Angang Steel Co plans to build a 3.8 billion yuan (US$556 million) steel plant in southeastern China's Fujian Province to tap growing demand.

The construction of the plant, with a planned annual capacity of 1 million tons of cold-rolled steel products, is expected to be completed by June 2012, China's second-largest steel mill said in a statement filed to the Shenzhen Stock Exchange over the weekend. The products are primarily used in home electrical appliances, automobiles and in the building industry.

The steel maker aims to optimize its product mix and improve profitability.

The plant could also increase its market share in the southeast coastal region, the Liaoning Province-based company said, and is in line with the strategy of its parent, Anshan Iron and Steel Group, to expand its presence in coastal areas.

The group agreed on a strategic partnership with the Fujian provincial government to accelerate consolidation and development in the area's steel industry.

The plant will be funded by its own capital and bank loans.