China produced less steel in the first quarter of the year due to shrinking demand amid slowing economy and government's effort to overhaul the saturated sector. [Photo provided to China Daily]

BEIJING - China produced less steel in the first quarter of the year due to shrinking demand amid slowing economy and government's effort to overhaul the saturated sector.

The output of crude steel slipped 1.7 percent from a year ago to 200.1 million tons in the Jan-March period, accounting slightly more than half of the world's total, data released Wednesday by the China Iron and Steel Association (CISA) said.

Meanwhile, steel prices continued to drop and inventories of steel mills kept piling high, the data showed.

The CISA said many plants were still struggling to keep floated as the market remained sluggish under the economic downturn.

The decline was also attributable to the government's determined resolution to curb overcapacity in the sector.

The Ministry of Industry and Information Technology announced in March the government will accelerate the overhaul of its overly-invested iron and steel sector to bring it back to a "basically balanced level" by 2017.