Shanghai to boost its M&A market Related readings:  China steel firm profits soar 21% in Oct - CISA POSCO to build galvanised steel plant in China

China's 77 large- and medium-sized steel mills made a total profit of more than 7 billion yuan in October, the highest monthly profit in the recent months, according to statistics released by the China Iron & Steel Association's website, Securities Daily reported Friday.

The surge in the profits was spurred by the decline in agreed iron ore price and increase in steel prices, the report said.

But it is still too early for China's steel industry to be optimistic. Analysts said the agreed seasonal iron ore price will climb at the beginning of next year.

Although energy saving and reducing emissions has helped eliminate backward production capacity, the steel industry still faces high capacity pressure in the short term. The profit rate of steel businesses will remain at a comparatively low point for a while, the report said.