TMK and Magnitogorsk Iron & Steel Works (MMK) signed an agreement to apply a price formula for hot-rolled heavy plate supplied to TMK. The document was signed by Alexander Shiryaev, CEO of TMK, and Pavel Shilyaev, CEO of MMK.
The price formula is based on the direct cost method. Its main variables include cost of raw materials and production cost of steel plate. Based on this formula, the price is also adjusted for inflation and currency exchange rates. The price of steel plate will be revised quarterly. Term of the agreement is 2016-2018.
"MMK is a traditional and major supplier of hot-rolled steel plate for production of large diameter pipe by TMK’s Volzhsky Pipe Plant. The price formula will enable both parties to significantly reduce risks in the periods of volatile commodity and currency markets, make pricing mechanism transparent and improve planning efficiency", said Alexander Shiryaev, TMK CEO.
"The agreement will enable us to gradually develop our partnership in the coming years. It demonstrates our mutual interest in keeping our relationship stable. We believe our collaboration with TMK is strategic, and therefore we try to strengthen our partnership. Open and clear pricing is one of the major components of our work", said Pavel Shilyaev, MMK CEO.
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