Chinese steel makers Shougang, Tonghua plan merger

China's eighth-largest steel maker, Shougang Steel Group is planning to acquire Tonghua Iron & Steel Group, the largest iron and steel mill in Northeast China's Jilin province, to consolidate its position in the organised Chinese steel market.

The success of its bid for Tonghua Steel would enable the company to tap the northern China market.

According to Beijing News, Shougang Steel and State-owned Assets Supervision and Administration of Jilin province had reached an initial agreement to pay some 2 billion yuan for a controlling stake in Tonghua Steel.

But Shougang Steel said the deal is still in the early stages of negotiation.

"No decision has been made about whether the restructuring should go ahead or not. Therefore, financial details have not been worked out," the paper quoted the company as saying.

Earlier reports said Shougang Steel on 6 January sent a delegation from production, equipment, finance, and administration to Tonghua Steel to do a field study of the company.