Major steel companies will achieve profits of 20 billion yuan ($3.25 billion) for the year, more than a tenfold increase on last year, even though the industry faces problems, including overcapacity and rising costs, a leading industry figure said.

For the first eight months of this year, large and medium-sized steel companies, which account for more than 80 percent of the country's total output, realized total profits of about 8 billion yuan, Wang Xiaoqi, vice-chairman of the China Iron Ore and Steel Association said during the China International Steel and Raw Materials Conference in Qingdao on Wednesday.

Whole-year profits for major steel companies in 2012 were only 1.58 billion yuan, according to data from the association.

Even though industrial profits this year will be about 12 times more than last year, it mainly comes from the companies' investment sector.

"Since the beginning of the year, the price of steel products has been declining. However, prices started to rise in July, which has resulted in profits for the companies," he said.

According to data from the association, domestic future prices of deformed steel bars, a key product, rose by 11.4 percent between early June and Aug 20.

China's crude steel output for the first seven months totaled 456 million metric tons, an increase of 7.1 percent year-on-year. The average daily output reached 2.15 million tons.

China's whole year crude steel output will reach 785 million tons based on present production.

The steel inventory of major companies reached a historic high in March with about 16 million tons. It gradually declined to about 12 million tons in August as demand increased, according to Wang.

He said the figure was based on investigation of the major companies and the total inventory for all domestic steel companies will be about 24 million tons by August.