China's steel industry gained a profit of 18.33 billion yuan ($2.91 million) in the first quarter, a 67.8 percent drop compared with the same period last year, according to a statement from the National Development and Reform Commission on Thursday.

The ferrous metal industry realized a profit of 17.03 billion yuan in the first quarter, a slight growth of about 1.2 percent compared with the same period, while the steel melting and processing industry faced a net deficit of 490 million yuan.

Since last October, China's steel industry has been facing difficulties.

The China Steel and Iron Association said the major large- and medium-scale steel mills had a loss of more than 100 million yuan in the first quarter because of shrinking demand, falling prices, rising raw material costs and the slowing down of the economy. It was the largest loss in the past 12 years.

Industrial analysts at Lange Steel Information Research Center said the steel industry will not get warm any time soon because of the serious oversupply in factories.

The price of hot rolled steel in China was 4,168 yuan ($655) per metric ton on Wednesday, down 9 yuan from last week.

The State Council recently announced a series of policies to stimulate the economy by accelerating the approval of many important projects, including railway, energy and infrastructure construction.