China's most modern steel company, Baosteel, said Saturday it has signed an agreement on full cooperation with the First Automobile Works Group (FAW), the biggest auto maker of China.

As a part of the deal, the two partners and Japan's Sumitomo Corp. will jointly invest 176 million yuan (US$21 million) to establish a joint venture for steel processing and product delivery to meet the needs of FAW for steel sheet.

According to company sources, Baosteel, or Shanghai Baosteel Group Company, and FAW will cooperate in steel supply, steel technological development for the use of steel, steel processing, logistics and business management, and car sales.

The two partners will also seek new models of cooperation to meet the increasingly fierce competition brought about by economic globalization and promote the development China's steel and auto industries.

FAW has long been a client of quality steel products of Baosteel, which took the fifth place in the world last year with an annual production of 20 million tons and sales revenue of 77.7 billion yuan (US$9.4 billion).

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