Two of China’s largest steel companies have made announcement of a merger which will lead to create the world’s second largest steelmaker. According to the agreement, Baosteel is to take over its smaller competitor Wuhan Iron and Steel.
Both companies are majorly owned by the state. This deal will create a new company named China Baowu Iron and Steel Group. As per 2015 data, the two firms together have an annual production of about 60 million tons a year, making it the largest steelmaker in the country.
Globally, it would be second, first being Luxembourg-based ArcelorMittal.
Steel demand in Chinaand all around the globe has fell in the past year as the country’s economic growth has slowed. The resulting overproduction is causing losses to the steel makers around the world. Meanwhile, China has been accused of price dumping selling its steel cheaply overseas in order to clear its stocks.
In April, China promised to reduce its steel output, following a crisis meeting attended by 30 nations. China manufactured over 822 million tons of steel in 2014 and is expected to produce even more this year. However, projected demand for its steel in 2016 is only 672 million tons.