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Is the worst over for the crumbling steel industry?

Like much of the commodity complex, the last 12 months have been brutal for the steel industry, with prices falling to 12-year lows as currency headwinds, oversupply and dwindling demand prevail, resulting in mass job cuts in the sector.

The fallout once again became clear on Friday, when the world's largest steel maker ArcelorMittal reported an annual loss of close to $8 billion in 2015, forcing the shares of the group down over 6 percent to the bottom of the pan-European STOXX 600, adding to the 60 percent losses seen in the last year.

While chief executive of the Amsterdam listed firm, Lakshmi Mittal acknowledged what a "difficult" year 2015 had been for steel and mining industries, he also suggested there was light at the end of the tunnel, as reforms in China look to be underway.

Analysts assessing the sector agree that output both inside and outside of China is showing signs of slowing and recent easing in Chinese policy further aimed at boosting the ailing construction sector in the country means 2016 could be the start of a turnaround for the industry.

"Looking ahead, although we have started to see a recovery in Chinese steel spreads from 2015 lows, 2016 will be another difficult year for our industries. It is clear that China has a challenge to restructure its steel industry for a lower growth economy but we are somewhat encouraged by recent comments concerning capacity closures," Mittal said in in a statement following the firm's earnings.

China currently makes around half of the world's steel and Mittal's comments come as the European Union's top trade official has urged Beijing to cut the overcapacity in its steel industry, according to reports this week, amid a deep crisis in the European industry.

U.K. based Tata Steel announced plans last month to cut another 1,050 jobs on top of the 1,200 jobs axed at the Indian owned group last October. Ratings agencies have also come down hard on steelmakers around the world, downgrading major firms including ArcelorMittal and U.S. Steel.

Data released at the end of January shows that global crude steel output totaled approximately 126.72 million tons in December, marking a drop of 110,000 tons from November and down 7 tons or 5 percent from December 2014, according to the World Steel Association.

December saw the lowest amount of crude steel produced in any month in 2015 and prior to 2015, every year this decade had also seen a month-on-month rise in production in December according to managing director of Commodore Research & Consultancy, Jeffrey Landsberg.

"China will continue to dominate the headlines, and rightfully so. China's equity market and financial system is in shambles, and China's economic growth is at the weakest level than seen in years. However, Chinese steel production has managed to find some resilience compared to steel production outside of China. Going forward, we expect both Chinese steel production and steel production outside of China to fall ever further this year," Landsberg said.

New easing measures directed at the construction sector in China were also announced this week, with reduction of the down payment for first-time buyers from 25 percent to 20 percent (in cities without purchase restrictions such as Beijing and Shanghai). This follows a cut in the down payment last year by 5 percentage points, in an attempt to support housing.

"Part of the problem with big overcapacity in the steel, cement and aluminium industry relates to the construction stagnation. Hence, turning construction is also key for dealing with industry overcapacity and bad loans in these sectors," said analysts at Danske Bank.

China, with the top share of production in the world, has seen output fall significantly by 5.2 percent year on year in December. Output is down by more than 80 million tonnes (annualized), since last June and mills that are seeing expanding deficit and cash flow shortages have suspended production according to analysts, helping the overall industry with supply and demand imbalances longer term.

"Since the financial crisis, global steel stocks have remained within a range band of +/-10 percent, but they fell below the lower end of the range and to a new low last week. At the current stage, we forecast profit growth for 2016, but note a downside risk in view of the economic climate. However , in our view the major companies' price to book valuation has approached the trough," UBS analyst Atsushi Yamaguchi said in a note published this week.

"By region, we are bullish on Europe, where there are moves to reduce excess supply and where protectionist moves can be seen. We are also bullish on the U.S., where prices are finding support in protectionist moves. We like India due to long term growth outlook. On the other hand, we are bearish on China and Latin America due to the weak fundamentals," he added.