Japan's Nippon Steel Corp. and Sumitomo Metal Industries Ltd. plan to combine their businesses next year, a move that would create the world's second-largest steelmaker. The companies aim to be operating as a single company by October 2012. Both want to expand global operations, especially in China, India and other emerging countries where demand is expected to grow, while consolidating operations in the shrinking Japanese market. Based on 2010 numbers, the combined company would have an annual steel production of 47.8 million metric tons.

Nippon Steel and Sumitomo Metal Industries currently have cross-shareholdings and operate several joint ventures that produce stainless steel, sheet piling and other products. The companies established a strategic alliance, which also involves Kobe Steel, in 2002. The terms of the deal and the name of the new company are still being decided.