A report by Bloomberg suggests that China is planning to entirely reshape its steel industry by merging Hebei Iron & Steel Group with Shougang Group – to form Northern China Steel Group – and Shanghai Baosteel Group Corp and Wuhan Iron & Steel Group Corp to form the Southern China Steel Group.

While such mergers would mean that the two giant regional Chinese steelmakers would rival 'rest of the world' steel giants, such as ArcelorMittal – often described as the world's biggest steelmaker – it would also mean that China could go some way towards reducing overcapacity, something that is currently having worldwide repercussions.

China's steel output has peaked but it's domestic market remains saturated, according to Chen Derong, general manager, Baosteel Group, who was speaking at a conference in May this year.

At the end of 2015, China's crude steel production capacity stood at 1.2 billion tonnes, according to the China Iron & Steel Association (CISA).

The Chinese government plans to cut 150Mt of capacity by 2020.

Source: Bloomberg