UPDATE 1-Global steel output hits new record in 2013, boosted by China

Thursday, 23 Jan 2014 | 5:11 AM ET

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LONDON, Jan 23 (Reuters) - Global steel production hit a new record high in 2013 helped by strong output performances in China and other Asian countries which offset a contraction in Europe and the United States, data from an industry body showed on Thursday.

Overcapacity however remains a serious issue for the industry which has been suffering from depressed steel prices and thin margins and has seen many mills posting heavy losses in 2013.

Global output of crude steel rose by 3.5 percent to more than 1.6 billion tonnes, data from the World Steel Association showed, with most of the growth coming from Asia.

"Another year of increasing crude steel output indicates significant surplus supply with output in Asia, the Middle East and Africa offsetting declines in Europe, North America and the CIS," said analyst Kashaan Kamal at Sucden.

"While global oversupply remains an issue, putting downward pressure on finished steel prices, the stronger-than-expected recovery in the U.S., progress in the eurozone and subsequent stability in Chinese economic growth hints towards a recovery in investment spending which will drive restocking in 2014."

Asia as a whole posted 6 percent growth and China confirmed itself as the world's largest producer of the metals with a 7.5 percent jump in steel output to 779 million tonnes.

Japan was the second largest producer posting a 3.1 percent increase to 111 million tonnes in 2013, the first increase in three years.

Europe and the United States both saw a 2 percent contraction as western steelmakers tried to respond to weak steel prices an depressed demand by cutting some production.

(Reporting by Silvia Antonioli; editing by Jeremy Gaunt)