BEIJING (Reuters) - China’s iron ore imports rebounded in July, customs data showed on Wednesday, buoyed by record steel production and strong margins as official measures to cut pollution curb the output of cheaper products from small mills.

FILE PHOTO: Workers walk past an iron ore storage site at Yingkou Port, one of China's biggest ports for the import of the commodity, Liaoning province, June 10, 2010. REUTERS/Sheng Li

The world’s top iron ore importer bought 89.96 million tonnes of the steel making raw material last month, according to the General Administration of Customs, up from June’s 83.24 million tonnes and 88.66 million tonnes in July last year.

Shipments for the first seven months of this year fell 0.7 percent from a year ago to 620.65 million tonnes, the customs data showed.

China, the world’s leading steelmaker, churned out a record 80.2 million tonnes of crude steel last month, just shy of the 81.6 million tonnes the United States produced in whole of 2017.

Profit margins at Chinese steel mills have reached near- record levels around 1,100 yuan ($161.24) a ton, supported by ongoing capacity cutting and environmental crackdowns.

Demand from traders for iron ore was still strong, especially given an escalating U.S.-China trade row and a weakening yuan, said Cao Ying, chief steel analyst at SDIC Essence Futures.

“Uncertainties from the external trade situation, especially changes in currency exchange rates amid the trade row between Beijing and Washington, may stimulate demand to replenish supplies before the yuan devalues further,” she said, adding that traders had been scrambling to buy imported ore in recent days.

The yuan touched a 14-month high of 6.89 against the U.S. dollar CNY= on Monday after China proposed new tariffs on $60 billion of imported goods from the United States.

On Tuesday, Washington said it will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug.23, heating up the trade spat between the world’s top two economies.

However, stricter environmental controls have cut restocking demand by mills for iron ore fines, which need to go through a high-polluting sintering process before being used in iron-making blast furnaces.

Weekly utilization rates at steel mills’ blast furnaces across the country slipped last week to the lowest since mid-April, according to the Mysteel consultancy.

Several steelmaking cities in Hebei province have also enacted summer production restrictions to curb pollution, while Beijing last week unveiled a draft plan for 28 northern cities in winter, asking steel mills to cut capacity by as much as 50 percent.

Imports of steel products fell 1.3 percent to 1.03 million tonnes, customs data showed. The country bought 7.7 million tonnes of steel products in the first seven months of 2018, which was down 1.1 percent from a year ago.