Electrical Steel Market Expected to Rise by 11.29% CAGR by 2028

 The Electrical Steel Market is projected to experience significant expansion, with an anticipated increase of USD 24.25 billion and a compound annual growth rate (CAGR) of 11.29% from 2023 to 2028. This growth is largely driven by the increasing demand for electrical steel across various industries, particularly the automotive sector. The shift towards electric and hybrid vehicles is one of the key factors propelling the need for electrical steel, as these vehicles require substantial quantities of the material for their motors and transformers. 

To meet this growing demand, companies are ramping up production capacities. Furthermore, the excess production capacity in steel manufacturing plants offers opportunities for price competition, which could further fuel market expansion. These factors combine to create a positive outlook for the electrical steel market, presenting a valuable opportunity for investment.

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Market Segmentation

The electrical steel market is segmented by type, end-user, and region. The following sections provide a detailed analysis of these segments, with forecasts and estimates in "USD Billion" from 2024 to 2028, and historical data from 2018 to 2022.

Type of Electrical Steel:

  1. Grain-oriented electrical steel
  2. Non-grain-oriented electrical steel

End-User Segmentation:

  • Automotive
  • Manufacturing
  • Energy generation

Regional Segmentation:

  • North America (U.S., Canada)
  • Europe (U.K., Germany, France, Rest of Europe)
  • APAC (China, India)
  • Middle East & Africa (Saudi Arabia, South Africa, Rest of the Middle East & Africa)
  • South America (Chile, Argentina, Brazil)

Market Insights by Type

The grain-oriented electrical steel segment is expected to experience substantial growth over the forecast period. This type of steel is crucial for the manufacturing of large, high-performance generators and energy-efficient transformers. It is commonly used in laminated, wrapped, or punched sheets for components like power transformers, distribution transformers, and miniature transformers.

In 2018, the grain-oriented electrical steel segment accounted for the largest portion of the market, valued at USD 18.88 billion. This steel is highly favored for its superior permeability and energy efficiency, which are essential for high-efficiency transformers. Its applications in power generation plants—such as turbine body casings, rotor shafts, compressors, and various components—will continue to drive growth in the electrical steel market.

Market Insights by End-User

The automotive industry is the largest end-user of electrical steel, contributing significantly to the market's growth. The anticipated increase in global vehicle production will drive demand in this sector. Key automotive-producing regions, such as Germany, South Korea, Japan, India, and China, are expected to see continued growth in vehicle manufacturing. As emerging economies like India experience rising demand for vehicles, the global electrical steel market will also benefit from increased consumption within the automotive industry.

Regional Analysis

The Asia-Pacific (APAC) region is expected to contribute 77% to the market's growth during the forecast period. Rapid industrialization and infrastructure development across countries like China and India are key drivers. Additionally, the region's transition towards renewable energy sources and sustainable infrastructure will further fuel demand for electrical steel. The rising adoption of green technologies, including recycling and energy efficiency measures, will help address environmental concerns linked to the steel manufacturing process.

High-efficiency transformers made from grain-oriented electrical steel are critical for power generation and transmission, as they reduce energy loss and enhance system performance. Furthermore, renewable energy sources such as wind and solar power require advanced power transmission technologies and motors, which further contributes to the rising demand for electrical steel.

Market Dynamics

Electrical steel is vital for various electrical and electronic applications due to its distinctive magnetic properties. Its high permeability and low core loss make it the material of choice for components in solenoids, electric motors, generators, relays, and power distribution. Grain-oriented electrical steel, like Powercore, is widely used in distribution transformers, which play a key role in voltage transformation and power grid systems.

The growing demand for energy-efficient transformers and the focus on energy conservation and renewable energy sources are driving the electrical steel market. Grain-oriented electrical steel's superior magnetic permeability and reduced hysteresis loss make it ideal for high-efficiency motors and advanced power transmission technologies. Additionally, advancements in steel production techniques are helping reduce energy losses, which boosts demand.

Key Market Drivers

One of the main factors driving the electrical steel market is the growing demand from the automotive industry. Automakers are focusing on producing lighter, fuel-efficient, and environmentally friendly vehicles to comply with strict emission regulations. While plastic and polymer components help reduce vehicle weight and emissions, key automotive parts, including engines, chassis, gearboxes, and exhaust systems, are made from metal for durability and strength. The rise in global vehicle production, particularly electric vehicles (EVs), is expected to increase the demand for electrical steel over the forecast period.

Key Market Trend

The expansion of production capacity among manufacturers is a significant trend in the electrical steel market. Companies are enhancing their production capabilities to meet the growing demand from various industries. For instance, Ansteel Group Corp. Ltd. (Ben Gang Group) merged in August 2021, becoming the third-largest steelmaker in the world with an annual production capacity of 63 million tons of crude steel. The company aims to reach 70 million tons by 2025, which highlights the growing industry focus on expanding production capacity to meet increasing demand.

Major Market Challenges

Despite strong growth prospects, excess production capacity in steel manufacturing plants presents a challenge to the electrical steel market. Overproduction in some regions leads to low capacity utilization rates, causing an imbalance between supply and demand. To address this, the Chinese government has implemented measures to restructure the steel industry, including shutting down outdated steel production facilities. Additionally, low-cost production in certain regions may create price distortions and hinder market growth.

Competitive Landscape

The electrical steel market is highly competitive, with major players employing strategies such as mergers, acquisitions, partnerships, and geographic expansion to strengthen their market positions. Leading companies in the industry include:

  • Voestalpine AG
  • Ansteel Group Corp. Ltd.
  • Aperam SA
  • ArcelorMittal
  • Arnold Magnetic Technologies Corp.
  • Beijing Shougang Co. Ltd.
  • China BaoWu Steel Group Corp. Ltd.
  • China Steel Corp.
  • Cleveland Cliffs Inc.
  • JFE Holdings Inc.

Click here to download Electrical Steel Market SamplePDF

Market Overview

Electrical steel plays a crucial role in various electrical and electronic applications, owing to its unique magnetic characteristics, which include high permeability and minimal core loss. These properties make it indispensable in the production of magnetic components such as solenoids, electric motors, generators, and industrial machinery. Additionally, grain-oriented electrical steel is widely used in transformers, induction motors, and power transmission components, driving its demand in the power sector.

The ongoing emphasis on energy conservation, the shift toward renewable energy, and the growing need for energy-efficient vehicles and infrastructure are all contributing to the increasing demand for electrical steel. Innovations in steel production processes, including improved magnetic properties and reduced energy losses, are expected to further support market growth.

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