SYDNEY - Australian mining giant BHP has recorded its largest quarterly output of iron ore ever from the company's Western Australian (WA) operations, due to strong demand from Chinese steel mills.

BHP said in an end of financial year report on Tuesday that it had shipped 76 million tonnes of the steelmaking commodity from its operations in the WA Pilbara region during the three months to June 30, up from 71 million tonnes the year before.

While steel production in much of the world had contracted significantly due to COVID-19, the report said, Chinese domestic industrial activity was improving and had the potential to offset weaker demand elsewhere.

The report noted that China was ahead of the rest of the world in moving from, "intensive viral suppression to economic recovery."

"We continue to believe that if China can avoid a second wave of COVID-19, steel and pig iron production can both rise in the 2020 calendar year versus the prior year," the report stated.

In contrast, demand for BHP's oil and gas product fell 10 percent to 109 million barrels of oil equivalent as a result of COVID-19.

Last week, rival miner Rio Tinto revealed it had also recorded a lift in iron ore shipments from its Pilbarra operations, similarly citing China as the main driver of global demand.