China’s largest steel company Baowu Steel Group is set to buy a majority stake in the smaller steel-producer, Magang Steel, to strengthen its “international competitiveness,” creating a group whose combined production exceeded that of the entire US steel industry last year, reported the Financial Times.
The two companies had a combined crude steel output of 87 million tons last year, surpassing the total US steel output of 86.6 million tons, according to World Steel Association data. The merger would also put the combined group only slightly behind the world’s number one steelmaker, Indian-owned ArcelorMittal, which produced 92.5 million tons of crude steel in 2018.
The merged group would have a combined capacity of 90 million tons, and further expansion “could see the company become the world’s largest steel producer within the next two to three years,” according to analysts at S&P Global. Beijing aims to consolidate its fragmented steel sector so that its top 10 producers would account for 60% of steel production, up from the current 35%.