Chinese steel companies have turned their attention to overseas markets for their production facilities after focusing on the acquisition of mines, according to Shanghai's China Business News.

The Chinese-language Indonesia Shang Bao newspaper recently reported on a plan by China's Anshan Iron and Steel Group (Ansteel) to build a steel plant with an annual production of 85 million tons in Morowwali in central Indonesia, citing Imam Haryono, director-general for industrial estate development under the Industry Ministry of the Southeast Asian nation.

However, employees at Ansteel told the China Business News that they have no details about the project, as no official agreement has been reached.

According to Zhang Lin, an analyst at Lange Group, a provider of market information on the steel sector, Chinese steel companies set their sights on the demands of local markets when planning overseas plants.

"For instance, Indonesia has strong demand for steel because of the rapid growth of its economy. The automobile, ship building and machinery sectors will become the main driving forces behind the increasing demand for steel," Zhang said.

Nanjing Iron and Steel Group already entered a joint venture with Indonesia's PT Gunung Gahapi Sakti in January 2014 to build a steel mill in Medan. US$80 million was invested in the first phase of the project in Medan to build a plant that can produce 500,000 tons of steel products a year within three years.

Despite easy access to coal at home and from Australia, Zhang said the main challenge facing Chinese companies is the lagging infrastructure in some areas in Indonesia. "Some islands have no electricity and require construction of railways and highways," Zhang said.

Zhang also said that South America is a tougher market because of the strict environmental evaluation process and labor laws there, which are both areas that Chinese companies handle poorly, even at home.

Hebei province, which has the highest concentration of steel plants in China, is also encouraging local companies to expand overseas, especially in Southeast Asia, West Asia and Africa, according to the paper.

Several companies in Hebei have launched or have planned projects in Indonesia, Thailand and Laos, while the largest steel maker in the province, Hebei Iron and Steel Group, signed a deal with the Industrial Development Corp of South Africa and the China-Africa Development Fund to build a 5 million-ton plant in South Africa in September 2014.

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