Shougang Group, China's sixth largest steel maker, is in talks to buy Guiyang Special Steel Co Ltd, Shougang Chairman Zhu Jimin said on Wednesday on the sidelines of the annual sessions of the National People's Congress.

Guiyang Special Steel, based in Southwestern China's Guizhou province, has an annual capacity of less than 1 million tons.

The Chinese Government has been encouraging a consolidation of the domestic steel-making sector to absorb an industry-wide glut amid a slowing economy.

Zhu said Shougang is in talks with a number of smaller local steel makers for potential acquisition deals. He said the company will "gradually" push forward the acquisition activities.