Zhang Guangning, who was elected chairman of the China Iron & Steel Association last month, did not mince his words when he gave his first speech.

As China's economy enters a "new normal", the steel industry faces unprecedented challenges, said Mr Zhang, a life-long steel man who started his career working at an iron and steel factory in 1971. "China's steel production has already hit a peak, or to put it another way, it has hit a turning point."

He said the industry must shift its focus from expansion to quality and efficiency, adding that it is "currently in its most difficult period, it is the most optimal time for adjustment and upgrading".

After growing at an average rate of 15 percent between 2000 and 2013, a peaking of China's steel production would be a powerful symbol of a shift in the world's second-largest economy after years of growth based on urbanization and industrialization.

The growth of the country's steel industry is also crucial for the future of some of the world's largest miners such as BHP Billiton and Rio Tinto, which supply the raw material that goes into making steel and iron ore and have aggressively expanded mine output.

Based on optimistic forecasts for continuing urbanization, many analysts had previously predicted a peak for steel production in China by 2025. Now that point could be much closer.

China produced half of the world's steel last year, at 820 million tonnes, yet exports accounted for nearly all net steel production growth, according to consultancy Wood Mackenzie.

Domestic steel consumption, on the other hand, fell 3.4 percent to 740 million tonnes, the first time in 30 years it has recorded a drop.

China's steel mills are also unlikely to be able to continue to export their way out of trouble. That avenue is now being shut off after authorities ended an export tax rebate on the steel alloy boron last month. Boron-added products accounted for almost a third of total steel exports between January and November last year, according to Wood Mackenzie.

They also face competition from Russian smelters, who have benefited from the decline in the ruble. Russian steel exports rose 25 percent in the fourth quarter of 2014 to 5.5 million tonnes.

This month, China's Ministry of Industry and Information Technology echoed Mr Zhang's comments.

"Under the 'new normal' China's iron and steel consumption has already entered into the peak zone," it said in comments published on its website.

"Overall, in 2015 it is difficult to see the situation of oversupply of steel improving," it said. "Exports will be lower, steel prices will be rangebound, it's hard to be optimistic about the profitability of steel mills, and the steel market will remain weak."

China's state-affiliated China Metallurgical Industry Planning and Research Institute estimates that steel consumption in 2020 will be 750 million tonnes, and production 850 million tonnes. By 2025 that will drop to 696 million tonnes and 800 million tonnes respectively.

China's per capita crude steel consumption is already above that of Germany, the US and India, according to Capital Economics. Yet it falls behind South Korea and Japan, which are big car producers.

China is spending only 3 per cent of its gross domestic product on steel, down from the 2004-12 average of 8 per cent, according to Citigroup. That is closer to a global long-term trend of 2 per cent.

"It may be, however, that the feared rebalance has already happened," says Heath Jansen, an analyst at Citi. "China is already close to consuming at a sustainable level."