The world's largest steel producer churned out 83.24 million tonnes of the metal last month, down 4.1% from July and well down on output of 94.85 million tonnes in August 2020, data from the National Bureau of Statistics (NBS) showed.

That was the lowest monthly output since March 2020, not accounting for January and February data which the NBS combines.

Average daily output of crude steel stood at 2.69 million tonnes in August, down from 2.8 million tonnes in July, according to Reuters calculations based on the NBS data.

In the first eight months of the year, China produced 733.02 million tonnes of crude steel, up 5.3% from the January-August period in 2020, according to the statistics bureau.

China's resolution to reduce carbon emissions and pollutants from the ferrous sector have capped steel production since late June, but the efforts have also supported steel prices on supply concerns as September and October are normally peak times for steel consumption in construction activities.

Capacity utilisation rates of blast furnaces at 163 mills across the country ran at below 76% in August, falling sharply from an average rate of 86.7% over the same period a year earlier, according to Mysteel consultancy.

The country's top listed steel producer Baoshan Iron & Steel Co Ltd had reduced its steel products exports in response to the government's appeal that steelmakers and traders ensure domestic supplies this year.

Prices for construction-used steel rebar futures and hot rolled coils used in the manufacturing sector had gained 22% and 30%, respectively, so far this year to the end of August.

(Reporting by Min Zhang and Shivani Singh; Editing by Richard Pullin and Ana Nicolaci da Costa)

By Min Zhang and Shivani Singh