Electrical Steel Market Analysis with USD 18.5 Billion Growth and CAGR of 3.94% with Regional Outlook Forecast of 2024-2032

Electrical steel, also known as silicon steel or lamination steel, is a specialized steel type used primarily in the production of electrical components like transformers, generators, and motors. This steel’s unique properties, such as high magnetic permeability, low hysteresis loss, and reduced core loss, make it ideal for improving the efficiency of electrical machines and equipment. Electrical steel plays a critical role in modern energy systems, particularly as the world transitions to more energy-efficient technologies and renewable energy solutions.

The global electrical steel market has witnessed steady growth, driven by rising energy demand, the expansion of renewable energy sources, and the increasing need for efficient power distribution systems. Industries such as automotive, energy, and manufacturing are among the largest consumers of electrical steel. As the global focus on sustainability and electrification grows, the market is poised to expand significantly in the coming years.

The Electrical Steel Market was valued at USD 12.58 billion in 2022 and is projected to grow from USD 13.07 billion in 2023 to USD 18.5 billion by 2032, reflecting a compound annual growth rate (CAGR) of 3.94% over the forecast period (2024–2032).

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Market Drivers

1. Growing Demand for Energy-Efficient Electrical Machines

The global push toward energy efficiency is one of the key drivers of the electrical steel market. Electrical steel is essential in manufacturing transformers, electric motors, and generators—equipment that is critical in reducing energy losses and improving operational efficiency. As industries, governments, and consumers focus on reducing energy consumption and minimizing carbon footprints, the demand for electrical steel in energy-efficient devices has increased.

This trend is further supported by regulatory mandates and standards, such as energy efficiency labels and minimum performance standards (MEPS), which encourage the adoption of high-efficiency electrical appliances and machinery.

2. Expansion of Renewable Energy Sources

The increasing adoption of renewable energy sources, such as wind and solar power, has created a significant demand for electrical steel. Transformers, generators, and other components used in renewable energy systems rely heavily on electrical steel for their efficient operation. With governments worldwide setting ambitious targets to increase the share of renewables in their energy mix, the electrical steel market is benefiting from the expansion of wind farms, solar installations, and smart grid infrastructure.

In particular, non-grain oriented (NGO) electrical steel, which is used in rotating machines like wind turbine generators, is expected to see significant growth due to the rising deployment of wind power projects.

3. Growing Electric Vehicle (EV) Market

The automotive industry is undergoing a profound transformation as electric vehicles (EVs) become more prevalent. EV motors rely on electrical steel to optimize efficiency and minimize energy losses. As the global automotive sector shifts towards electrification, the demand for electrical steel in EV motors, battery systems, and charging infrastructure is increasing.

Governments’ policies supporting EV adoption, such as subsidies, tax incentives, and investments in EV infrastructure, further boost the demand for electrical steel. Leading automakers are also ramping up their EV production, leading to higher consumption of electrical steel in the automotive sector.

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Market Segmentation

The electrical steel market can be segmented based on product type, application, and region.

1. By Product Type

• Grain-Oriented Electrical Steel (GOES): Grain-oriented electrical steel is mainly used in static machines, such as transformers. It is designed to have a high magnetic permeability in the rolling direction, making it highly efficient in minimizing energy losses in transformers and generators. This type of steel is typically used in power distribution and large-scale industrial applications.
• Non-Grain Oriented Electrical Steel (NGOES): Non-grain oriented electrical steel is used in rotating machines, such as motors and alternators. Its magnetic properties are uniform in all directions, making it suitable for applications that require rotating magnetic fields, such as electric motors and generators. NGO electrical steel is commonly used in industries such as automotive, renewable energy, and manufacturing.

2. By Application

• Transformers: Electrical steel is a key material in the production of power and distribution transformers. The increasing demand for electricity, coupled with the modernization of grid infrastructure, has driven the need for more efficient transformers. Grain-oriented electrical steel is particularly important in this segment, as it helps reduce energy losses in transformers and enhances overall grid efficiency.
• Motors: The motor segment is one of the largest consumers of electrical steel, particularly in industries such as automotive, industrial manufacturing, and consumer goods. Electric motors used in various applications, from household appliances to electric vehicles, rely on non-grain oriented electrical steel to operate efficiently.
• Generators: Electrical steel is also used in the production of generators, particularly those used in renewable energy systems such as wind turbines. As the adoption of renewable energy grows, so does the demand for efficient generators that rely on high-performance electrical steel.

3. By Region

• Asia-Pacific: The Asia-Pacific region is the largest market for electrical steel, driven by the rapid industrialization and urbanization in countries like China and India. The region is also a major hub for automotive manufacturing, and the growing demand for electric vehicles has further fueled the consumption of electrical steel. Additionally, government initiatives to modernize power infrastructure and increase the share of renewable energy in the energy mix are contributing to the market’s growth in this region.
• North America: The electrical steel market in North America is driven by the modernization of aging power grids, the expansion of renewable energy projects, and the increasing adoption of electric vehicles. The United States, in particular, has seen significant investments in grid modernization and renewable energy, boosting demand for transformers, motors, and other electrical equipment that rely on electrical steel.
• Europe: Europe is another key market for electrical steel, with a strong focus on energy efficiency and sustainability. The European Union’s commitment to reducing carbon emissions and increasing the share of renewable energy has led to increased demand for electrical steel in various applications, including wind turbines, transformers, and electric vehicles. Countries like Germany, France, and the UK are at the forefront of this trend, with significant investments in green energy and electric mobility.

Trends and Opportunities

1. Technological Advancements in Electrical Steel Production

Advancements in steelmaking technologies are expected to enhance the performance of electrical steel. New manufacturing processes that improve the magnetic properties of electrical steel, reduce core losses, and increase energy efficiency are being developed. These innovations will likely open up new applications and improve the competitiveness of electrical steel in the market.

2. Increasing Focus on Sustainability

Sustainability is becoming a key focus for industries worldwide, and the electrical steel market is no exception. Manufacturers are increasingly looking for ways to reduce the environmental impact of steel production by adopting cleaner production technologies and increasing the use of recycled materials. This shift toward sustainable production practices presents opportunities for companies to differentiate themselves in the market.

3. Expanding Infrastructure Investments

Global infrastructure investments, particularly in the energy sector, are expected to boost the demand for electrical steel. Investments in smart grids, renewable energy projects, and electrification initiatives are creating opportunities for the electrical steel market to expand further. In particular, the growing focus on decarbonizing energy systems and reducing transmission losses will drive demand for high-performance electrical steel in the power sector.

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 Key Companies Profiled:

POSCO, HBIS Group, Hyundai Steel, thyssenkrupp Steel, Ansteel Group, Tata Steel, China Baowu Steel Group, Wuhan Iron and Steel Group, Nippon Steel, JFE Steel, Voestalpine, Shougang Group, Nucor, ArcelorMittal, Baosteel

Conclusion

The electrical steel market is poised for significant growth in the coming years, driven by increasing demand for energy-efficient technologies, the expansion of renewable energy sources, and the rapid adoption of electric vehicles. As industries and governments prioritize sustainability and efficiency, electrical steel will continue to play a critical role in shaping the future of energy and power systems. With ongoing technological advancements and the global shift toward cleaner energy solutions, the electrical steel market presents vast opportunities for innovation and expansion.

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