Steel sector still facing profitability problems(2)

For the first three quarters of this year, large and medium-sized steel companies realized a total profit of 11.3 billion yuan, according to the association.

During the same period last year, these companies suffered a total loss of 6 billion yuan.

Despite this, Li said it is still far from the worst period the industry had enjoyed.

According to an industrial report released by the institute last Friday, the growth rate of China's steel demand will decline from 6.3 percent this year to 3.2 percent next year.

China will use 715 million tons of steel next year, which represents a 3.2 percent year-on-year growth rate, said Li.

The steel use in many sectors including construction, manufacturing, shipbuilding and auto-making will see slower growth next year compared with previous years.

Chinese steelmakers' confidence has been returning since November, said Wang Jinhua, analyst at Mysteel - but only in the short term.

She said a warming macroeconomy will ease the contradiction between the excessive supply and slowing demand at the beginning of next year.