Mechel agrees to boost coking coal supplies to Baosteel by 25%

Coking coal producer Mechel has agreed to boost its annual supplies to Chinese steelmaker Baosteel by 25% year-on-year, the Russian company said on Thursday April 10.

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Mechel will deliver as much as 1.2 million tonnes of coking coal to Baosteel between April this year and March next year. The agreement is a subject to annual renewal, while the price to be paid will be determined by the companies on a monthly basis.

Mechel supplied 960,000 tonnes of coking coal to Baosteel between March last year and March this year, under the terms of a contract signed in 2013.

The Russian company also made test shipments of PCI coals and steam coal from its Elga coal deposit in Eastern Siberia to its Chinese partner during the period.

Baosteel will account for as much as 10% of Mechel’s total sales to the Asia-Pacific region under the new agreement.

Mechel wants to sell 70% of its coal exports into Asian markets as it switches its sales focus away from Europe, chief marketing officer Benoit de Meulemeester told Steel First in October last year.

The company said in June 2013 that it had agreed to supply 40,000-80,000 tpm of coking coal to China’s Shagang Group.

Mechel started shipping its coal concentrate to China by land in early August last year after the opening of a railway route between the Primorye region in southern Russia and China’s Jilin Province, through the Makhalino-Hunchun checkpoint.

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