Hebei Iron & Steel Group, China's biggest steel maker, has signed an alliance agreement with five domestic steel mills in a move that will boost its production capacity, the China Securities Journal reported on Friday.

The consolidation will add new production capacity of more than 10 million tons to Hebei Steel, the newspaper said. Hebei Steel's new combined total capacity will surpass 60 million tons, the paper said without giving a specific time frame.

Hebei Steel will hold a 10 percent stake in each of the companies.

Hebei Jingye Group and Tangshan Changcheng Iron & Steel are among the five companies involved, with all the mills located in North China's Hebei province.

Hebei cut November key steel prices, pointing to mills' cautious demand outlook for the rest of the year.