The global electrical steel market size was valued at USD 44.56 billion in 2025 and is projected to grow from USD 47.46 billion in 2026 to USD 78.54 billion by 2034 at a CAGR of 6.5% during the forecast period 2026-2034. Asia Pacific dominated the electrical steel market with a market share of 46.8% in 2025.
The electrical steel market comprises the production, distribution, and application of specialised steel alloys engineered to deliver high magnetic permeability and low core losses in electromagnetic equipment. Electrical steel is widely used in transformers, electric motors, generators, inductors, and power transmission systems. Market growth is driven by increasing electricity demand, grid modernisation, renewable energy integration, electric vehicle adoption, and advancements in energy-efficient electrical infrastructure.
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Growing Investments in Energy-Efficient Power Infrastructure
The global electrical steel market is witnessing strong growth due to increasing investments in energy-efficient power transmission and distribution infrastructure. Governments and utilities are upgrading ageing power grids while expanding renewable energy capacity, creating higher demand for grain-oriented and non-grain-oriented electrical steel used in transformers, generators, and transmission equipment. The shift towards low-loss electrical steel is helping improve energy efficiency and reduce power losses across electricity networks.
Rising Demand from Electric Vehicle Manufacturing
The rapid expansion of the electric vehicle (EV) industry is driving significant demand for electrical steel used in traction motors and electric drivetrains. Automakers are increasingly adopting high-performance non-grain-oriented electrical steel to improve motor efficiency, increase driving range, and reduce energy losses. Growing EV production, coupled with investments in battery manufacturing and charging infrastructure, continues to support market growth.
Rising Demand for Energy-Efficient Power Infrastructure
The electrical steel market is primarily driven by the increasing demand for energy-efficient transformers, electric motors, and power transmission equipment. Governments worldwide are investing in grid modernization, renewable energy integration, and energy-efficient electrical systems to reduce transmission losses and carbon emissions. The rapid expansion of electric vehicle (EV) production is also boosting the consumption of electrical steel in traction motors. According to the International Energy Agency (IEA), global electricity demand grew by approximately 4.3% in 2024, while renewable power capacity continues to expand, increasing the need for high-performance electrical steel in transformers and grid infrastructure.
High Production Costs and Raw Material Price Volatility
The high manufacturing cost of electrical steel remains a major restraint for market growth. Producing grain-oriented and non-grain-oriented electrical steel requires advanced processing technologies, precision rolling, and specialized coatings, resulting in higher production costs. In addition, fluctuations in steel and alloy prices directly impact manufacturers' profit margins and product pricing. Energy-intensive manufacturing processes and stringent environmental regulations further increase operating expenses. These factors make electrical steel more expensive than conventional steel, limiting its adoption in cost-sensitive applications and developing economies.
Growing Investments in Electric Vehicles and Smart Grids
The rapid adoption of electric vehicles, renewable energy projects, and smart grid infrastructure is creating substantial opportunities for the electrical steel market. High-efficiency electrical steel is essential for EV motors, charging infrastructure, transformers, and renewable power generation equipment. Governments across North America, Europe, and Asia-Pacific are increasing investments in clean energy and power grid modernization to improve electricity reliability and reduce carbon emissions. The rising deployment of wind and solar energy projects is expected to further strengthen demand for advanced grain-oriented and non-grain-oriented electrical steel, creating long-term growth opportunities for manufacturers.
Capacity Constraints and Stringent Quality Requirements
The electrical steel market faces significant challenges due to limited global production capacity for high-grade electrical steel and stringent quality standards required for energy-efficient applications. Manufacturing premium electrical steel requires specialized technology, skilled labour, and substantial capital investment, creating barriers for new entrants. At the same time, growing demand from transformer and EV manufacturers is placing pressure on existing production facilities. Supply chain disruptions, long lead times, and the need to meet increasingly strict energy-efficiency standards continue to challenge manufacturers seeking to expand production while maintaining product quality and competitive pricing.
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Non-Grain Oriented Electrical Steel Dominated the Market with 64.2% Share in 2025
The non-grain oriented electrical steel segment accounted for the largest share of the global electrical steel market at 64.2% in 2025, driven by its extensive use in electric motors, generators, household appliances, and electric vehicles. Its superior magnetic properties and growing demand across industrial and automotive applications continue to support segment growth.
Motors are Projected to Register the Fastest Growth at a CAGR of 8.1%
The motors segment is expected to expand at the highest CAGR of 8.1% during 2026–2034, supported by the rising adoption of electric vehicles, increasing industrial automation, expanding manufacturing activities, and growing demand for energy-efficient motor systems across various industries.
Energy & Power Dominated the Market with 31.4% Share in 2025
The energy & power segment accounted for the largest share of the global electrical steel market at 31.4% in 2025, driven by increasing investments in power generation, transmission, and distribution infrastructure. Growing deployment of transformers, grid modernisation projects, and the integration of renewable energy sources continue to strengthen demand for electrical steel in this sector.
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Asia Pacific dominated the electrical steel market with a 46.8% share, valued at USD 20.85 billion in 2025. The region's leadership is driven by rapid industrialisation, expanding power generation and transmission infrastructure, growing electric vehicle (EV) production, and increasing investments in renewable energy projects. Strong manufacturing capabilities, rising electricity demand, and government initiatives supporting energy-efficient technologies continue to drive regional market growth.
China accounted for the largest share of the Asia Pacific market in 2025. Growth is supported by large-scale investments in power grid expansion, increasing production of electric vehicles and industrial equipment, strong domestic manufacturing capacity, and rising demand for energy-efficient transformers and motors.
Japan is witnessing steady market growth due to its advanced manufacturing sector, increasing adoption of high-grade electrical steel in electric motors and transformers, continuous investments in energy-efficient technologies, and growing demand from the automotive and electronics industries.
North America accounted for 20.4% of the global electrical steel market, reaching USD 9.09 billion in 2025. Market growth is driven by increasing investments in grid modernisation, rising adoption of electric vehicles, expanding renewable energy capacity, and growing demand for energy-efficient electrical equipment. Government initiatives promoting clean energy and sustainable infrastructure further support regional expansion.
The United States represents the largest market in North America, driven by increasing investments in electrical infrastructure, expanding EV manufacturing, rising demand for high-efficiency transformers, and ongoing modernisation of ageing power grids.
Canada is experiencing steady market growth due to increasing renewable energy projects, investments in power transmission infrastructure, growing adoption of electric vehicles, and rising demand for energy-efficient electrical components.
Europe accounted for 19.7% of the global market, valued at USD 8.78 billion in 2025, and is projected to register the fastest CAGR of 8.4% during the forecast period. Growth is supported by stringent energy efficiency regulations, increasing renewable energy integration, expanding EV production, and rising investments in smart grid infrastructure across the region.
Germany leads the European market owing to its strong automotive industry, advanced electrical equipment manufacturing, increasing production of electric vehicles, and continuous investments in renewable energy and industrial automation.
The United Kingdom is witnessing increasing demand for electrical steel due to investments in offshore wind energy, grid modernisation initiatives, growing adoption of electric vehicles, and expanding deployment of energy-efficient electrical systems.
Latin America represented 6.9% of the global market, totaling USD 3.07 billion in 2025. Market growth is supported by increasing investments in power generation, expanding industrial activities, rising renewable energy projects, and growing demand for efficient electrical transmission and distribution equipment.
Brazil is the largest market in Latin America, driven by expanding electricity infrastructure, increasing industrial production, growing renewable energy investments, and rising demand for transformers and electric motors.
Mexico continues to experience market growth due to expanding automotive manufacturing, increasing industrial automation, growing investments in power infrastructure, and rising demand for energy-efficient electrical equipment.
The Middle East & Africa represented 6.2% of the global market, totaling USD 2.76 billion in 2025. Rising investments in power infrastructure, increasing renewable energy capacity, expanding industrial development, and growing electricity demand are supporting regional market growth.
The UAE is a key market in the Middle East, driven by smart grid development, expanding renewable energy projects, increasing investments in modern electrical infrastructure, and growing demand for high-efficiency transformers and electrical equipment.
Africa is witnessing gradual market growth, supported by expanding electricity access, increasing investments in transmission and distribution networks, rising renewable energy installations, and growing industrialisation. Countries such as South Africa, Egypt, and Nigeria are creating long-term growth opportunities for electrical steel manufacturers.
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Author's Details
Research Associate
Tejas Zamde is a Research Associate with 2 years of experience in market research. He specializes in analyzing industry trends, assessing competitive landscapes, and providing actionable insights to support strategic business decisions. Tejas’s strong analytical skills and detail-oriented approach help organizations navigate evolving markets, identify growth opportunities, and strengthen their competitive advantage.
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