The support package for China's steel sector unveiled Wednesday by the State Council will help domestic steel enterprises to get through the most difficult time and solve the long-existing problems in the industry, say many analysts.

According to analysts, the support package will help relief the industry's overcapacity, promote technological innovation in steel plants, accelerate industry restructuring, improve standards for building steels, speed up the introduction of steel futures and further adjust import and export duties for steel products.

Some analysts note that the actual effect of the support package depends on how local governments will implement the policies under the package.

According to analyst Zhou Tao with Guojin Securities, the government had better provide financial support for eliminating backward production capacities, which is crucial to invigoration of Chinese steel industry. Some analysts keep cautious optimism and are not sure about the actual effects of the support package.

On Wednesday, China's State Council unveiled the long-awaited support package for the auto and steel sectors to boost the two "pillar industries." The plan requires accelerated upgrading of the steel sector, transforming "big" industry competitors into "strong" international players.

The government urges the industry to eliminate outdated technology, and not to establish new projects that merely add to steel output.

Under the plan, the government will strive to increase domestic demand for steel and adopt a more flexible tax rebate policy to keep international markets.

In addition, special funds will be allocated from the central budget to promote technological advancement of the sector, readjustment of products mix and improvements of product quality, according to the plan.