(Bloomberg) -- A potential merger between Anshan Iron & Steel Group and Benxi Iron & Steel Group is likely to make the new company one of the biggest steelmakers in the world, further cementing China's dominance in the sector.
Benxi's unit Bengang Steel Plates Co. announced the plans in an exchange filing, without providing further details. Discussions about a merger of the two companies have taken place since at least the early 2000s, though were never finalized. A revival of the talks comes amid a push to consolidate China's mammoth 1-billion-tons a year steel sector to focus on bigger, higher-quality producers.
“We view the potential transaction as a positive trend toward rising M&As in the steel sector, and expect further consolidation among the steel producers in the coming years,” analysts at Citigroup Inc. wrote in a note. “Angang Group will likely take the initiative to consolidate steel mills in the northeastern provinces.”
Ansteel Group was the world's seventh-biggest steelmaker in 2019, with 39.2 million tons of output, and Benxi was no. 19 with 16.2 million, according to data from the World Steel Association. A merger is likely to see them top Japan's Nippon Steel Corp., whose output was 51.7 million, as the third-biggest in the world.
The nation's biggest steelmaker China Baowu Steel Group Corp. has already embarked on a string of mergers, with combined group assets surpassing ArcelorMittal SA as the top global supplier.
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With assistance from Bloomberg
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