In a first mixing process, soft magnetic powders and inorganic insulative powders of 0.4-1.5 wt % relative to the soft magnetic powders are mixed. In the heating process, a mixture through the first mixing process is heated at a temperature of 1000° C. or more and below the sintering temperature of the soft magnetic powders under a non-oxidizing atmosphere. In the granulating process, a silane coupling agent of 0.1-0.5 wt % is added to form an adhesiveness enhancing layer. A silicon resin of 0.5-2.0 wt % is added to the soft magnetic alloy powders having the adhesiveness enhancing layer formed by the silane coupling agent to form a binding layer. A lubricating resin is mixed, and a mixture is pressed and molded to form a mold. In an annealing process, the mold is annealed under a non-oxidizing atmosphere to form a dust core which is used to form a reactor.