A worker examines coiled steel rods to be shipped abroad at the Port of Rizhao in Rizhao, east Chinas Shandong province, Nov 11, 2013.

The growth rate decline will also be seen in the auto manufacturing industry. According to the institute's estimate, China will use 46.5 million tons of steel in the sector this year, up 11.2 percent year-on-year, while demand from the sector in 2014 will be about 50.2 million tons, up 8 percent on an annual basis.

In the appliance manufacturing industry, the steel usage's growth rate will fall from 8.7 percent in 2013 to 5 percent in 2014.

Steel use by railway construction companies will be 5.2 million tons in 2014, up 8.3 percent year-on-year, but the figure is 3.3 percentage points less than 2013's growth rate.

"China's steel demand increase will continue to slow down for sure," said Xu Xiangchun, information director of Mysteel.com, a steel industry consultancy firm.

He said the country's urbanization drive will support China's economy in the following years, but steel demand during the process will become stable rather than see dramatic growth.

Li also warned of risks related to the overcapacity problem in the steel industry, saying that the country should not add any new steel production capacity.

"The excessive steel capacity needs to be reduced with strict measures," he said.

China will export about 60 million tons of steel products this year, 5 million tons more than last year, Li added.