(Corrects paragraph 2 rank of Wuhan Steel to 6th-largest, not 4th-largest)
BEIJING (Reuters) - China’s Baosteel Group and Wuhan Iron and Steel Group, two of the country’s largest steelmakers, are together planning to restructure, their listed units said in separate stock exchange filings on Sunday.
Baosteel Group is China’s second-largest steelmaker, and Wuhan Iron and Steel Group is the country’s sixth-largest in terms of 2015 output.
The companies did not specify what the restructuring would entail. Beijing has said that mergers would be a key way to consolidate the steel sector, aiming to cut overcapacity and increase the proportion of output from China’s ten biggest mills.
China has vowed to tackle price-sapping supply gluts in major industrial sectors and said in February it would close 100 million-150 million tonnes of steel capacity and 500 million tonnes of coal production in the coming three to five years.
On Sunday, the head of the country’s top economic planner said the government aims to cut 45 million tonnes of steel capacity and 280 million tonnes of coal production this year.
China’s Baoshan Iron and Steel Co Ltd and Wuhan Iron and Steel Co Ltd said in stock exchange filings that their parent companies are planning to restructure.
The details of the restructuring have not yet been finalised, and once they are settled the deal would still need regulatory approval, the companies said.
The firms also said they have each applied to halt trading of their shares as of June 27, and that they would issue an update after five trading days.
In 2013, China’s industrial regulator said it aims to bring around 60 percent of total steel capacity under the control of its top 10 steel mills by the end of last year.
By that time, those mills controlled 34.2 percent of the total capacity, Tang Fuping, the chairman of Anshan Iron & Steel Group Corp, said in May.
Beijing’s consolidation drive has also seen mergers like China Minmetals Corp’s takeover of equipment maker China Metallurgical Group Corp last year, and February’s state-driven merger of former rivals China Ocean Shipping (Group) Company [COSCO.UL] and China Shipping Group [CNSHI.UL] to become China Cosco Shipping Corporation (COSCOCS).
Reporting by Paul Carsten; Additional reporting by Ruby Lian and Nicholas Heath; Editing by Sam Holmes