A number of regional steel makers in China are regrouping themselves in a bid to improve their market competitiveness, China Securities Journal reported.

The regrouping began in the second half of this year when Tonghua Steel and Iron Group Co., the biggest State-owned firm in northeast China's Jilin Province, Jilin Ferroalloy Co. and the private Jianlong Steel and Iron Co. merged into a single entity named New Tonggang steel Group on November 28.

With a registered capital of 4.2 billion yuan (US$519.8 million), the new group plans to increase its capacity of steel making to 10 million tons and ferroalloy to 2 million tons in the coming few years, according to the report.

Two steel makers in northeast China's Liaoning Province, Anshan Steel and Iron Company and Benxi Steel and Iron Co., joined hands in August to set up Anben Steel Group Co, whose annual steel-making capacity totals 20 million tons and will be raised to 30 million tons by 2010.

In north China's Hebei Province, three local steel makers, including Tangshan-based steel plant, were incorporated into New Tanggang Steel Co, whose combined steel output last year totaled 13.12 million tons.

Luo Bingsheng, executive deputy president of the China Iron and Steel Association, said China encourages local steel makers to get bigger and stronger through incorporation.

Major steel makers in China are controlled by central and provincial governments, but overseas investors are beginning to invest in medium- and small-sized steel plants.

Mittal Steel Company, the world's No.1 steel maker, announced earlier this year that it has completed the acquisition of 36.67 percent of China's Hunan Valin Steel Tube and Wire.

Mittal Steel paid 338 million dollars for the stake in one of China's leading steel makers.

China, the world's No. 1 steel maker and consumer, will limit its annual steel output to the maximum of 450 million tons during the next five years, sources with the China Iron and Steel Association said.

Currently, China's steel output capacity stands at 500 million tons, far exceeding the domestic demand.

(Xinhua News Agency December 7, 2005)