China’s largest steelmaker, Hebei Iron and Steel (Hegang) is in advanced talks with Duferco to increase its stake significantly in the Swiss-based trading group, Kallanish understands. Hegang expects to sign an agreement to buy into Duferco soon, Hegang general manager Peng Zhaofeng revealed to the China Iron and Steel Technology and Economy Summit held in Beijing by the China Metallurgical Industry Planning and Research Institute (MPI) on 13 September.

The deal would be worth an estimated $400 million and see the Chinese steelmaker increase its stake in the world’s largest steel trader to around 51-52%, Peng adds.

Hegang is already Duferco’s largest supplier of flat steel through its Tangshan Iron and Steel (Tanggang) subsdiary. In March 2013, Tanggang took a 10% stake in Duferco for $78 million.

The latest negotiations were confirmed to Kallanish by senior industry figures in China, while informed sources in Europe stress that not all the talk coming out of the Beijing summit is 100% accurate.

With the Chinese domestic steel market cooling rapidly, China’s mills are increasingly reliant on exports to maintain production levels. Duferco now handles Tanggang’s steel sales in Asia, Middle East, Africa and South America. The Chinese subsidiary exported 3.07 million tonnes of steel in 2013, of which 80% went through Duferco, and is aiming for 4mt of exports this year and 17mt of production, according to Chinese media. Tanggang exported 1.39mt over January-April 2014.

Meanwhile, the Duferco group sold 6.35mt of steel products in 2013, which includes roughly 2mt of steel distribution, Kallanish understands. This is up from 5.58mt in 2012, largely because of its developing relationship with Tanggang.

Duferco’s global shipments last year included 3.36mt of flat steel, 2.42mt of longs and 570,000t of special steel, according to the group’s annual report. The company also trades around 12m t/y of iron ore, pig iron, coke, HBI scrap and vanadium through its steel and raw materials division.

Duferco’s 44,000 customers are spread across 76 locations in 111 countries, Kallanish hears.