The consolidation in steel continues. British Steel has agreed to acquire Royal Hoogovens NV, the Dutch steel maker. The merger will create Europe''s second largest steel maker. The past year has seen two other mergers in the European steel industry -- the acquisition of Cockerill Sambre SA of Belgium by Usinor SA of France for $1.1 billion, and the merger of Thyseen AG and Fried Krupp Hoesch.

Usinor, with its output of 25.6 million tonnes in 1998, is currently the largest steel maker in Europe. British Steel and Hoogovens together made an aggregate 22.5 million tonnes.

British Steel will have 61.7 per cent of the new company, to be called BSKH, and Hoogovens 38 per cent. Additionally, the British company''s shareholders will be paid an equivalent of $1.12 billion, or 35 pence a share in cash.

The merger will come as a reprieve for the two companies, hurt, like other steel makers, by the one-third decline in steel prices in the past year. The merger will help them shave off an estimated 194 million pounds sterling in costs annually. British Steel incurred a net loss of 81 million pounds sterling in the year ended 31 March 1999. In the previous year it had earned a profit of 226 million pounds.