“We are in conversations with a number of parties that have expressed interest in acquiring Stemcor’s core trading and distribution business,” a spokesman for Stemcor told Steel First.
Stemcor, which was until recently the world’s largest steel trader, declined to comment on which companies it had been in talks with.
The trader has a pre-existing relationship with Anshan, one of China’s largest steel producers. Anshan subsidiary Ansteel formed a joint venture with Stemcor’s UK service centre business in 2011, the Asian company’s second European joint venture.
The sale of the privately owned trading company’s core trading business would leave it with an iron ore mining and pelletizing business in India, as well as its stockholding and logistics businesses.
Stemcor’s Indian operations have been for sale for the past year, however.
If both sales were to go through, Stemcor would be reduced to just a stockholding and logistics business.
The struggling steel trader, which numbers among its shareholders Margaret Hodge, a Labour Party MP in the UK parliament, has been dramatically reducing headcount across its global operations over the past year as part of a restructuring process.
Stemcor narrowly avoided insolvency last year when the UK High Court approved schemes of arrangement for the Asian and European lending groups in February, after the trader defaulted on an $850 million loan.
Under the terms of the new financing arrangement
, Stemcor agreed to shrink its operations, but said that it would remain a “global company”.
Its trading operations in Ukraine, India and Switzerland were all axed last year, however, while the parent company published a pre-tax loss of £250 million ($380.3 million) for 2013 in its delayed annual results statement in September 2014.
Reports emerged on Friday that the trader was having further credit issues.
Stemcor said that credit insurance had been withdrawn on some new transactions, but that no covenants with regards to its loan agreement had been breached and its credit lines remained in place.
The sale of Stemcor’s trading business to Anshan would represent the second major acquisition by a Chinese steel mill of a European steel trading company in the past year.
In November 2014, China’s Hebei Iron & Steel acquired a majority stake in Duferco Trading
in a deal thought to be worth $400 million.