China's Baosteel to cut production - sources

By Lucy Hornby and Alfred Cang

SHANGHAI/BEIJING, Oct 11 (Reuters) - China's largest steel maker, Baosteel Group, will cut steel production over the next three months in the face of a weakening outlook for demand, sources close to the company said on Saturday.

The sources told Reuters that Baosteel, parent of Baoshan Iron & Steel Co (600019.SS: Quote, Profile, Research, Stock Buzz), would overhaul one of its biggest blast furnaces and expected this to reduce its production by about 1 million tonnes.

Baosteel had previously said it expected its crude steel output in 2008 to rise nearly 5 percent to 30 million tonnes.

A spokesman for the group said he had not received any information from management about a production cut.

Earlier in the week, Chinese industry officials said four other big steel makers -- Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel -- had agreed to cut production by up to 20 percent, perhaps until the end of this year, in an effort to support falling steel prices. (Writing by Andrew Torchia, editing by Mike Peacock)