infrastructure construction
is continuing, but at a slower pace than expected," Xu said.
"Steel consumption will weaken in the second and third
quarter, which will force mills to be more rational in their
production plans. That means output growth will slow."
Overhyped expectations of a strong rebound in demand in the
second-quarter have led China's army of steel makers to ramp up
production since February to record levels..
Producers have also been reluctant to cut output for fear of
losing market share, sending China's Jan-April crude steel
output up 8.4 percent from a year ago to 238.1 million tonnes.
The forecast by Baosteel, whose listed unit is
China's biggest steelmaker, means the rate of steel production
would have to fall in coming months.
While output cuts by steel makers would pressure iron ore
prices, Tsou Jo-Chi, Chairman of Taiwan's China Steel Corp
, said the high cost of China's domestic iron ore
production would keep a floor under prices.
A sustained period of low prices would force most of China's
swing producers to idle mines, reducing supply.
About half of Chinese miners will become unprofitable should
iron ore prices fall to $100 a tonne, while about 80 percent of
local mines will start bleeding should ore prices drop to $80 a
tonne, Baosteel's Xu said.
By comparison, big iron ore exporters such as Brazil's Vale
and Rio Tinto Ltd have production costs of
around $40 to $50 a tonne.
China produced 716.5 million tonnes of crude steel in
(Reporting by Ruby Lian and Fayen Wong; Editing by Richard