Tengzhong has started talks with government agencies after signing a "definitive agreement" last week with US giant GM to buy the sport-utility vehicle brand, a spokeswoman for the Chinese company told AFP.

The transaction is expected to be finalised in late 2009 or early 2010, she said, "which is the point that we also expect to have received the necessary review or approvals to close the transaction".

Privately owned Tengzhong and GM announced Friday that the Chinese company would purchase Hummer through an investment entity, in which Tengzhong will hold an 80 percent stake.

Chinese entrepreneur Suolang Duoji, whose holdings include the Hong Kong-listed industrial chemical producer Lumena, will hold the remaining 20 percent stake.

Financial terms of the agreement, which is subject to regulatory approval by both the US and Chinese governments, were not disclosed.

GM and Tengzhong in early June signed a tentative agreement for the Chinese firm to buy the Hummer nameplate, whose gas-guzzling vehicles have lost favour with US buyers.

GM emerged earlier this year from a bankruptcy court-supervised restructuring and is majority owned by the US government.

earlier related report
Chinese demand eases global steel sector woes: industry group
The World Steel Association said on Monday it had improved its 2009 forecast for the global industry after economic stimulus measures in China helped spur demand.

The group had forecast in April a 14.1 percent fall in apparent steel demand this year, but is now projecting a decline of only 8.6 percent due to the strength in Chinese demand, it said in a statement on its website.

China's steel consumption was vital for the global outlook and it was the country's "exceptionally strong growth" in demand that prompted the revision, said the statement, released as the association held its annual conference in Beijing.

China's steel demand would likely expand 19 percent this year to 526 million tonnes, but growth could drop to five percent next year as the impact of Beijing's stimulus measures tapers off, the association cautioned.

The association said without China, which will account for 47.7 percent of the world's apparent steel use this year, potential world demand would have fallen 24.4 percent in 2009.

"As before the financial crisis, the emerging economies, especially China, will be the critical factor in driving world steel demand in the near future," Daniel Novegil, chairman of the group's economics committee, said in the statement.

However, he warned there were still uncertainties and concerns regarding the resilience of the global recovery.

"This uncertainty particularly exists for the Chinese economy in 2010, whose fast recovery in 2009 was largely enabled by such strong government stimulus policies," he said.

On a global basis, apparent steel demand was expected to grow 9.2 percent next year to 1.2 billion tonnes, the association said.

Apparent steel use reflects deliveries of steel to the marketplace from domestic producers as well as from importers.

This differs from actual steel use, which takes into account steel delivered to or drawn from inventories.

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