“But there is no decision yet,” one of them told Reuters on Wednesday, adding that a buyer could be picked in the next two to three weeks.
ThyssenKrupp has been trying to offload its Steel Americas business, which comprises the Brazilian mill as well as a plant in Alabama, as it shifts investments to higher-margin products and services such as elevators, submarines and parts for manufacturing plants.
German investor newsletter Platow Brief reported earlier, citing no sources, that ThyssenKrupp had picked CSN as the buyer for the mill in Brazil, CSA. The report pushed ThyssenKrupp shares up as much as 4 percent.
Platow Brief had said ThyssenKrupp Chief Executive Heinrich Hiesinger would hold off announcing the sale until all legal details were agreed.
ThyssenKrupp owns about three quarters of CSA, with Brazilian miner Vale (VALE5.SA) holding the rest.
The German company declined to comment on details of the negotiations and reiterated that it aimed to agree a deal shortly. CSN was not immediately available for comment.
CEO Hiesinger said last month that there was a frontrunner for Steel Americas, but declined to be more specific. Sources had told Reuters that ThyssenKrupp was in talks with CSN, among others.
They had said U.S. Steel (X.N) and Nucor (NUE.N) put in bids for the U.S. mill alone. But one of the sources told Reuters on Wednesday that it may take longer to agree a deal for the Alabama plant than for CSA in Brazil.
JP Morgan analysts said they still expected a sale to be announced by the end of June. If it agrees a deal with CSN, ThyssenKrupp is likely to retain a minority stake in CSA with a lock-up agreement for ThyssenKrupp and a full exit in the next two years or so, they said.
ThyssenKrupp recently wrote down the total book value of Steel Americas to 3.4 billion euros, although analysts expect the ultimate purchase price to be lower.
Reporting by Alexander Huebner, Tom Kaeckenhoff and Maria Sheahan; editing by Alexander Ratz and Tom Pfeiffer