Shanxi Coking Coal Group will cooperate with six steel companies on the purchase and sale of coking coal, according to a medium-and-long term agreement signed on Nov 23 in Beijing.

The company discussed with six steel giants in China, including Baosteel in Shanghai and Ansteel in Anshan, about resource management and market pricing in the coal and steel industries. The two sides decided upon a flexible pricing strategy which combines benchmark pricing and differential pricing.

The pricing strategy takes the production cost of coal and purchasing power of steel businesses into account, reducing disagreements during transactions. A certain discount will be given to clients who buy coal in bulk far away from Shanxi and can pay their bill quickly.

The Chinese government is encouraging Shanxi Coking Coal Group and the six steel companies to establish a long-term partnership, and the central government will support the cooperation by enacting relevant policies and strengthening credit regulations for transactions, according to the director of the National Development and Reform Commission at the signing ceremony.

The cooperation will solidify the relationship between the coal and steel businesses, cut down their costs, and balance the demand and supply in the two industries.

Shanxi Coking Coal Group signs a medium-and-long term agreement with six steel giants in China, including Baosteel in Shanghai and Ansteel in Anshan, on Nov 23 in Beijing. [Photo/sxcc.com]