China's Largest Steel Maker To Acquire Smaller Competitor

China's largest steelmaker is set to absorb a smaller competitor in a policy of consolidating a bloated industry.

China's state-owned Baowu Iron and Steel Group will acquire 51% of Magang (Group) Holding Co. Ltd.

The move will increase Baowu's total production capacity from 70 million tonnes to 90 million tonnes, bringing it closer to the total capacity of 113 million tonnes of Arcelor Mittal SA, the world's largest steel producer.

The merger is part of the government's five-year plan to consolidate the steel industry and place 60% of capacity in the hands of the country's largest steel producers by the end of the decade.

It still has a long way to go by the end of the first half of 2018, according to the China Iron & Steel Association, with the top 10 controlling only 48.8% of capacity.