A worker welds the ends of hot rolled steel on the line at the Wuhan Iron and Steel Group Corp in Wuhan, Hubei province, August 27, 2016. [Photo/VCG]

Wuhan Iron and Steel Co Ltd, one of the major listed State-owned steel companies in China, formally withdrew from the capital market on Tuesday.

At present, Wuhan Iron and Steel and Baosteel have entered the stock swap stage, the key process in the restructuring of the two steel giants which started last year. One share of Wuhan Iron and Steel can be swapped for 0.56 share of Baosteel.

The two stocks were suspended on Jan 24, with Baosteel's share price at 6.8 yuan ($1) and Wuhan Iron and Steel at 3.71 yuan.

The total number of shares of the new Baosteel will increase to 22.1 billion, of which Baowu Iron and Steel Group holds 52.14 percent, while Wuhan Iron and Steel Group holds 13.49 percent, and the remaining 34.37 percent is owned by external shareholders.

Wang Guoqing, director of the Lange Steel Information Center, said that the withdrawal of Wuhan Iron and Steel is good for investors because the quality of Baosteel's shares is much higher. Baosteel has a stronger capacity to operate the assets of Wuhan Iron and Steel.

"The withdrawal comes within expectations since the plan for the reorganization is clear. Going by the current trend, the reorganization of SOEs will mainly take the form of cross-shareholdings in the future," said Wang.

Zhou Minliang, a researcher at the Institute of Industrial Economics at the Chinese Academy of Social Sciences, said State-owned enterprises must take the initiative to improve quality and achieve efficiency, optimizing the allocation of resources.

In 2016, the State-owned Assets Supervision and Administration Commission promoted the reorganization and integration of 10 State-owned enterprises, including Baosteel and Wuhan Iron and Steel Company. The number of enterprises supervised by SASAC has also been reduced to 102.

Xu He contributed to this story.