Steel prices in China will see some upside going forward due to an expected slowdown in growth of domestic capacity as well as quake-related rebuilding demand, Fitch Ratings said.

'There are indications that China's capacity expansion is slowing given delays in getting permits, coupled with efforts to shutter uneconomical capacity,' Fitch said in a note.

It added that severe snowstorms earlier this year disrupted steam coal shipments, which led to power shortages and calls to curtail manufacturing, including steel production, which could help prevent domestic oversupply and support product prices.

It also said that reconstruction orders following the May earthquake will support steel prices.