EU and China drive global steel output rise in April - Worldsteel

(Adds detail, background, analyst comment)

By Maytaal Angel

LONDON, May 21 (Reuters) - Global crude steel output rose at its second-fastest level this year in April, responding to an uptick in demand in Europe and the Middle East, though higher output in China added to oversupply and kept prices depressed.

Output of the alloy rose by an annual 1.7 percent globally in the month to 137 million tonnes, with production in China rising 2.1 percent to 68.8 million tonnes, data from steel producers association Worldsteel showed.

China is the world's top producer and consumer of steel.

"Steel prices are near the lowest they've been in recent times," said Jeremy Platts, analyst at steel consultancy MEPS.

"There are some encouraging signs that demand is increasing and output growth isn't just coming from China, as in recent years, but at the same time the price would benefit from some production cuts in Europe," Platts added.

In percentage terms, the biggest growth in output came from the Middle East - up an annual 9.6 percent - and from Europe, where it rose an annual 4 percent to 14.61 million tonnes as economic growth in the region takes hold.

Industry lobby Eurofer has said it expects EU demand for steel to grow almost 3.5 percent this year, the first growth in two years, while top steelmakers such as ArcelorMittal SA (Other OTC: ARCXF - news) and Tata Steel Ltd recently boasted upbeat earnings thanks in large part to Europe and the United States.

Still, global steel prices (ST-CRU-IDX) have not much recovered from the 3-1/2 year lows they plunged to last June, thanks in large part to a structural oversupply and to falling raw material prices such as iron ore.

Iron ore prices are down some 25 percent this year, hitting 2-1/2 year lows earlier this week on slowing growth in China. Economists say Beijing may need more stimulus measures to achieve its 7.5 percent growth target this year.

Worldsteel said output in Ukraine fell 4.5 percent in April, while in nearby Russia production rose just 0.7 percent, as the threat of more Western sanctions against Moscow for its actions in Ukraine continued to hurt the country's economy.

In Japan, the world's second-largest steel producer, output fell 2.5 percent to 8.9 million tonnes, though output in the year through April was still up 2 percent at 36.5 million tonnes, Worldsteel said.

(Editing by David Holmes)