Electrical Steel Market Size, Share & Trends Analysis Report By Type (Grain Oriented, Non-Grain Oriented, Others), By Applications (Inductors, Transformers, Motors, Rotors, Stators, Others), By End User (Household Appliances, Manufacturing, Energy & Power, Automotive, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global electrical steel market size was valued at USD 37.8 billion in 2022. It is projected to reach USD 66.6 billion by 2031, growing at a CAGR of 6.5% during the forecast period (2023–2031). The global surge in automotive production is driving the electrical steel industry.

An iron alloy molded to produce particular magnetic properties is called electrical steel, also referred to as laminate steel or silicon steel. Due to its high permeability, which supports low core loss in electrical components, electrical steel is primarily used to produce cores for power transformers, generators, and inductors, among other electrical components. Small relays, solenoids, electric motors, generators, and many other electromagnetic devices all make use of electrical steel, a soft magnetic material with excellent electrical properties. Silicon steel, transformer steel, and lamination steel are other names for electrical steel. It is primarily utilized in the automotive and electric power distribution industries. Additionally, electrical steel is an iron-based ferromagnetic material that contains silicon (Si) in concentrations ranging from 1% to 6.5%. Electric devices that needed steel that could reduce heat dissipation, a problem that leads to electricity waste, led to the advancement of electrical steel.

Although iron was found to be the most cost-effective option, its impurities aren't ideal. It was found that silicon improves permeability, decreases hysteresis loss, and increases resistivity. The most popular type of commercially available electric steel contains about 3.25% silicon because steel with a higher silicon content tends to be too brittle to be cold rolled. However, the most advanced magnetic and electric properties are found in electrical steel with 6.5% Si, but to overcome its brittleness and constrained ductility, different thermomechanical processes are needed.

Market Dynamics

Market drivers

Rising electric motor demand to speed up market growth

The increasing demand for electric motors across various residential, commercial, and industrial sectors is one of the main factors fueling market expansion. Electrical steel is frequently used in creating power generators with improved electromagnetic properties and low carbon dioxide emissions, as well as motors with increased magnetic flux and torque. Additionally, the growing use of hybrid and electric vehicles (H/EVs) is accelerating market growth. Vehicle parts made of electric steel are lighter while also improving the appearance and safety of the vehicle. Accordingly, the increasing demand for electrical steel for low-energy loss long-distance power transmission and infrastructure construction operations is also fueling the market growth.

High rate of electrical steel consumption in transformers and motors

One of the main factors propelling the expansion of the global market for electrical steel is the rise in automobile production on a global scale. Year over year, the production is increasing. Using electrical steel in automobiles improves fuel efficiency, stimulating demand for electrical steel in the automotive sector. During the forecast period, the market for electrical steel is anticipated to grow even more due to the rising demand for electric and hybrid vehicles. A recent development in the market is the conservation of energy. The main factors boosting the demand for transformers and propelling the market are increased industrial development and rising electricity consumption. Due to its strong magnetic permeability, electrical steel is primarily utilized in the power industry.

Market restraint

Fluctuating costs for raw materials

The steel industry primarily depends on the supply of raw materials for processing steel products and production. Iron ore, coal, industrial gases, and ferroalloys are the raw materials needed to produce steel. Steel production and processing operations can run smoothly if reasonably priced raw materials are. The cost of raw materials is, however, very erratic. Prices of finished steel products, such as non-grain-oriented electrical steel and grain-oriented electrical steel, rise due to rising steel production costs due to rising raw material costs.

Market opportunities

Upcoming rules, government assistance, and regulations

Compared to the US and Western European nations, the laws and regulations in emerging economies like India, China, and Brazil are less strict. These nations' automotive industries are not only huge but also expanding rapidly. With the regulations in place, these nations will be essential destinations for market participants in electrical steel. Governmental organizations place a strong emphasis on lowering vehicle carbon emissions. In addition to supporting the use of electrical steel for electric vehicles, heavy construction machinery, and passenger vehicles, they are conducting research and development (R&D) on new materials.

Regional Analysis

The global market is bifurcated into four regions: north america, europe, asia-pacific, and lamea.

Asia Pacific is the most significant shareholder in the global market and is expected to grow at a CAGR of 5.8% during the forecast period. China, India, Japan, Australia, and the rest of Asia-Pacific are all included in the analysis of the Asia-Pacific market. India ranks third in the world for both the production and consumption of electricity. Additionally, investments worth USD 179.31 billion are anticipated to flow into the Indian power sector. More than 44% of South Asia and Pacific revenue would come from India. India's energy sector development is anticipated to be aided by government plans to provide quality and affordable energy generating and distribution networks across the nation for rural and urban electrification. This development has been facilitated by the presence of international steel producers in the area, including ArcelorMittal, Nippon Steel & Sumitomo Metal Corporation, Tata Steel, and POSCO Steel. These businesses also benefit from the region's inexpensive raw materials and labor. The rapidly expanding population and urbanization are additional factors anticipated to fuel market expansion.

Europe is expected to grow at a CAGR of 6.8% during the forecast period. The UK, Germany, France, Italy, Spain, and the rest of Europe are all included in the analysis of Europe's market. Because of the expanding auto industry in the area and the developing electric vehicle market sector. The automotive industry is rapidly establishing cost and fuel efficiency, recyclability, and formability as key focus areas, making material and component selection more crucial than ever. Facts provided by Tata Steel, a division of the Tata Group, indicate that the demand for advanced electrical and plated steel in the European automotive industry will increase by 2.6 million tons by 2050 due to the projected rise in demand for ultra-low emission or electric vehicles. The demand for this product is anticipated to rise due to the expansion of the automotive and manufacturing industries in the European region. Due to its leading automakers, Germany controls the domestic automotive market in Europe.

Segmental Analysis

The market is segmented by type, application, and end user.

Based on type, the global electrical steel market is bifurcated into grain-oriented, non-grain-oriented, and others.

The grain-oriented electrical steel segment is the highest contributor to the electrical steel market and is expected to grow at a CAGR of 6.3% during the forecast period. Electrical Transformers are expanding due to several factors, including upgrading current grid networks, initiatives for developing the smart grid, and increasing demand for these electrical Transformers. During the forecast period, the adoption of grain-oriented electrical steel will be aided by the sharp rise in demand for electrical transformers. Grain-oriented electrical steel typically contains 3% silicon. It is made of low-carbon steel, and to get the best results, it is generated in the rolling direction under strict control of the crystal orientation of the sheet. Applications for grain-oriented electrical steel include large power transformers, distribution transformers, compact transformers, current transformers, shunt reactors, wound cores, and power generators.

Based on application, the global electrical steel market is bifurcated into inductors, transformers, motors, rotors, stators, and others.

The motors segment is the highest contributor to the electrical steel market and is expected to grow at a CAGR of 6.48% during the forecast period. The motor segment has experienced robust volume growth in recent years. It was projected. As the use of electric vehicles spreads across more developed and developing countries worldwide, the demand for electric motors will rise. Growing public awareness of the advantages of using electrical steel generates demand, opening doors for material producers. Rotating machines in the manufacturing sector transform electrical energy into mechanical energy for industrial work. The current and potential demand motor will be intensified by following statistical information.

Based on end users, the global electrical steel market is bifurcated into household appliances, manufacturing, energy & power, automotive, and others.

The energy & power segment is the highest contributor to the electrical steel market and is expected to grow at a CAGR of 6.07% during the forecast period. This may be a result of the expanding world economy, which is directly related to the expansion of the power industry. The energy category is expected to produce a maximum revenue share of more than 33% in 2022 due to the rising number of applications and the frequent use of transformers, motors, and generators for uninterrupted energy consumption. In nations like the United States, the United Kingdom, and others, improvements in energy sector techniques have led to better cost-effectiveness for energy efficiency in transformers and generators.

Recent Developments

• October 2022, The intelligent sample preparation and physical property testing system developed by TISCO has been successfully implemented. Robots have taken over the entire process of testing specimens, and the results have been excellent. The geometric accuracy of the processed specimens has exceeded domestic and international testing standards and those for similar products, and they have good consistency in their metallurgical features.

• July 2022, For car parts that will eventually be used in the production of vehicles in Spain and throughout Europe, ArcelorMittal and Tier 1 automotive supplier Gestamp have successfully tested low-carbon emissions steel.