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Global steel output lowest since Feb as China smog war intensifies

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LONDON, Oct 23 (Reuters) - Global crude steel output hit its lowest since February last month, with mills in top producer China cutting production as Beijing intensified its campaign for clearer skies, data from the World Steel Association (worldsteel) showed on Monday.

Crude steel production for the 66 countries reporting to worldsteel hit 141.4 million tonnes in September, a yearly increase of 5.6 percent but a monthly drop of 2.3 percent and the lowest output on a monthly basis since February.

Crude steel output in China, which produces roughly half the world's steel, stood at 71.8 million tonnes in September, a yearly increase of 5.3 percent but a monthly drop of 3.7 percent, worldsteel data showed.

Output drops of 30 million tonnes or more are expected in China this winter as Beijing intensifies its war on smog.

Official figures from China show it has cut 110 million tonnes of legal steel capacity and 120 million tonnes of illegal capacity since the start of last year, but the cuts are only now starting to translate into lower production.

Average global steel prices have climbed some 50 percent since the 12-year lows of December 2015, according to consultants MEPS, driven by capacity cuts in China, soaring infrastructure spending, and increased trade protectionism.

Next year however, worldsteel expects no growth in steel demand in China as Beijing infrastructure spending fades and the country resumes efforts to rebalance the economy and protect the environment.

The steel industry, worth about $900 billion a year, is seen as a gauge of the world's economic health.

(Reporting by Maytaal Angel. Editing by Jane Merriman)