MMTC in talks to source silicon steel from abroad

Metals and Minerals Trading Corporation (MMTC) has initiated talks with international suppliers of silicon steel, in a bid to help domestic transformer manufacturers who are grappling with high input price.

A senior official at MMTC said that last week the corporation held an initial round of talks with suppliers, including Japanese Nippon Steel.

MMTC intends to purchase silicon steel in bulk at low prices and then supply it to transformer manufacturers. There is also a reported shortage of raw material in the international market, further fueling the price rise.

An integral ingredient in making transformers, silicon steel price has shot up from $1,400 per tonne last year to almost $4,000 per tonne this year. This has put transformer companies in a fix as their clients, the power utilities, refused to increase transformer prices. Many of these companies are said to have failed to deliver transformers on the prior agreed prices.

Manufacturers allege suppliers of forming a cartel and dictating prices. They also blame the latter of supplying steel at cheaper rates to European firms. "If your prices are 30 to 60 per cent higher than others, how do you compete," a manufacturer wondered.

But the MMTC initiative is expected to give them breathing space. "We have good relationships with these silicon steel suppliers as they buy iron-ore from us. So we are hopeful of an outcome within a month. As of now, the suppliers have asked for our requirement," said the MMTC official.

Indian demand for silicon steel, at about 1.2 lakh tonne per year, is almost 10 per cent of the global demand.

"It is not viable to produce it in India as a minimum of 1.5 lakh tonne has to be produced yearly to make the business profitable. Plus, it's a technology-driven product," said Saif Qureshi, managing director, Kryfs Laminations. The company is one of the largest importers of silicon steel in the country.