China's top economic planner said Thursday the government will soon implement large-scale policies to deal with steel overcapacity. National Development and Reform Commission spokesman Zhao Chenxin said at a news conference that recent spikes in domestic steel prices aren't sustainable.

The spokesman said that's because the increases are being driven largely by a seasonal pick-up in fixed-asset investments and speculation in the steel futures market.

Zhao says the surging steel prices will ease overcapacity a bit in the short term but the impact will be limited.

"According to the China Iron and Steel Industry Association, until the end of April, the iron and steel price index has risen to 84.66. That's 11.47 higher than in the same period last year," said Zhao Chenxin.

"Despite the surging steel prices, there is no overturn of supply and demand in the market. China still faces a severe overcapacity issue. The State Council announced earlier this year that crude steel production capacity will be slashed by 100 to 150 million tons over the next five years. Governments at all levels are making due measures to implement that goal."