Optimism is growing despite downward pressure on China's steel industry, with experts predicting a better supply-demand balance thanks to the country's efforts to stabilize growth, new policies for managing crude steel production, and increasing demand from emerging sectors like new energy vehicles and solar power.

Fan Tiejun, the head of the China Metallurgical Industry Planning and Research Institute, said there was an increasing need for some steel products.

"For example, in shipbuilding, the transition from oil-powered to gas-powered ships and the increasing use of liquefied natural gas transport vessels demands high-resilience steel that can withstand low-temperature and deep-cold environments," he said.

"In addition, surging vehicle exports are boosting new orders for steel used in car transport ships, leading to increasing demand for products like thin-spec shipbuilding plates."

In the first half of the year, the steel industry saw surplus production amid sluggish demand, particularly due to the prolonged downturn in the real estate market. As a result, the Ministry of Industry and Information Technology, together with six other ministry-level authorities, released a plan in late August to stabilize the growth of the steel industry through measures such as promoting technological innovation to expand the use of high-tech steel products in emerging sectors to boost demand.

Experts said the implementation of such policies, incentives for the real estate market, and the traditional September-October peak season for sales would help drive up demand, especially in the special steel sector, and further stabilize prices, contributing to the industry's sustainable development.

Special steels are those with physical and chemical properties that provide higher strength and toughness than ordinary steels, and those that serve specific purposes in areas such as aerospace engineering and shipbuilding.

According to commodity price tracker Mysteel, in the first half of the year, 23 of the 36 A-share-listed steel companies recorded profits, with seven seeing year-on-year growth. Five of those seven were special steel manufacturers.

Shenzhen-listed Jiangsu Changbao Steel Tube, a manufacturer of high-tech-embedded steel tubes used for oil exploration and new energy vehicles, topped the profit-growth list with a 150.6 percent surge to 450 million yuan ($62.35 million).The company said in its half-year financial report that a primary reason behind the growth was the development of new steel products in emerging sectors like new energy vehicles.

Experts said the development of high-end equipment manufacturing, automotive, green energy, aerospace, and other emerging industries in China would continue to drive up demand for special steels, and the sector still had ample room for optimization and improvement in terms of product structure and market applications.

Traditional steel companies have also stepped up efforts to seek growth opportunities by providing steel products for emerging sectors. Angang Steel, for example, has made breakthroughs in key technologies and products, including its 690 megapascal low-temperature steel for carbon dioxide transport ships.

"In recent years, Angang has continuously enhanced its technological innovation capabilities and increased investment in research and development to stand above the industry average," said Liu Fengqiang, general manager of Angang's technology development department.

According to the China Iron and Steel Association, as policy incentives to boost infrastructure construction, consumption and the real estate sector take effect, the steel market's prospects will improve, and overall steel demand will find a new balance after a period of output reduction.

Fan also called for further efforts to set standards in the steel sector, which he said was a crucial lever for promoting the sector's high-quality development and a vital step for China to evolve from a big steel producer to a competitive steel powerhouse.