MMTC bags silicon steel supply order from Nippon

MMTC has secured 3,000 tonne silicon steel supply from the Japanese manufacturer Nippon Steel. This would help the domestic transformer industry which is facing high silicon steel prices.

MMTC has been talking to various Japanese and European players for silicon steel purchase at low prices.

There is also a reported shortage of raw material in the international market, which has further fuelled the prices.

The price of silicon steel, which is an integral ingredient for transformers, has shot up almost four times from $1,400 per tonne over a year ago.

In the last few months, the price stabilised at about $4,200 per tonne. This had put transformer companies in a fix as their clients, the power utilities, refused to increase transformer prices. According to some sources many companies have failed to deliver transformers on the prior agreed prices.

"Nippon Steel has direct supply contacts with about 20 domestic players. But the smaller manufacturers have been finding it difficult to buy the raw material. The supply from Nippon will give them some respite," said Sunil More,secretary general, Indian Electrical & Electronics Manufacturers' Association (IEEMA).

The Indian demand for silicon steel, about 1.2 lakh tonne per year, is almost 10 per cent of the global demand. But there are hardly any local producers.

"It is not viable to produce silicon steel in India as a minimum of 1.5 lakh tonne has to be produced annully to make the business profitable. Plus, it's a technology-driven product," says an industry analyst.

This dependence on imports has left the domestic players vulnerable to discrimination. "While the Indian manufacturers pay about $ 4,000 per month, their counterparts in the US and Europe get it cheaper by $ 1,000 per tonne," said Avinash Barve, assistant secretary general, IEEMA.

MMTC is expected to secure similar supplies from other manufacturers by next month.