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Bloomberg reported that China, which produces almost half the world’s steel boosted production by 3.1% last year as economic expansion spurred demand for roads and railways.

According to China’s National Bureau of Statistics said steel output increased to 716.5 million tonne in 2012. Production in December climbed 7.7% from a year earlier to 57.66 million tonne.

The bureau said that it’s the 31st annual increase in steel production and came as the world’s second largest economy expanded 7.8% in 2012 according to statistics bureau data released today. China will spend CNY 650 billion this year on railway construction more than the CNY 631 billion spent last year.

Mr Hu Yanping, Beijing based chief analyst with Custeel.com said that in an e mailed “Steel production this year may grow at a similar pace to last year. The government- led investments in infrastructure will continue playing a big role in steel demand.”

Steel reinforcement bar futures rose for a second day on expectations the government’s increased investment in railways will stoke demand for steel. Rebar for delivery in May rose 1.4% to CNY 4,002 a tonne on the Shanghai Futures Exchange. The alloy gained 2% this week the sixth weekly gain in the last seven weeks