Baosteel chairman Xu Lejiang told Shanghai Securities News that he denied earlier reports in the 21st Century Business Herald that he said the company was studying counter-measures to BHP Billiton's proposed offer for Rio, which included purchasing the company.
"I did not say this," Xu said. "It is a fabrication of the media."
Xu also said that the company did not have the financial strength for a Rio bid.
Earlier this week, 21st Century Business Herald had quoted Xu as saying it would take more than $US200 billion ($A228 billion) to buy Rio.
The report caused shares in Baosteel's Shanghai-listed subsidiary Baoshan Iron & Steel Co. to increase 5.2% on Tuesday.
Most analysts believe a consortium of companies would need to make a joint bid, with backing from the Chinese Government, since a Chinese company on its own wouldn't have the cash to make an offer.
Others have suggested the Chinese companies may launch a bid in the full knowledge of failure, but with the intention of taking a blocking stake in Rio that would doom BHP's bid as well as maintain the status quo.
There is also a belief that BHP may offer a significantly higher bid than its current proposal to quash any likelihood of a Chinese counter-offer, with one analyst suggesting BHP may offer a higher bid of around $200 billion.
Rio has repeatedly rejected BHP's proposed three-for-one scrip deal, saying it undervalues the company.
Shares in BHP gained $1.05 to $43.75 at lunchtime today, while Rio climbed 75c to $144.57.
