China's iron and steel industry is going through a difficult time as the price of domestic steel falls near to what it had been 18 years ago.

On Thursday, the news website Caijing.com.cn said enterprises that can't compete successfully must withdraw from the market to help the industry out of its plight.

For July, China's iron and steel industry reported a loss of 1.9 billion yuan ($299 million), an amount up by 1.7 billion yuan from June. For every ton of its steel, the industry made a profit of 1.68 yuan on average from January to July, which was only about a seventieth of what its profits had been in the same period last year.

Steel prices have hit bottom and overcapacity is still one of the chief causes of the industry's difficulties, said Wang Xiaoqi, vice-president of China Iron and Steel Association.

The first half of the year saw the amount of iron and steel consumed decrease by 12 million tons.

Despite the sluggish demand for the metal, the Chinese iron and steel industry has not slowed its production. In the middle of August, it continued to produce 1.93 million tons a day, close to its highest rate of output in the past, which was 2 million tons a day.

Wang said consistent and detailed policies are needed to ensure the industry is regulated strictly and to phase out enterprises that cannot compete successfully.

Many iron and steel companies that are listed on stock exchanges reported great losses in the first half of the year. Seventeen such companies reported a net loss of 1.12 billion yuan for that period. In the same period last year, they had enjoyed a net profit of 4.64 billion yuan.