BEIJING, Jan 19 (Reuters) - China's banks have been urged to pay closer attention to the credit risks of local steel mills, which are struggling with soaring stockpiles and a possible supply glut, the official China Securities Journal reported.

The newspaper said regulators issued a notice on January 6 urging banks to carry out thorough investigations into the health of steel mills before offering any loans.
According to figures from industry consultancy Mysteel, China's steel product inventories at major cities stood at 12.456 million tonnes by January 14, 100.8 percent higher than the same period last year and 7.6 percent higher than the previous month.
Traders and mills have been building up their stockpiles in anticipation of a surge in prices over the rest of the year.

But optimism in the sector took a hit last week when the central bank decided to raise banks' reserve requirement ratios by 50 basis points, which is expected to have an impact on China's property market and sap steel demand.