Electrical Steel Market - By Product (Grain Oriented, Non-Grain-Oriented), By Application (Large Power Transformers, Distribution Transformers, Small Transformers, Power Generators, Audio Transformers), By End User & Forecast, 2024 – 2032

Electrical Steel Market Size

Electrical Steel Market was valued at USD 38.18 billion in 2023 and is anticipated to register 6.5% CAGR between 2024 and 2032. The increase in the adoption of smart grids is a major growth factor in the market. As countries worldwide modernize their electricity infrastructure, smart grids are increasingly being deployed to improve grid efficiency, reliability, and sustainability.

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Smart grids use advanced digital communications and control technologies to optimize energy distribution, enable real-time monitoring, and more efficiently integrate renewable energy sources. Electrical steel is crucial in manufacturing key smart grid components, including transformers, sensors, and meters. These components require high-quality electrical steel for optimal performance and efficiency. As smart grids become more common to solve energy challenges and improve grid sustainability, the demand for electrical steel will increase significantly, stimulating market expansion and innovation in the coming years.

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In addition, technological advances in electrical steel production are another important growth factor.

Continuous innovations in production processes and material composition lead to the development of high-performance electrical steels with better magnetic properties and lower energy losses. These advances enable manufacturers to produce electrical steels that meet the increasingly stringent performance requirements of diverse applications, including transformers, motors, and generators. Advanced manufacturing techniques such as improved annealing processes, grain orientation control, and alloy optimization contribute to the production of electrical steels with better magnetic and mechanical properties. In addition, R&D initiatives focused on nanotechnology and materials science will advance electrical steel production, paving the way for next-generation material.

A major market restraint is fluctuating raw material prices. The dependence of markets on key raw materials such as iron ore and various alloys makes them vulnerable to price fluctuations due to factors such as supply and demand dynamics, geopolitical tensions, and exchange rate fluctuations. Fluctuations in raw material prices can disrupt production schedules, affect profit margins, and create forecasting and planning challenges for both producers and end users. In addition, sharp increases in commodity prices can affect the overall competitiveness of electrical steel products in the market and cause uncertainty among stakeholders throughout the supply chain. Therefore, managing and mitigating the risks associated with commodity price fluctuations remains a major concern for players in the electrical steel industry.

Electrical Steel Market Trends

The growing demand for energy-efficient solutions is shaping the landscape of various industries and increasing the need for electrical steel. Several sectors, such as the automotive industry, renewable energy, and home appliances, are making concerted efforts to optimize energy use and reduce environmental impact. Electrical steel plays a key role in this effort by increasing the efficiency of electrical equipment and systems. Its unique magnetic properties allow transformers, motors, and generators to be produced with minimal energy loss, maximizing overall system efficiency. As industries prioritize sustainability and look for ways to reduce operating costs, the demand for electrical steel continues to grow.

Furthermore, the implementation of stringent environmental laws has emerged as another significant market trend, exerting a profound impact on the demand for electrical steel. Governments worldwide are enacting regulations, aiming to reduce carbon emissions and enhance energy efficiency across industries.

In response to these regulations, industries are compelled to invest in energy-efficient equipment and technologies to comply with environmental standards and reduce their carbon footprint. Electrical steel, known for its role in enhancing the efficiency of electrical equipment and systems, has become increasingly sought after as industries seek to meet regulatory requirements while optimizing operational efficiency. This surge in demand for energy-efficient solutions, driven by regulatory pressures, is driving the growth of the market as industries across sectors prioritize sustainability and environmental stewardship.

Electrical Steel Market Analysis

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Based on product, the electric steel market is divided into grain-oriented electric steel and non-grain-oriented electric steel. Non-grain electrical steel held the dominant market share of USD 24.4 billion in 2023 and will grow at 6.4% CAGR through 2032, due to its versatile applications in various electrical devices. Unlike grain-oriented steel, NGO electric steel has uniformly distributed magnetic properties, making it ideal for use in rotating machinery such as motors and generators. The increasing demand for electric vehicles (EVs) is a major driver for the NGO electric steel segment, as this material is essential for the efficient functioning of EV motors.

Additionally, NGO electric steel is extensively used in household appliances, power tools, and industrial machinery, further broadening its market scope. The ongoing advancements in manufacturing processes are improving the quality and performance of NGO electric steel, making it a preferred choice for high-efficiency applications. As industries continue to prioritize energy efficiency and performance, the demand for NGO electric steel is expected to rise significantly.

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Based on application, the market is categorized into large power transformers, distribution transformers, small transformers, power generators, audio transformers, and others. Large transformers accounted for USD 6.2 billion in 2023 and is projected to grow at 7% CAGR through 2032. Large power transformers, essential for high-voltage power transmission, rely on high-quality electric steel to minimize energy losses and ensure efficient performance.

The growth of renewable energy projects, such as wind farms and solar power plants, is a significant driver for this segment, as these projects require robust and efficient transformers to connect to the grid. Additionally, the modernization and expansion of electrical grids, particularly in developing regions, are increasing the demand for large power transformers. Governments and utilities are investing heavily in upgrading aging infrastructure to improve reliability and capacity, thereby boosting the market for electric steel. The rise in urbanization and industrialization also necessitates the development of efficient power transmission systems, further driving the demand for large power transformers and, consequently, electric steel.

By end user, the energy segment emerges as the fastest-growing category within the electric steel market, fueled by several pivotal growth drivers. As the world transitions towards a more sustainable energy landscape, there's an increasing need for efficient energy storage solutions to address the intermittency of renewable energy sources like wind and solar power. Energy storage systems serve as vital components in managing the variability of renewable energy generation, ensuring grid stability, and meeting fluctuating energy demands. Electric steel plays a crucial role in the manufacturing of key components within these energy storage systems, including transformers and inverters.

Transformers are essential for stepping up or down voltages within the system. On the other hand, inverters are crucial for converting direct current (DC) electricity from batteries into alternating current (AC) electricity that can be used to power homes, businesses, and industries. These components rely on high-quality electric steel due to its superior magnetic properties and low energy losses, ensuring the efficiency and reliability of energy storage systems. With the rapid growth of renewable energy deployment and the increasing adoption of energy storage solutions worldwide, driven by advancements in battery technology, supportive government policies, and the need for grid resilience, the demand for electric steel in the energy storage segment is poised to experience significant growth in the coming years.

In addition, electrical steel supports the development of smart grid technologies, which is another emerging segment in the electrical steel market. Smart grids use advanced digital communication and control technologies to improve the efficiency, reliability, and sustainability of electricity supply. Electrical steel is used to make components such as sensors, relays, and smart meters that are integral to the operation and monitoring of smart grid networks.

These components enable real-time monitoring of power consumption, facilitate dynamic pricing models, and improve fault and outage management, ultimately optimizing network performance and increasing energy efficiency. As the global drive to modernize and digitize the grid accelerates due to increasing energy demand, aging infrastructure, and the need for grid resilience due to climate change, the demand for electrical steel in the smart grid segment is set to grow notably.

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North America dominated the electrical steel market in 2023. It generated a revenue of USD 9.3 billion in 2023 and will grow at 6.2% CAGR during the forecast period. In North America, the market is experiencing robust growth, driven by several factors unique to the region. The United States and Canada are at the forefront of renewable energy adoption, with significant investments in wind, solar, and hydroelectric power projects.

This transition toward renewable energy is increasing the demand for electric steel in the production of energy-efficient transformers and generators. Besides, North America is witnessing substantial infrastructure development, including the modernization of electrical grids and the expansion of urban areas, which further fuels the demand for electric steel. The region's strong automotive industry, particularly the growing market for electric vehicles, is also a major driver for electric steel, as high-efficiency motors are essential for EV performance. Furthermore, stringent government regulations aimed at improving energy efficiency and reducing greenhouse gas emissions are encouraging the adoption of advanced electrical materials, including high-grade electric steel. With its technological advancements, strong industrial base, and commitment to sustainability, North America is poised to be a significant player in the global market.

In North America, the USA stands out as a dominant player in the electrical steel market. Several factors contribute to the USA’s prominence in this sector. The United States stands at the forefront of renewable energy adoption, with significant investments in wind, solar, and hydroelectric power projects. This transition towards renewable energy sources is leading to an increased demand for electric steel, particularly in the production of energy-efficient transformers and generators necessary for grid integration. Furthermore, North America is experiencing substantial infrastructure development, including the modernization of electrical grids and the expansion of urban areas. This infrastructure growth further fuels the demand for electric steel as it is essential for the efficient operation of power transmission and distribution systems.
In addition, the region's strong automotive industry, particularly the growing market for electric vehicles, is a major driver for electric steel demand, as high-efficiency motors are vital components in electric vehicles. Moreover, stringent government regulations aimed at improving energy efficiency and reducing greenhouse gas emissions are encouraging the adoption of advanced electrical materials, including high-grade electric steel. With its technological advancements, strong industrial base, and commitment to sustainability, North America, particularly the United States, is poised to remain a significant player in the global Electric Steel Market.

Electrical Steel Market Share

Prominent players such as POSCO, Tata Steel, and Arcelor Mittal, play integral roles in driving growth and innovation within the market. ArcelorMittal and Nippon Steel Corporation focus on technological innovation and strategic partnerships to enhance product quality and efficiency. POSCO and Baosteel Group Corporation invest heavily in research and development to develop advanced steel grades, while Voestalpine AG emphasizes sustainable production methods. Tata Steel and JFE Steel Corporation expand their global footprint through acquisitions and joint ventures. ThyssenKrupp and AK Steel, now part of Cleveland-Cliffs Inc., leverage their extensive distribution networks to reach new markets. Aperam focuses on optimizing its production processes and expanding its product portfolio to meet the increasing demand for high-performance electrical steels.

Electrical Steel Market Companies

Major players operating in the electrical steel industry include

• AK Steel (a subsidiary of Cleveland-Cliffs Inc.)
• Aperam
• ArcelorMittal
• Baosteel Group Corporation
• JFE Steel Corporation
• Nippon Steel Corporation
• POSCO
• Tata Steel
• ThyssenKrupp
• Voestalpine AG

Electrical Steel Industry News

• In April 2024, Tata Steel teamed up with National Grid Plc's Electricity System Operator to spearhead the development of power infrastructure crucial for its green steel initiative at the Port Talbot site. Under this partnership, the British grid operator is slated to construct a new electrical system to assist Tata Steel's 3.2-million-ton electric arc furnace, set to be functional by the conclusion of 2027.
• In December 2023, Nippon Steel Corporation, Japan’s largest steelmaker, and United States Steel Corporation, a leading U.S. steel producer, announced a definitive agreement for NSC to acquire U.S. Steel in an all-cash transaction. This acquisition will enhance NSC’s manufacturing and technology capabilities and expand its geographic reach, allowing it to better serve its customers and society at large.

The electrical steel market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue and volume (USD Million) (Kilo Tons) from 2021 to 2032, for the following segments

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Market, By Application

• Grain oriented electrical steel
  • By application
    • Large power transformers
    • Distribution transformers
    • Small transformers
    • Power generators
    • Audio transformers
    • Others
  • By end use
    • Energy
    • Automotive
    • Manufacturing
    • Household appliances
• Non-grain oriented electrical steel
  • By product
    • Fully processed
    • Semi-processed
  • By application
    • Power generators
    • Motors
    • Ballasts
    • Rotating machines
    • Small transformers
    • Audio transformers
    • Others
  • By end use
    • Energy
    • Automotive
    • Manufacturing
    • Household appliances

The above information is provided for the following regions and countries

• North America
  • U.S.
  • Canada 
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• MEA
  • Saudi Arabia
  • UAE
  • South Africa
  • Rest of MEA