The combined profits of China's major steelmakers crashed by more than 98 percent in 2012 as growth in the economy of the world's largest steel producer slowed, an industry group said.

After-tax profits of more than 80 steelmakers reached around 1.58 billion yuan ($251 million) last year, the China Iron and Steel Association said in a statement on its website on Thursday.

It attributed the fall to China's economic downtrend, which cut demand and caused prices to drop.

China's economy -- the world's second largest -- grew at its slowest pace in 13 years in 2012, expanding an annual 7.8 percent in the face of weakness at home and in key overseas markets.

Industry officials say Chinese steel producers failed to heed the signals as growth faltered and did not immediately address overcapacity, continuing to pump out steel which caused a major excess of supply and falling prices.

"In 2012, under the influence of the global economic slowdown, China's economic growth declined, some industries' steel use had negative growth, market demand shrank and steel prices fell sharply," the association said.

"The steel industry experienced a phase of serious difficulties."

China's crude steel production rose 3.1 percent in 2012 to 716.54 million tonnes, the association said in the statement.

An international industry group, the World Steel Association, estimates China accounted for 46.3 percent of world crude steel production last year, up from 45.4 percent in 2011.