EU Trade Commissioner Cecilia Malmstroem has urged China to scale back rampant overproduction in its steel industry that is punishing European companies through low prices, a letter seen by AFP on Friday said.

European manufacturers are reeling from a global glut in steel supply with Luxembourg based ArcelorMittal on Friday blaming China for a colossal $8 billion loss for 2015, with thousands of job cuts announced throughout the industry.

"In the wake of a worrying trend, I urge you to take all appropriate measures to curb the steel overcapacity and other causes aggravating the situation," Malmstroem wrote in her letter to Gao Hucheng, Beijing's commerce minister.

The letter, sent on January 29, also warned China that it faces new EU probes into alleged price-dumping later this month, with yet more still to come.

It notes that total steel exports from China grew by 50 percent in 2015, destabilising the global market and the EU in particular.

China accounts for half the world's crude steel production, but can no longer absorb a huge portion of it as the once booming economy cools.

Beijing on Thursday announced plans to cut steel production by as much as 150 million tonnes over the next five years, but this is far short of the 340 million tonnes that experts say the country is now overproducing every year.

The steel industry is also at the heart of a row at the World Trade Organization where China is pushing to win the coveted "market economy" status.

The status would make it far more difficult for WTO members, including the EU, to impose anti-dumping duties on China.

The EU currently has dozens of anti-dumping measures in place against China, several involving the steel industry.

An impact study is underway by the EU on the potential effects of giving China market economy status, before a decision by the end of the year.