ThyssenKrupp chief warns European steel mergers 'necessary'

Berlin (AFP) - The chief executive of German steelmaker and manufacturer ThyssenKrupp said Friday that mergers between European steel firms were "necessary" as the sector struggles with a flood of low-cost Chinese competition.

"We have always said that under these circumstances we believe a consolidation of the European steel industry is necessary," Heinrich Hiesinger told the firm's annual general meeting in the western city of Bochum.

Steel prices have fallen sharply as cheap Chinese alternatives undercut European producers, burdening ThyssenKrupp's results in 2016.

"Cost savings programmes only give us short-term relief. Without structural changes, we'll have to do one restructuring after another, endlessly," Hiesinger said, adding that he saw no "Plan B" as an alternative to mergers.

"In a situation like this everyone talks to everyone. Among others, we are talking to Tata Steel," the ThyssenKrupp boss went on.

"It still remains open whether, when and with whom such a step in consolidating the industry will take place," he said.

Conversations between Tata Steel and ThyssenKrupp have been going on for several months, but uncertainty linked to Brexit has made a potential tie-up more complicated.

The Indian group plans to give up some of its British steelworks, and Hiesinger wants to see "a viable solution" to its pension commitments in the island nation, which he sees as too costly for ThyssenKrupp to take on.

"Without that, a merger is impossible because the risks are too high," he warned, while allowing that it was a "very complex" question.

"Any possible joint venture will have to be based on a convincing business plan with corresponding synergies," Hiesinger said.

ThyssenKrupp employs around 27,000 people in Europe in its steelmaking arm.