China's steel output, which has been slowing since last May due to government macroeconomic controls, rose to 31.82 million tons in February, up nearly 22 percent from the same month last year.

The growth rate was 4.3 percentage points higher than the on-year rise in February 2005, the China Securities Journal reported yesterday.

Daily steel output hit a record 1.1365 million tons in February 2006, compared with 906,000 tons in the same month last year.

He Xiaoying, an analyst at the Price Monitoring Center of the National Development and Reform Commission, said the revival of the steel market and a price increase at the beginning of this year contributed to the increase.

On March 31, the average price of major steel products was 4,009 yuan (US$501) a ton, a rise of 5.47 percent from the beginning of this year.

The analyst expects prices to continue to climb due to surging exports and an increase in the price of hot rolled steel by China's largest steelmaker, Baosteel in Shanghai, and five other major steel producers in north China.

The beginning of a new round of negotiations over the price of imported iron ore between China and major international suppliers also boosted market confidence, He said.

Lu Qin, a researcher at the Shiji Securities Research Institute, said sagging prices last year offered a good opportunity to replace outdated manufacturing equipment and step up industry restructuring.

The task will become more difficult if prices continue to rise, he said.

He also warned of market risks in expanding output, urging producers to try to avoid another round of price fluctuations resulting from oversupply and speculation.

Despite record daily output in February, trading volume remained normal, while inventory rose sharply, he said. 

Editor: Yan