* Daily output up 1.8 percent compared to May
* Monthly production at 69.3 million tonnes, down 1.6 pct
from May's record
* Prices suggest little improvement in underlying demand
(Recasts to focus on daily production rates)
BEIJING, July 16 China's daily crude steel
output rose 1.8 percent in June to hit a record 2.31 million
tonnes, defying any seasonal downturn in demand, data from the
statistics bureau showed on Wednesday.
Total output over the month reached 69.3 million tonnes, up
4.5 percent from the same month last year but dipping 1.6
percent from May's record high.
On an annualised basis, output amounted to 828.6 million
tonnes, according to Reuters calculations, which would represent
a 6.3 increase on last year.
Despite soaring environmental costs, persistent overcapacity
and widespread cash shortages throughout the Chinese steel
sector, output has remained strong, with little indication that
mills are adjusting production rates in anticipation of a summer
slowdown in demand over summer.
"The rise in new export orders together with an improvement
in demand have dragged production up," analysts at the
Tangshan-based consultancy ChinaTSI.com said in a note.
However, the consultancy warned that there were no obvious
signs that the increase in steel demand was being reflected by
price increases, and more policy support would be needed to keep
the momentum going over the next few months.
Steel product inventories fell over the course of June,
according to the SteelHome consultancy, with rebar stocks
SH-TOT-RBARINV dropping more than 11 percent to end the month
at 5.98 million tonnes. Rebar stocks had surged to as high as
9.4 million tonnes in February.
With domestic demand still relatively weak, the sector has
benefited from an improvement in exports. In the first half of
the year, China sold 41 million tonnes of steel products
overseas, up 33.6 percent compared to the same period of 2013.
The China Iron and Steel Association (CISA) warned in a
research report earlier this month that apparent steel
consumption in China was rising far more slowly than production,
and by May had actually declined for four consecutive months.
It said 97.2 percent of additional output over the first
five months of the year was diverted into exports.
(Reporting by David Stanway; Editing by Ed Davies)