With China producing 800 million tons of steel a year - four times more than any other country has ever produced—the sector is in severe overcapacity of some 400 million tons as construction slows in the world's second largest economy.
Apparent steel consumption in China fell 5.7 percent to 591 million tons in the first 10 months of the year, according to the China Iron & Steel Association, the nation's leading industry group.
Global chief investment officer of equities at HSBC global asset management, Bill Maldonado, said while the manufacturing and industrial sector in China has been slowing severely, he also sees strong growth in the consumer side of the economy.
"We would argue that the economy is already rebalancing away from the infrastructure led, very heavy industrial manufacturing side of the economy. Much more to a consumer led, service side of the economy," Maldonado said in an investment update call with journalists and clients.
"We see a number of signs that the Chinese economy is doing better than many commentators might suggest, particularly in the consumer and service side of the economy. Really leading the charge is e-commerce in China. This gives us a great deal of comfort and creates opportunists in terms of stock picking in many of our strategies and many of our funds," he said.