This is the first time a Chinese steelmaker has been selected for evaluation as a global supplier to Japan's third-largest carmaker, the Shanghai-based mill said in a statement on its website.

The move underscores the rising competition Japanese steelmakers such as Nippon Steel Corp face from China, where exports last month jumped to the highest level since September 2008. Nissan Motor is predicting that North American sales will rise 13 percent this fiscal year, and is planning to boost production capacity in China by almost 70 percent by 2012.

"Japanese carmakers, who used to buy from local steelmakers, are seeking to diversify their steel supplies and trying to lower costs," said Luo Wei, a Shanghai-based steel analyst with China International Capital Corp. "For ordinary grades of auto steel, Baosteel is able to compete with its Japanese rivals including Nippon Steel."

Winning acceptance as Nissan Motor's global supplier will help reduce Baosteel's reliance on the Chinese market, where it has more than half the market share. Domestic demand is weakening from automakers, Baosteel said July 5 in a statement.