The agreement will establish a multi-level commodity trading market system and win China more of a say in the pricing of metals which the country consumes in significant quantities, the senior executives said.

The Shanghai Steel Exchange under China Baowu will work closely with the steel futures trading platform under the Shanghai Stock Exchange to launch spot and futures trading in metals.

"The collaboration comes after years of efforts made by our two parties as well as the local government, which can better facilitate resources between supply and demand, while letting the market play the decisive role in pricing," said Chen Derong, the chairman of China Baowu which is the world's second largest steel-maker.

"China's steel output snowballed from 158,000 metric tons 70 years ago to approaching 1 billion tons this year. But new problems are emerging to threaten our competitiveness, including the homogeneity of products and unbalanced supply and demand," said Chen.

In 2018, Chinese steel mills saw their fastest growth of the past few years in production of crude steel, which amounted to 928 million tons, data from the National Bureau of Statistics showed.

Taking up half of the global output of 1.89 billion tons, most of China's 300 plus steel mills are competing against each other with homogeneous products for razor-thin profit margins.

"The rapid development of our country in various sectors and the wider application of steel products in daily life will require steel to play an important role. The critical problem is how to clear the blocks between products and the market, and how to bridge the gap between specialized requirements from customers and standardized manufacturing," Chen said.

"The connection of spot and future steel trading by the two platforms under China Baowu and the Shanghai Stock Exchange respectively will effectively bring the clients and producers closer," said Huang Keli, head of the Shanghai Steel Exchange.

After the two platforms open up to each other by the end of this year or early in 2020, the first batch of products by the 73 steel mills which are collaborating with Baowu will be launched at first. This will be followed by several steel companies and more diversified products that should be launched in the future, Huang said.

"Considering the size of Baowu and Shanghai Futures Exchange, this is a world class collaboration," said Jiang Yan, chairman of the Shanghai Futures Exchange.

Trading of yuan-denominated stainless steel futures will be the first of its kind worldwide. It was launched by the Shanghai Futures Exchange last month. At this time, 14.3 percent of the nation's steel futures trading volume are being conducted at the SFE.

As a bellwether of the global steel industry, Baowu has the vision to be an innovator in technology and the business model of the sector. It can create a high quality ecosystem for the steel sector that includes research and development, production, and trading, Chen stated.

"We want to make Shanghai a global center for the steel sector. In order to reach this goal, we will make the city our future research and development center, the operation and control center that can remotely control production sites far away with technologies like 5G, big data and intelligent manufacturing," said Chen.