It is reported that market forces are likely to achieve consolidation in China's booming steel sector, which Chinese authorities could not do using force.

Expected price hikes for iron ore are putting the squeeze on smaller steel producers, which could see China's major producers snap up weaker players as they shift to growth through acquisitions rather than expansion.

A strategist at a state owned steel trader said "Independent small steelmakers may have to quit the market if iron ore prices surge next year, as I expect steel prices to fall in the first half of next year following a slowdown in fixed assets investment."

Mr Xu Lejiang chairman of Baosteel Group recently said that “The three big international mining companies have 70% to 75% control of iron ore supplies, while on the downstream the six biggest auto firms control 60% of their industry worldwide. Steel companies are stuck between them, and our control ratio is not even 30%, so we need scale and consolidation."