According to Platts, output rose on a rally in prices prompted by a crackdown on induction furnace operators. As the furnaces were taken off-line, other producers, especially those making long products, stepped in to replace the lost production, an unidentified trader told Platts. 

Beijing last week warned its steel mill operators that they should prepare for a vigorous attempt to pare excess capacity this year. 

"Although capacity reduction targets were achieved early last year, the overcapacity problem in China's steel sector has not fundamentally been improved," said Xia Nong, supervisor at the industry department of the National Development and Reform Commission, according to the Reuters news service. 

Reuters said Xia, who spoke during a gathering of government officials and executives last week, warned that 2017 would be a "year of attack" on the country’s excess steel capacity.