Reuters reported that a stainless steel tie up between ThyssenKrupp and Outokumpu will need deep production cuts to resolve the sector's crippling overcapacity and reverse losses, but union resistance could yet scupper the deal to create Europe's top producer.

Outokumpu CEO Mr Mika Seitovirta, whose company is expected to swallow all or much of Thyssen's stainless steel unit, has already told unions he plans to close down two German operations, according to a source directly involved with the talks and another familiar with discussions.

The potential 1,400 job losses have put Mr Seitovirta, in the throes of restructuring his own loss-making company, on a collision course with unions and mean no agreement has been reached.

In German companies, supervisory boards need to give their blessing to major strategic decisions by the management board. Unions make up half the supervisory board, giving workers significant clout in any deal.

(Sourced from Reuters)