The Essar Group arm, Essar Steel, has signed a long-term supply agreement with global major Posco for the supply of 1.1 million tonne of flat steel products during the current financial year.

This is the second year in a row that Essar Steel has signed such a contract. The contracted volume this year is higher by 30 per cent when compared to last year, according to a company statement.

A memorandum of understanding (MoU) signed between the two companies is in line with Essar Steel’s strategy to lock-in a certain portion of its production through long-term arrangements. In addition to Posco, Essar Steel has also signed supply contracts with customers from auto, and infrastructure segments and overseas markets as well.

Almost two million tonnes of flat steel products are used by Essar Steel in its downstream units thereby limiting its products’ availability in the spot market.

Dilip Oommen, CEO & MD, Essar Steel said, "Essar Steel's MoU with international player Posco re-validates our commitment to the perfect partnership. The long-term arrangement helps us in better working capital management and manage finished goods inventory. Long-term arrangements reflect the confidence of our customers in the quality, reliability and service of our products.”

Essar Steel has been ramping up production over the last two years. Last year, its production was up by 47 per cent at 5.6 mt and this year, it has set the target at seven mt.

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