LONDON — Two of the world’s leading steel makers said on Wednesday that they had agreed to combine their European operations, creating a regional giant they hope will be better equipped to tackle chronic problems like an excess of capacity in the industry.

The deal between ThyssenKrupp of Germany and Tata Steel, a unit of the Indian conglomerate, still faces major obstacles, ranging from union opposition to obtaining the approval of regulators. But if the two companies were to complete the 50-50 joint venture, it would create Europe’s second-largest steel maker.

Steel is a so-called old-line business, and major companies in the West have struggled in recent years to adapt to changes in the industry. They have been reluctant to close plants in the face of weak demand growth and the rapid rise of Chinese steel makers, who now account for about half of global production and have tended to export surpluses rather than curtail output.

Still, the products turned out by Europe’s steel mills remain vital for a wide range of economic activities from construction to energy, as well as carmaking, and of late, steel makers’ fortunes have improved somewhat.