OREANDA-NEWS. On March 27, 2007 Novolipetsk Steel, NLMK (LSE: NLMK), the leading Russian steel producer, announced  that it has signed a long-term supply agreement with Tebian Electric Apparatus Stock Co., Ltd. (TBEA), the Chinese transformer producer, to supply grain-oriented (GO) electrical steel to China, reported the press-centre of  Novolipetsk Steel. The agreement will ensure a stable supply of GO steel produced by NLMK Group companies to China.  NLMK will supply 94,000 tonnes of grain-oriented steel to TBEA during the period 2007 - 2011. The agreement has a total value of USD460 million. The parties have nominated “RUSSTEEL” trading company to act as a commercial agent for shipments under the agreement.


The agreement is of strategic value to both parties.  NLMK will increase its supply of high value-added products to Chinese consumers while TBEA will develop its competitive advantages in the domestic and global electrical products market.  The parties have agreed to conduct regular monitoring of the efficiency of TBEA finished electrical products. The parties will also exchange information about major trends and developments in the transformer manufacturing industry in China as well as other countries. This approach will enable NLMK to obtain essential information to continue to improve GO steel quality.


Commenting on the agreement, Mr. Alexei Lapshin, President of NLMK, said: “This agreement is an important step in developing NLMK’s relations with fast-growing Chinese producers. Securing a stable GO steel supply to China will allow NLMK to increase the production of high value-added products along with ongoing quality improvements and gain a strong position in the growing Chinese market”. The General Director of TBEA, Mr. Yu Jun, said: “NLMK and TBEA hold leading market positions. This agreement is a result of the unique match of interest between our two companies. I strongly believe that that strategic relations between TBEA, the largest Chinese producer of transformers, and NLMK, one of the world’s leading GO steel producers, are mutually beneficial not only for our companies but also for the development of trade relations between China and Russia”. According to the agreement, the first GO steel supply contacts should be signed in the first half of 2007.