China Knowledge cited Mr Xu Lejiang president of Baosteel Group as saying that China's demand in steel products for the past several months this year has dropped sharply fuelled by mainland economic slowdown and squeezed export.

Mr Xu during an industrial meeting said that China's steel output is expected to decrease to 480 million tonnes this year because of the weakening demand in the domestic market and the declining prices of steel products that has forced steelmakers to cut their output.

He said that mergers & acquisition are the strategic option for the industry, which will enhance the bargaining power of domestic iron and steel enterprises in both the upstream and downstream sectors.