SEOUL, Oct 25 (Reuters) - South Korean steelmaker POSCO (005490.KS) reported its highest-ever quarterly operating profit in the third quarter, as a surge in steel prices was fanned by reduced supply from China.

POSCO, the world's sixth-largest steelmaker, said on Monday its consolidated operating profit for the July-September quarter was 3.1 trillion won ($2.63 billion), matching its forecast earlier this month.

It reported 667 billion won in operating profit a year earlier.

Revenue rose 45% to 20.6 trillion won in the third quarter.

On Monday, POSCO revised up its consolidated 2021 revenue target to 74.1 trillion won from 66.4 trillion won previously, as it expected tight steel supply to continue for the rest of the year.

China, the world's top steel producer, saw September daily crude steel output fall to its lowest since December 2018, due to environmental curbs to reduce smog and carbon emissions as well as a power crunch in many areas.

POSCO shares rose 1.3% after the earnings results were published, while the wider market (.KS11) was down 0.1%.