China’s steel output reached a record high in March, as mills ramped up output in response to higher prices.

Daily production of crude steel rose to 1.986 million tonnes, a 3.1% increase from February, and 6.4% higher year-on-year, according to the National Bureau of Statistics.

The figures, much higher than earlier estimates from the China Iron & Steel Assn, suggest an annualised output of 725 million tonnes.

“Steel mills, especially long product mills, were encouraged to raise production in March with spot steel prices edging higher,” a trader in Shanghai said.

The higher output raises the risk that China’s mills will bring production back on line too quickly.

Production was up 10.3% month-on-month, or 3.9% higher year-on-year, to 61.58 million tonnes, which equates to about 739 million tpy.

Cisa published separate figures for steel production which analysts say consistently underestimate output from smaller mills.

Cisa’s daily figure for March was 1.904 million, which over the full month creates a gap of 2.5 million tonnes compared with the NBS statistics.

Production for the first three months of 2012 also rose 2.5% year-on-year to 174.2 million tonnes, NBS said.