The Ministry of Industry and Information Technology (MIIT) is reviewing a second batch of domestic steel firms.
The move aims to phase out mills that cannot meet certain standards.
The reviewing process for the second batch is scheduled to be completed by November, and a third round will kick off in 2014, Miao Zhimin, deputy director of the Raw Materials Department of the MIIT was quoted as saying by Reuters on Monday.
"The MIIT will support development of qualified enterprises, promote mergers and acquisitions across regions and different types of ownership, launch technological refurbishment and optimize industrial structure and regional layout," Miao said.
However, steel firms failing to meet standards will be forced to exit the industry by economic and administrative measures, such as tighter restrictions on energy efficiency and environmental protection requirements.
In the second half of 2012, the MIIT revised the standards for steelmakers, specifying basic requirements for companies to engage in steel production.