China's steel output rose in July to a fourth straight monthly record as mills ran full tilt to cash in on strong profit margins, despite anti-smog measures imposed by local governments.

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Mills in China, the world's top steel producer, churned out 81.24 million tons of crude steel last month, up 1.3 percent from June and 7.2 percent from the same month last year, data from the National Bureau of Statistics showed on Tuesday.

"The reason we didn't see declines in steel output amid the environmental crackdown is that steel mills have improved their production efficiency by using higher grades of iron ore and adding more scrap steel to churn out more products," said Wang Yilin, an analyst at Sinosteel Futures.

Year-to-date output to end-July grew 6.3 percent compared with the previous year to 532.85 million tons.

Profit margins at Chinese steel mills touched around 1,100 yuan ($159.59) a ton, near the record levels seen in December 2017 , according to analysts from Huatai Futures.

The margins are supported by strong demand from downstream users and ongoing supply-side reform, as well as environmental measures that have helped to eliminate low-cost producers from the market, the Huatai futures analysts said.

Sinosteel's Wang said, though, that space for mills to ramp up output is limited as the crackdown on pollution looks set to intensify, with industrial plants around Beijing expected to adopt more stringent production curbs.