Baosteel and Wuhan Iron and Steel Corporation (WISCO), two major steel producers in China, have both suspended stock trading today and announced that they are planning a strategic restructuring.
The two groups said the restructuring is still at early planning stage and is awaiting approval from the authorities.
The move is a response the central government’s supply end reform policy in several sectors, including shipbuilding and coal, to shed capacity.
The merger could create one of the world’s largest steel producers in terms of producing capacity.
Baosteel operates a shipping unit Baosteel Shipping and it also established a shipping joint venture Haibao Shipping with China Shipping in 2008. WISCO runs shipping unit WISCO Shipping in Hong Kong.
The steel industry in China is currently in the middle of a crisis. WISCO reported a net loss of RMB7.5bn ($1.12bn) in 2015, while Baosteel’s net profit dropped by 82% to RMB1.01bn ($152m).
