Japan's fifth-largest steelmaker, Nisshin Steel Co., and stainless steel maker Nippon Metal Industry Co. are in talks to integrate their operations next fall, sources said.
Their combined output of stainless steel would approach that of the industry leader, Nippon Steel & Sumikin Stainless Steel Corp.
The move is apparently aimed at bolstering competitiveness by achieving economies of scale as the firms struggle amid weak domestic demand for stainless steel for auto parts and other products.
Nisshin Steel's main plants are in Kure, Hiroshima Prefecture, and Shunan, Yamaguchi Prefecture, which produces stainless steel. Nippon Metal Industry has its facilities in Hekinan, Aichi Prefecture.