New Delhi, May 4 (IANS): For the second year in a row, Essar Steel has signed a strategic long-term memorandum of understanding (MoU) with Posco for supply of 1.1 million tonnes of flat steel products during the current financial year, a company statement said here on Thursday.

The contracted volume this year is 30 per cent higher as compared to last year.

The MoU 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 MOUs with customers from auto, infrastructure sector and overseas customers as well. 

"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," said Dilip Oommen, CEO and MD, Essar Steel.

The company has been ramping up production over the last two years. In the last year, its production was up by 47 per cent at 5.6 million tonnes and its current year target is seven million tonnes.