China's central government has issued guidelines to regulate the coal market's new pricing mechanism.

The guidelines stipulate that medium- and long-term contracts should include language to cover trade and the settlement of disputes. The guidelines also stress that prices should be based on market conditions.

In addition, the guideline prohibits price manipulations. The National Reform and Development Commission will supervise the execution of contracts every three months.

Companies that agree to the contracts in good faith will be granted policy support in China's electricity market. Medium- and long-term contracts were introduced into China's coal market in November to keep prices stable.