Hebei province-based steelmaker China Oriental Group<581>, the country's largest producer of steel H-beams, said it aims to enhance cooperation with its second-largest shareholder, ArcelorMittal.

    Han Jingyuan, chairman of China Oriental, said its partnership with ArcelorMittal would enable the company to achieve further vertical integration.

    Earlier this month, China Oriental had disclosed that it would acquire a 71% stake in smaller Xinyi Iron and Steel for RMB 532 million. Upon the completion of the deal, China Oriental's total annual capacity would be lifted to 7 million tons, closer to its target of 10 million tons of annual capacity by 2010.

    China Oriental had posted its first-half net profit of RMB 835 million (HK$949.9 million), an increment of 9% from RMB 769 million a year earlier, fuelled by increased output and steel prices, according to the company's interim result released on Tuesday.

    In the Jan.-Jun. period, revenue rose 75% to RMB 11.65 billion. Gross margin shrank 4.8 percentage points to 11.6%, mainly due to a 71% year-on-year surge in first-half coke prices.

    ArcelorMittal, the world's biggest steelmaker, owns 29.63% in China Oriental.