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* Jan-Feb steel output at 128.77 mln T
* March output may rise further
* Steel producers making strong profits after govt orders cuts
By Ruby Lian and Josephine Mason
SHANGHAI, March 14 (Reuters) - China's steel output in the first two months of 2017 rose 5.8 percent from the same period a year ago, data showed on Tuesday, as mills boosted production amid higher prices and firm demand as Beijing moves to cut excess capacity in the sector.
China's steel output for January and February combined rose to 128.77 million tonnes, the National Bureau of Statistics (NBS) said. The NBS provided information for January and February together to smooth the impact of the Lunar New Year holiday, and did not give a separate monthly breakdown.
Steel output gained this year as China's policy to shut excess steel production has pushed up prices for lower-quality rebar, used mainly in construction. Rebar futures on the Shanghai Futures Exchange have climbed 23 percent since the beginning of this year.
Steel mills are currently making a profit of up to 800 yuan ($115.74) a tonne by producing rebar, the strongest level since 2011, analysts said.
"Production in the first two months of last year was low as soft prices discouraged mills to produce. But high profits has driven mills to churn out more metal," said Qiu Yuecheng, an analyst with the steel trading platform Xiben New Line E-Commerce in Shanghai.
China, the world's top steel producer, started the policy to shut output last year and for 2017 plans to cuts 50 million tonnes of capacity as the world's No. 2 economy deepens efforts to tackle pollution and curb excess supply.
China produced 808.4 million tonnes of crude steel output in 2016, up 1.2 percent.
$1 = 6.9121 Chinese yuan renminbi Reporting by Ruby Lian and Josephine Mason; Editing by Christian Schmollinger