Reuters reported global crude steel production rose at an annual 2.2% rate in May as output in China hit new record levels and North American and European mills cranked up production, industry data showed, pressuring prices the world over.

Data from the World Steel Association showed that global crude steel output hit 141 million tonnes in May, nearing the record seen in March. The increase was driven by an annual 2.6% growth in China's output to 70.4 million tonne.

Global steel prices are at their lowest levels since August and not far off the lowest in three and a half years reached last June. The price falls have come despite an increase in demand in Western economies.

Mr Jeremy Platts analyst of MEPS said that "Growth in steel output is exceeding growth in demand and is adding to the global surplus. Steel prices are going to fall on a YoY basis. Raw material costs like iron ore are coming down, but that's not the whole story; the excess supply is a pressure. China's exports are soaring."

According to China's General Administration of Customs, Chinese exports of steel, including stainless, hit 8.07 million tonnes in May, the highest ever level and an annual increase of 41.5% in the year to date.

However, steel production in North China's Hebei Province fell 3% in May from a year ago compared to a 2.6% increase nationwide, with the top steel making province bearing the brunt of a campaign to shut down polluting industrial capacity.

According to official air quality data, Hebei was home to seven of China's 10 smoggiest cities in 2013 and has been under heavy pressure to clean up its economy and ease its dependence on polluting industries like steel and cement.

According to data from the National Bureau of Statistics, Hebei produced 16.36 million tonnes of steel in May, up 1.1% compared to April, but its share of the total fell to 23.2% from 23.5% in the previous month. Over the first five months of the year, Hebei produced 82.95 million tonnes of steel, 24.2% of the total of 2013.

The pressure on steel makers' margins is being mitigated, however, by a 32% fall in iron ore prices this year, outpacing the fall in steel prices.

The World Steel Association data showed that output in Europe, the second largest steel-producing region after China, grew by 2.7% to 15.04 million tonnes, while output in North America grew 3.3% to 10.22 million tonnes.