UPDATE 1-China daily steel output 1.5 mln T late May-Mysteel

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SHANGHAI, June 8 (Reuters) - China's daily crude steel production in late May reached 1.49 million tonnes, industry consultancy website Mysteel said on Monday, citing official statistics.

The figure is equal to an annual production of 544 million tonnes of crude steel, according to Reuters calculations. That compares with about 500 million tonnes produced in 2008.

China has been urging its steel mills to curb production, in an apparent attempt to stablise domestic steel prices and to hold a better position in iron ore term negotiations with miners including BHP Billiton (BHP.AX)(BLT.L), Rio Tinto (RIO.AX)(RIO.L) and Vale (VALE5.SA).

The government wants to cap this year's total steel output at 460 million tonnes, 8 percent lower than last year, but it has so far been unable to rein in the sector.

China's monthly iron ore import volume has been on a record-breaking run, reaching an all-time high of 57 million tonnes in April, and stockpiles at major ports have soared beyond 75 million tonnes, according to Chinica Shipbrokers Ltd, up around a quarter since the beginning of the year.

With steel output showing little sign of slowing down despite low demand, analysts are predicting a rapid rise in inventories over the second half of the year.

Yet some of the big players are still putting new capacity into operation.

China's Shougang Group, parent of Shougang Iron and Steel (000959.SZ) and China's sixth-largest steel maker, opened its new steel mill, which has a design capacity of 4.85 million tonnes a year, in late May.

In April, Angang Steel Co Ltd (000898.SZ), another flagship mill in China, started production in a new blast furnace that will add more than 3 million tonnes of pig iron ore production.

But the bigger problem appears to be the smaller mills, and the government has been forced to step in with punitive action.

Last month, the Ministry of Industry and Information Technology urged commercial banks to cut off credit to steel enterprises that are "blindly expanding in disregard of the market".

It said the industry has been put under intense pressure as a result of excessive iron ore import growth and an oversupplied domestic market.

But while calls to curb output might be heeded by the big firms, smaller operators are still unlikely to follow suit, said Sun Jiqing, analyst with China's Dongxing Securities.

"The effects of output restrictions will be limited, with domestic investment stimulated by government policy and high demand for construction materials, and you also have local governments chasing GDP, jobs and revenues during the world financial crisis," he said in a note. (Reporting by Alfred Cang and Jacqueline Wong; Editing by Michael Urquhart)