Nippon Steel & Sumitomo Metal on Monday cut its full-year sales and profit forecast amid a slowdown in China and other overseas markets.

The Tokyo-based company, one of the world's biggest steelmakers, also said it will start talks to take a controlling interest in a domestic rival to better compete globally.

The global steel industry has suffered from weakening demand as Asian giant China's economy has slowed down from its high growth era, when international commodity suppliers grew fat off demand for big ticket infrastructure projects there.

NSSMC downgraded its net profit forecast to 140 billion yen ($1.2 billion) for the fiscal year to March, from an earlier estimate of 180 billion yen.

It also revised downwards its full-year sales projection to 4.97 trillion yen, from the 5.0 trillion yen forecast earlier.

For the nine months to December, its net profit edged down 0.4 percent to 153.0 billion yen, while operating profit plunged 42.1 percent to 147.7 billion yen, with sales down 11.1 percent at 3.7 trillion yen.

"Regarding overseas steel demand, on top of the slowdown in steel demand in China, the ASEAN region also experienced stagnant demand," NSSMC said in a statement.

"In overseas steel markets... the company expects the current severe competitive conditions to remain unchanged in the near term as Chinese steelmakers are continuing to expand exports," it added.

It said that factors including gains from sales of its shareholdings helped limit the decline in net income.

Earlier Monday, the company announced an agreement to raise its stake in its French partner Vallourec to around 15 percent by investments worth 350 million euros ($379 million).

NSSMC also agreed to start talks on plans to take control of the fourth largest domestic player Nisshin Steel.

Under the plan, NSSMC would raise its stake in Nisshin from the current 8.3 percent to a range between 51 percent and 66 percent by March 2017, the two firms said.

With the purchase - estimated at up to 80 billion yen - NSSMC would control roughly half the domestic stainless steel market, local media said.