On March 10, Wang Yifang, chairman of major Chinese steel producer Hebei Iron and Steel Group, said that the four main reasons for the reorganization of the Chinese steel industry were the need to avoid redundant construction, to eliminate backward capacity, to enhance competition in the market and to achieve internal integration of resources.

Mr. Wang remarked that, while overall domestic crude steel production capacity had reached 650-700 million metric tons, only about 300 million metric tons had received approval from China's National Development and Reform Commission. Some of the overall domestic capacity consisted of redundant construction, he said, adding that this issue as well as that of elimination of backward capacity could be resolved through mergers and reorganization.

Mr. Wang went on to say that, after the establishment of Hebei Iron and Steel Group, a total of RMB 2.2 billion ($322.27 million) was saved in 2009 on the purchase of raw materials. Finally, he commented, due to integration among enterprises, advanced technology and resources could be shared, greatly improving operations.