Why CRGO Availability in India Remains Tight Despite Slow Transformer Demand

India’s transformer industry has experienced a visible slowdown in fresh orders over the past few months. Yet, paradoxically, the availability of Cold Rolled Grain Oriented (CRGO) electrical steel continues to remain tight. Prices have not corrected meaningfully, sourcing has become selective, and buyers often find fewer quality options despite reduced immediate demand. This apparent contradiction has left many transformer manufacturers and procurement teams questioning what is really happening in the CRGO market.

To understand this situation, one must look beyond short-term demand cycles and examine the structural realities of CRGO supply, sourcing dependence, inventory behavior, and long-term power sector planning in India.

India’s Structural Dependence on Imported CRGO

India produces only a small fraction of the CRGO it consumes. Domestic production is limited, and most high-grade CRGO used for power and distribution transformers—especially 0.23 mm and thinner grades—is imported. The primary sources remain Japan, South Korea, and select European mills.

This import dependence means that CRGO availability in India is not directly proportional to short-term transformer demand. Supply is driven by:

• Long-term mill allocation cycles

• Import lead times of several months

• Advance booking commitments by large buyers

  
  

Even when transformer demand slows temporarily, CRGO inflow does not automatically increase or become cheaper, because production decisions are taken much earlier at the mill level.

Global CRGO Production Is Capacity-Constrained

CRGO is a specialized electrical steel with limited global producers. Unlike commodity steel, CRGO production cannot be ramped up quickly. Mills operate on controlled volumes to maintain magnetic properties such as low core loss and consistent grain orientation.

Over the past few years, global CRGO supply has faced pressure due to:

• Energy transition projects worldwide

• Grid upgrades in multiple countries

• Replacement demand for aging transformers

As a result, mills continue to prioritize stable, long-term customers rather than spot-market flexibility. This keeps availability tight even when local demand in a single country appears subdued.

Inventory Is Locked With Select Holders

Another key reason for tight availability is inventory concentration. A significant portion of CRGO material—especially prime coils and usable secondary sheets—is held by:

• Large transformer manufacturers

• Strategic traders with long-term positions

• Buyers who stocked material during earlier uncertainty phases

These holders are often under no urgency to liquidate stock at lower prices. Instead, they prefer to release material selectively, preserving price stability. This behavior prevents a sudden oversupply situation in the open market.

Secondary CRGO Demand Remains Consistent

While fresh transformer orders may slow, secondary CRGO demand does not fall at the same rate. Repair, replacement, rural electrification, and small transformer manufacturing continue steadily. Many manufacturers rely on secondary CRGO sheets and coils for cost-effective production.

This ongoing baseline demand absorbs available secondary material, ensuring that even non-prime CRGO remains in circulation without significant accumulation of excess stock.

Policy Signals and Forward-Looking Procurement

Another important factor is forward visibility. Transformer manufacturers and large buyers are well aware that government-backed power projects and utility tenders typically resume momentum after certain fiscal or administrative cycles.

Procurement teams often avoid over-reacting to short-term slowdowns because:

• Grid expansion and replacement demand is structural

• Power infrastructure investment is not discretionary

• Delayed orders usually convert into bulk releases later

This expectation encourages buyers to hold positions rather than trigger price corrections by distress selling.

Quality Sensitivity Limits Effective Supply

Not all CRGO is interchangeable. Buyers increasingly focus on:

• Core loss consistency

• Thickness accuracy

• Coating condition (oily vs dry)

• Laser-treated vs non-laser material

Even if volume exists in the market, usable and acceptable quality material is limited. This quality filtering further tightens effective availability, especially for manufacturers catering to utilities and export markets.

What This Means for Indian Buyers

The current CRGO market should not be interpreted as artificially tight or manipulated. It reflects a structurally constrained supply chain that does not respond instantly to short-term demand fluctuations.

For buyers, this means:

• Waiting for price drops may not yield results

• Planning procurement in advance remains critical

• Reliable sourcing partners matter more than spot pricing

Role of Market Intermediaries

In such conditions, experienced intermediaries play an important role in bridging gaps between supply holders and genuine buyers. Transparent information, grade clarity, and realistic pricing expectations help transactions move even in slow markets.

At S M Steels, we actively work with transformer manufacturers, OEMs, and traders across India to source suitable CRGO materials—both prime and secondary—based on real-time availability rather than speculative pricing.