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China's crude steel output retreated slightly in April to 44.68 million tonnes from the previous month's record volume, constrained by tight supplies of coke and other key inputs, analysts said.
Steel prices in China, the world's largest producer of the metal, are expected to rise further, with additional upward pressure likely from reconstruction operations in southwest China's Sichuan Province after Monday's devastating earthquake.
Crude steel output in April, while down a marginal 0.4 per cent from March's all-time high of 44.87 million tonnes, was up 10 per cent from a year earlier.
Analysts said they were nevertheless disappointed by the figure, which they had expected could hit another peak.
"It seems that the steel mills were not able to ease bottlenecks in raw materials sourcing. I think they were willing to produce more with the high prices, but they might have faced problems purchasing more materials such as coke," said Macquarie analyst Henry Liu.
"That is not a good indicator, because the second quarter is seen as a peak production season and it is believed that some steel mills have been moving their production ahead of schedule before the Beijing Olympics," he said.
Production of coke rose 2 per cent month-on-month to 29.62 million tonnes in April, or an increase of 12 per cent from the same month last year.
China's coke production is expected to rise 7 per cent this year, riding steady growth in the steel industry, the China Coking Industry Association has said.
Coke prices have been climbing due to tight supplies of coking coal, the chief raw material input, as the steel mills' strong appetite exceeds limited mining resources.
The price of coking coal, which accounts for 90 per cent of the production cost for coke, has about doubled since late last year on the international market.
Steel products, especially bar, rod and section steel used for construction, will be badly needed in Sichuan Province, where buildings and infrastructure such as roads and bridges were seriously damaged by the magnitude 7.9 earthquake.
"Demand for rebuilding in Sichuan Province will restrain domestic supplies, we can say that," Macquarie's Liu said.
Steel prices have been soaring in China due to rising raw material and labour costs as well as brisk demand, especially for products used in construction as the country spends heavily on fixed-asset investments.
Shares in Shanghai-listed Chongqing Iron and Steel , which is based near Sichuan, rose their 10 per cent daily limit on Wednesday on prospects for strong demand in the region, while its Hong Kong-listed shares soared more than 18 per cent.
The following table shows China's output figures for crude steel and steel products as well as coal and coke in April and in the first four months of 2008, as issued by the National Bureau of Statistics.