Wuhan Iron & Steel Corp, China's No 5 steel mill based on 2006 production, will buy the smaller competitor Kunming Iron & Steel Group, a much-needed move for the country's mammoth but fragmented steel sector.

The company, based in the central city of Wuhan, will announce a deal tomorrow to acquire Kunming, which is based in the southwestern city by the same name, Luo Bingsheng, vice-chairman of China Iron & Steel Association, said yesterday.

A press official from Wuhan, surnamed Bai, confirmed the deal. But he declined to confirm the timing and reveal how much Wuhan will pay.