TOKYO Japan's third largest steelmaker Kawasaki Steel Corp. denied Monday that it is in talks with U.S. steelmaker AK Steel Corp. jointly to supply steel products to automakers, AFP quoted the Japanese company as saying Monday.

"It is not the case that AK Steel and we are in discussions for a tie up," said Kawasaki in a statement denying an earlier press report.

"Currently, we have a five percent stake in AK Steel and have built friendly ties," the company said.

The comment was in response to a report in the ****Nihon Keizai Shimbun*** Sunday that Kawasaki and AK Steel would form an alliance to supply steel sheets to Japanese and U.S. automakers and develop new steel products for them.

The two companies would exchange engineers and know-how in order to improve the quality of steel products, the business daily said.

Separately, another Kawasaki spokesman, Ryusuke Chiyonobu said the company was not party to talks between Japanese steel maker NKK Corp. and German heavy industry group Thyssenkrupp AG on closer cooperation.

NKK said Thursday it was in talks with Thyssenkrupp to extend their collaboration over supplying steel sheets to automakers.

NKK and Kawasaki, Japan's second and third-largest steelmakers, have been cooperating since September when they announced they would join forces to slash operating costs by $94 million a year (11 billion yen).

The ****Nihon Keizai*** report came amid a spate of deals as steelmakers and trading companies struggle to overcome intensifying global competition.

Japan's biggest steelmaker Nippon Steel and French giant Usinor announced a strategic alliance last Tuesday in a bid to keep pace with the globalization of their major customers in the auto industry.

Japan's largest trading house Mitsubishi Corp. and sixth-ranking Nissho Iwai Corp. said Thursday they were preparing to integrate their steel trading operations into a giant new unit with sales of 2.2 trillion yen.

Japanese trading houses Marubeni Corp. and Itochu Corp. also said Friday they had struck an agreement to integrate their steel trading operations.