Privately owned Rizhao Iron and Steel has agreed to consolidate with state-owned rival Shandong Iron and Steel, Reuters reported. Rizhao, one of China’s largest private steel mills, has seen rapid growth and high profit margins on its 8 million tons of annual steel production. No details were given on the agreement or the process of consolidation, but Beijing has been encouraging consolidation in the steel sector. Shandong Iron and Steel was formed by the merger of the state-owned parents of Laiwu Steel and Jinan Iron and Steel. Analysts at Standard & Poor’s have forecast reduced demand for Chinese steel products in 2009.