ChemChina is interested in buying Germany’s SGL Carbon, which has just completed a carve-out of its Performance Products business unit. According to Germany’s Manager Magazin, ChemChina chairman Ren Jianxin has held talks with SGL’s CEO, Jürgen Köhlerm and major shareholder Susanne Klatten.

SGL is said to be looking to sell its graphite electrode business – part of the Performance Products unit – which has suffered from substantial price erosion as a result of the overcapacity in the steel industry. ChemChina is understood to want to acquire the whole of SGL it is believed to be open to other options.

In April, ChemChina completed its acquisition of German plastics machinery maker KraussMaffei Group for €925 million. It is also in the process of buying Swiss agrochemicals company Syngenta in a $43 billion deal.

SGL said this month it had completed the legal separation of its Performance Products business earlier than originally anticipated, laying the foundations for “more specific analyses of strategic options.”

The company said the move was in response to changed market conditions in the steel recycling sector where prices for Chinese semi-finished steel have fallen low enough to compete with scrap. “In the current market environment, the only thing that counts is cost leadership. However, as graphite electrodes are indispensable for recycling steel scrap, the business unit has good prospects for the future,” said Köhler.

The cornerstone of SGL’s realignment is the focus on the two business units Composites – Fibers & Materials and Graphite Materials & Systems, where the company plans to increase its combined sales by more than 50% by 2020, to around €1.1 billion.