* Steel prices edge down
* Outlook positive on capacity cuts, firm demand
SHANGHAI, Aug 24 (Reuters) - Chinese steel futures edged lower on Wednesday, but traders and analysts said the outlook remains firm amid expectations the government will make greater efforts to cut steel making capacity.
China has sent inspection teams to more regions to check on the progress of cuts to curb overcapacity and counter pollution, fuelling expectations that steel production could be interrupted and more mills be shut, analysts said.
"China has stepped up its environmental crackdown and efforts to tackle a supply glut. They are sending inspection teams to regions with steel and coal, and we understand some small mills have already been hurt," said Zhao Chaoyue, an analyst with Merchant Futures in Shenzhen.
Some mills near the eastern city of Hangzhou, which will host the G20 summit in early September, have also suspended production.
"Prices are expected to keep their upward momentum, unless the post-summer demand doesn't grow as expected. Then the gains in prices might not be sustainable," Zhao added.
China has promised to slash steel capacity by 45 million tonnes this year and cuts in the first seven months of the year amounted to 47 percent of the annual target, spurring Beijing to vow to quicken the pace. most-traded January rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 fell 0.3 percent at 2,578 yuan ($387) a tonne at 0228 GMT.
On the Dalian Commodity Exchange, iron ore DCIOcv1 stood steady at 452 yuan a tonne.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI rose by 50 cents to $61.60 a tonne on Tuesday from a day ago, according to The Steel Index.
($1 = 6.6540 Chinese yuan renminbi)