* March output rises 2.2 pct on year to 70.3 mln T
* Q1 output jumps 2.4 on year to 202.7 mln T
* Slowing economy may lead to output drop from June -
(Adds analyst's comments, details of data)
By Ruby Lian and Fayen Wong
SHANGHAI, April 16 China's average daily crude
steel output hit a record high 2.27 million tonnes in March,
government data showed, as steelmakers ramped up on expectations
of increased seasonal demand but a slowing economy may curb
production in the months ahead.
Steel demand in the world's top producer and consumer
traditionally improves in April and May as construction and
manufacturing activities perk up after the New Year holiday,
encouraging mills to raise production.
Mills are expected to further boost output in April, but
probably only modestly, as a cooling economy could curb demand
growth for metals this year.
China's March crude steel output trumped the previous record
high 2.217 million tonnes hit in January and February. The
monthly output stood at 70.25 million tonnes, up 2.2 percent
from a year ago, data from the National Bureau of Statistics
(NBS) showed on Wednesday. NBS didn't provide a separate monthly
figure for the first two months.
"Steel output may continue going up slowly until May, but I
do not rule out the possibility that it might fall on year from
June," said Judy Zhu, an analyst with Standard Chartered Bank
"Many mills are struggling with tight cash flow, with a few
facing permanent shutdown threats, while Beijing has no
intention to boost investment to drive up steel consumption.
Meanwhile, Beijing will take tougher measures to crack down
pollution, curbing steel production," Zhu said.
China's economy grew at its slowest pace in 18 months in the
first quarter of 2014, with growth between January and March
dropping to 7.4 percent from 7.7 percent in the previous three
Hopes of a major stimulus package from the central
government to counter the slowdown were dashed by Premier Li
Keqiang at an investment forum last week.
As part of Beijing's efforts to restructure its economy and
push financial reforms, Beijing has vowed to tackle overcapacity
in heavy industries by pledging tougher credit conditions and
environmental protection measures.
Total steel output for the first quarter was 202.7 million
tonnes, up 2.4 from the same period of last year, NBS data
showed. Steel products output rose 5 percent to 95.07 million
tonnes in March from a year ago, according to the data.
The rise in steel output was flagged last week by data
showing a jump in imports of raw material iron ore. China's iron
ore imports rebounded in March from a 13-month low hit the
previous month, customs data had showed.
(Editing by Muralikumar Anantharaman)