CHINA'S steel industry may post a loss this year as oversupply persists, said Xu Lejiang, chairman of Baosteel Group Corp.

Xu blamed severe structural problems in the industry, which had an annual production capacity of 660 million tons at the end of last year, 160 million tons more than 2008 output.

"Such problems will emerge sooner or later. The financial crisis made it happen earlier," Xu said.

China's big and medium-sized steel makers have posted an aggregate loss of 3.3 billion yuan (US$484 million) in the first quarter of the year, prompting the government to crack down on overproduction by ordering banks to lighten loans for producers that keep raising output.

Xu said Baosteel will pursue further consolidation and restructuring in the domestic market.