China is working on policies to punish domestic steel companies that sell products below cost, in a bid to better regulate the market and improve the industry's current lackluster situation, a Beijing-based bulk commodities consultancy reported on Monday.

"It's a difficult time for the whole steel industry, which is being hit by high costs and low profits," said Zhu Jimin, vice-president of the China Iron and Steel Association. "During this period, some companies disrupted the market order by selling products at unreasonable low prices, which should be punished."

He said the industry will publish a black list of these companies on a regular basis. However, industrial analysts said the effect of black list will be very limited and that the industry has to go through the hard times by engaging in full competition.

"In my opinion, it's pure competitive behavior to sell products at a lower price in order to de-stock," said an industry insider, who didn't want to be named.