China, which is also the top consumer of the alloy, produced 64.7 million tons of steel last month, up 4.6 percent from a year earlier, the World Steel Association said.

Chinese authorities have helped steel plants, many of which are state-owned, to maintain strong growth in recent years in an effort to keep employment high and avoid social unrest even amid overproduction, softening demand growth and weaker prices.

"It’s hard to say when the Chinese will reduce their output substantially. There have been a couple of bankruptcies so far in China - it would almost be a positive in the long run to see some more," Meps steel analyst Jeremy Platt said.

Steel output in China for the first 10 days of July fell 4.5 percent from the previous 10 days, data from a Chinese industry body showed last week. The decrease is partially seasonal and not enough to fight oversupply in the region, analysts said.

Japan, another large steel supplier, posted a 0.9 percent output increase in June to 9.3 million tons, as a weaker yen helped exports, while South Korean output shrank by 5.4 percent to 5.5 million tons, the World Steel Association said.

Asia as a whole was the only region to log a significant swelling in steel output, up 3.5 percent in June, while other areas tried to balance output against weaker demand.

Global steel output for the first half of 2013 was just below 790 million tons, up 2 percent from the same period last year, with a 5.5 percent production increase in Asia more than offsetting negative growth in the rest of the world.

Production in the European Union, where steel demand has been hard hit by austerity policies, shrank 3.5 percent to 14.2 million tons in June. The region’s top producers, Germany and Italy, cut output by 2.2 percent and 10.3 percent respectively.

The United States posted a 0.2 percent decline to 7.2 million tons. A recent trade dispute is expected to boost domestic prices for some steel products and could support production in the next few months.

Although seasonally the first two quarters are generally the strongest for the U.S. steel market, prices have only recently started to move higher.

"So far this year the US steel market has been really poor even though the economic situation has been a bit brighter," Platt said.

"If we do see some sort of sustained increase in sentiment that should help production but there is always the risk of increasing production more than required, which would once again put negative pressure on prices." Another major production area, the Commonwealth of Independent States, boosted production only slightly in June, up 0.8 percent at 9.3 million tons.