Domestic production of silicon steel sought

Indian transformer manufacturers, like Bharat Heavy Electricals, Crompton Greaves, ABB, Emco, Alstom and Telec, are in talks with the Union steel ministry, urging it to ensure that silicon steel (CRGO steel) is produced domestically.

Silicon steel is the key commodity used in the manufacture of transformers, accounting for 40 per cent of their volume.

The domestic production of silicon steel, so far wholly imported, will ensure easy availability and enable transformer manufacturers to arrest the spiralling prices of their finished products.

Globally, silicon steel is made by only about 10 manufacturers in Europe, China, Japan and Korea. A monopolistic situation has enabled manufacturers to control supply the supply of silicon steel, thereby decreasing its availability and increasing the price.

"Silicon steel prices have quadrupled in the last 18 months to $4,000 a tonne. If the Centre's power sector reform targets have to be met, it will have to ensure an adequate domestic supply of the commodity," said Avinash Barve, senior director, operations, Indian Electrical and Electronics Manufacturers of India (IEEMA) "" the representative body of transformer makers.

Today, the demand for silicon steel from transformer makers is 1.10 lakh tonne. The requirement is expected to triple to 3 lakh tonne by 2010-2011, going by the government's plans, he said.

The increase in silicon steel prices is having a cascading effect on transformer prices, which have gone up by about 40 per cent in one year.

The price of a 160 mva transformer has gone up to Rs 3.3 crore from Rs 2.5 crore a year ago. The price of a 63 kva transformer has increased by 50 per cent to Rs 60,000 per unit in a year.