(Yicai Global) March 30 -- China Baowu Steel Group, the world's top steel producer and biggest iron ore buyer, plans to set up a joint venture to pool the bargaining  power of its subsidiaries, giving it greater leverage in negotiations over raw material prices.

As a single platform sharing raw materials and resources across affiliates, the JV will help the state-owned group guarantee supplies, cut costs and have a stronger say in pricing, Chongqing Iron and Steel, Baowu's partner in the new venture, said yesterday.

With a registered capital of CNY500 million (USD70.4 million), the JV will focus on the import, export and domestic trading of bulk raw materials and fuels and other kinds of commodities and technologies, the statement said. It will also handle corresponding industrial investment, third-party logistics and e-commerce services.

Shanghai-based Baowu Steel produced 95.2 million tons of crude steel last year, overtaking Luxembourg's ArcelorMittal to become the world's biggest steel manufacturer by output, it said earlier this year.

Baowu will have a 10 percent stake in the new JV, Chongqing Iron will have 8 percent, while the rest will be held by four of Baowu Steel's subsidiaries. Baoshan Iron and Steel and Magang Holding will own a 49 percent and 17 percent stake respectively. SGIS Songshan and Echeng Iron and Steel will each have an 8 percent share.

Other listed units of the group have yet to comment on the proposal.

Editor: Kim Taylor