BEIJING (Reuters) - Top Chinese steelmaker Baowu Steel Group is in talks to take over rival producer Magang Group, sources told Reuters.
The deal would come as China pushes to consolidate its bloated steel sector and would entrench its position as a serious competitor in the international steel market.
The marriage would sharply narrow Baowu’s gap with top-ranked global producer ArcelorMittal. The combined output of Baowu - the world’s second-largest steelmaker - and Magang was last year less than 12 million tonnes below ArcelorMittal’s 97 million tonnes, and exceeded the entire production of the United States.
The next possible mega-union after Baosteel Group’s 2016 acquisition of Wuhan Iron and Steel, which created Baowu, makes sense because the two companies are geographically close to each other and have complementary products, said the sources.
Magang is headquartered in Maanshan city in China’s eastern Anhui province, about 4 hours drive from Shanghai, where Baowu Group is based.
Reporting by Muyu Xu and Manolo Serapio Jr.; Editing by Joseph Radford