China’s steel output is one of the key indicators Australian investors look at each month to assess how our biggest export market is travelling.

For much of 2016 the steel sector saw rising output, even as millions of tonnes of out dated capacity was closed.

The first two months of 2017 saw more of the same with output up 5.8% to 128.77 million tonnes, according to the National Bureau of Statistics (NBS).

(The NBS provides information for January and February together to smooth the impact of the Lunar New Year holiday, and did not give a separate monthly breakdown). January production totalled 67.2 million tonnes and was up 7.4% from a year earlier when the Lunar New Year fell in that month.

That means production last month was 61.5 million tonnes.

Steel output gained this year as the shutting of excess steel production has pushed up prices for lower-quality rebar, used mainly in construction.

As a result rebar futures on the Shanghai Futures Exchange are up 23% so far in 2017 - they were up 18.5% a week ago, so the surge goes on, forcing even the most modern steel mills to boost production of the essential building material in housing, apartment and infrastructure construction.

China plans to cuts 50 million tonnes of capacity this year after cutting perhaps 35 to 40 million tonnes last year.

China produced 808.4 million tonnes of crude steel output in 2016, up 1.2%, which was much higher than many western and Chinese analysts had forecast.

Trade data last week showed that China’s iron ore imports rose to 83.49 million tonnes in February, up 13% from a year ago, but down 7% from the 92 million tones reported for January.

Total imports for the first two months of the year rose 12.6% to 175.3 million tonnes from a year ago, the highest ever for the first two months of the year.

Analysts wonder if this rapid start to the year means there will be a slowdown in import volumes as the year progresses.

At the same time Chinese steel exports fell to a three-year low in February, as steelmakers in the world’s top producer shifted to meeting rising demand at home.

Shipments for the month were 5.75 million tonnes, the lowest since February 2014, data from the country’s Customs showed.That was down 29.1% from a year ago and down 22.5% from January.

Overall, China’s factory output rose 6.3% in January-February from the same period a year earlier, while fixed-asset investment grew 8.9%, both better than expected.

Analysts had predicted factory output would grow 6.2% in the first two months this year, picking up from December’s 6.0% as demand for manufactured goods improves at home and abroad.

Analysts had expected fixed-asset investment growth of 8.3% up from the weak 8.1% in the whole of 2016.

Growth of private investment quickened to 6.7% from 3.2% last year, according to the National Bureau of Statistics said, suggesting an improved demand private firms to invest after a sharp loss of momentum in the last few years.

Retail sales growth was well below expectations, however.

Retail sales rose 9.5% in January-February from a year earlier. Analysts had forecasted they would rise 10.6%, easing from December.

China is targeting growth of around 9% in fixed asset investment for 2017, while retail sales were expected to increase about 10%.

China has cut its economic growth target to about 6.5% this year after growing 6.7% in 2016, the slowest pace in 26 years.

Some economists speculate that March quarter growth could be around 6.7% or a bit higher, even 7%, especially with the warmer weather and sharp fall in consumer price inflation last month because of a surplus of spring vegetables. That helped push retail sales growth lower.

Elsewhere, China’s car fell in the first two months of the year, according to government data. That was due to the ending of government tax relief for buyers of small cars.

The country reported its first trade deficit since 2014 in February because of the timing of the new year holiday.