OREANDA-NEWS. Japan's largest steelmaker Nippon Steel and Sumitomo Metal (NSSMC) has started talks to take control of its smaller competitor Nisshin Steel by March 2017, as part of efforts to rationalise and increase competitiveness of Japan's steel sector amid tough market conditions.

NSSMC is planning to boost its shareholding to 51-66pc of Nisshin Steel's voting rights, making it a direct subsidiary. Talks are scheduled to be completed in May. NSSMC is currently the largest shareholder in Nisshin Steel with an 8.3pc stake, while Nisshin Steel owns 0.4pc of NSSMC in line with deals to supply stainless steel products between group companies.

NSSMC is likely to supply slab to Nisshin Steel following the takeover deal, allowing the smaller firm to halt the No. 2 blast furnace at its Kure works in Hiroshima prefecture sometime during the fiscal year that starts April 2019. Nisshin is also planning to refurbish and expand its Kure No. 1 furnace by the same date.

NSSMC produced 47mn t of crude steel from 14 blast furnaces in Japan in the 2014-15 fiscal year that ended March last year. The company plans to close the No. 2 blast furnace at its Kokura works in Fukuoka prefecture by April 2019 as part of its own restructuring plan. Nisshin Steel produced 4mn t of crude steel in 2014-15 from its two blast furnaces at Kure.