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A guangdong-BASED steelmaker has signed up to use the sales network of China's biggest steel manufacturer, Shanghai Baosteel Corp.

Fuoshan city-based Baosteel South Gaoming, which was formerly known as Gaoming Cold Rolling Plant, will help the domestic steel giant in Shanghai increase its presence in South China.

Established at the end of 2002, the Guangdong company is privately owned with annually production of 150,000 tons of cold-rolled steel strips. Most of its products are used in auto production.

Since the two parties reached a frame agreement in April, Baosteel has helped the Fuoshan plant sell 20,000 tons of cold-rolling product in the southern Zhujiang Delta Area.

"Both parties can benefit from the cooperation," said Yong Zhiqiang, an analyst with Haitong Securities Co Ltd.

Through the cooperation, Baosteel can increase its market share in southern China, where demand is strong, according to Yong.

Guangdong province consumed 25 million tons of steel last year, of which only 6 million tons were produced there.

Meanwhile, Gaoming will be able to take advantage of Baosteel's good reputation and mature sales network, said Yong.

"There are only a handful of steel-makers in China that have the capacity to produce cold-rolled steel strips," said Yong. "And Baosteel is the biggest one with the best product quality."

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