Bloomberg reported that Nippon Steel Corporation has agreed to buy ArcelorMittal's 12% stake in an automotive steel venture in China as demand for cars rises in the world's largest market.

Mr Masato Suzuki, a spokesman for Nippon Steel, said that Nippon Steel will increase its stake in Baosteel NSC Arcelor Automotive Co to 50% from 38%. He added that Baoshan Iron & Steel Corporation will retain the remaining 50% in the venture. The deal will need approval from Chinese authorities.

According to the China Association of Automobile Manufacturers, total vehicle deliveries in China will grow about 5% in 2011 after surging 32% to a record in 2010. Baosteel NSC Arcelor, which started production in 2005, has a capacity of 2.2 million tonnes a year.

Mr Suzuki said that "We've concluded to buy the stake as we expect stable return from the venture, judging from a further growth in the Chinese auto market."

It may be recalled that Nippon Steel signed the agreement to buy the stake on June 27th 2011.

(Sourced from www.bloomberg.net)