According to a few representatives of Hebei Metallurgical Industry Association that further output cutback is inevitable for China's steel industry due to the massive oversupply and the weak demand both at home and abroad.

They said it's also taking time for the stimulus package to translate into real demand.

And market insiders noted that the biggest risk confronting China's steel sector is whether the raw materials purchasing costs can match with the steel sales prices. Insiders said global steel prices are unlikely to move up sharply this year and even if it looks up, it will be pressed down by the swift capacity expansion.

China produced 45.1 million tonnes of crude steel in March or translated into daily output of 1.45 million tonnes up 11,200 tonnes from the month before. And the oversupply picture can only be eased until the figure drops to 1.25 million tonnes.