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, registering a CAGR of 6.5% during the forecast period from 2026 to 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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Development of Silicon-Gradient Electrical Steel for High-Efficiency Motors
The electrical steel market analysis indicates that pressure for higher efficiency and lower high-frequency iron losses is shifting electrical steel toward silicon-gradient compositions, where higher silicon concentration near the surface can reduce eddy-current losses while retaining stronger magnetic flux characteristics in the inner layer; JFE Steel’s JNRF silicon-gradient sheet was developed for high-speed motors, and test motors using the material achieved more than 95% efficiency at 10,000 rpm and above.
Shift Toward Ultra-Thin Electrical Steel for High-Speed Traction Motors
Demand for higher rotational speeds and compact traction motors is also supporting ultra-thin laminations, as thinner sheets reduce eddy-current losses at elevated excitation frequencies; electrical steel as thin as 0.05 mm is commercially available for high-frequency applications, including high-speed motors.
Replacement of Aging Transformers and Grid Equipment and Rising Demand for Energy-Efficient Transformers Drive Market
The replacement of aging transformers and grid equipment is increasing demand for electrical steel as utilities modernize transmission and distribution assets. Older transformers often require replacement or refurbishment, creating recurring requirements for transformer cores and high-quality electrical steel. For example, utility companies can replace aging distribution transformers with newer units designed for improved efficiency and reliability. Higher replacement activity increases procurement of electrical steel from transformer manufacturers and supports production capacity across the supply chain. This grid modernization cycle therefore supports demand in the electrical steel market.
The rising demand for energy-efficient transformers is increasing the use of electrical steel with lower core losses to improve transformer operating efficiency. Higher efficiency requirements from utilities and industrial users create additional demand for materials that reduce energy losses during power transmission and distribution. For example, low-loss electrical steel is used in transformer cores to reduce no-load energy losses during continuous operation. Greater adoption of efficient transformers encourages manufacturers to procure higher-performance electrical steel and expand related production capacity. This efficiency-driven demand therefore supports growth in the electrical steel market.
High Production Costs and Volatility in Raw Material Prices Restrain Market Expansion
Energy-intensive processing, specialized equipment, strict quality controls, and advanced production techniques can increase the overall cost of electrical steel manufacturing. Higher production costs can raise product prices and reduce competitiveness in cost-sensitive applications. These cost pressures can limit adoption and slow market expansion.
Fluctuations in the prices of iron, alloying elements, and other production inputs can create uncertainty in electrical steel manufacturing costs. Unstable input prices can affect profit margins and make it difficult for manufacturers to maintain consistent product pricing. These cost fluctuations can delay purchasing decisions and restrict market growth.
Development of Electrical Steel for Industrial Motors and Drives and Growth of Electrical Steel for Electric Vehicle Motors Offer Growth Opportunities
Motor manufacturers, industrial equipment producers, and electrical steel suppliers can target demand from pumps, compressors, HVAC systems, and factory machinery. Companies such as Nippon Steel Corporation can generate additional revenue through specialized electrical steel grades supplied to motor and drive manufacturers. Long-term supply agreements can strengthen recurring material sales across industrial equipment applications.
EV manufacturers, traction-motor producers, and electrical steel suppliers can address demand for magnetic materials used in high-efficiency electric drivetrains. Companies such as POSCO supply electrical steel for EV motor applications, creating revenue through customized materials and automotive supply contracts. Higher EV production volumes can support larger recurring orders from vehicle and motor manufacturers.
Limited Availability of High-Grade Electrical Steel and Long Qualification and Product Approval Cycles Hinders Growth
Tight availability of specialized grain-oriented electrical steel can constrain transformer production and delay downstream orders, limiting growth for steel suppliers and transformer manufacturers. For example, the U.S. Department of Energy has identified grain-oriented electrical steel as a critical transformer component and noted domestic supply constraints.
Electrical steel used in transformers, motors, and generators must meet stringent magnetic-performance requirements, making qualification of new grades and suppliers time-consuming. For example, the DOE is funding development and validation of new low-loss grain-oriented steel technologies, illustrating the testing required before advanced grades can reach commercial applications.
The non-grain-oriented segment accounted for a share of 64.2% in 2025, owing to its extensive use in rotating electrical equipment such as motors and generators and its suitability for applications requiring magnetic performance in multiple directions. The grain-oriented segment is primarily used in transformer cores and other applications requiring directional magnetic properties, while the other segment includes additional electrical steel types serving specialized applications.
The non-grain-oriented segment is expected to grow at a CAGR of 7.7% during the forecast period 2026-2034, driven by increasing demand for efficient electric motors and growing adoption of electrical equipment across industrial and mobility applications. The grain-oriented and other segments continue to support transformer and specialized electrical equipment applications.
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The transformers segment accounted for a share of 34.8% in 2025, owing to the use of electrical steel in transformer cores to reduce energy losses and improve magnetic efficiency. The motors segment supports electric motor construction, while the stators segment forms the stationary magnetic component of rotating electrical machines. The rotors segment supports the rotating components of motors and other electrical machines, while the inductors segment uses electrical steel for magnetic energy storage and power conversion applications. The others segment includes additional electrical equipment applications.
The motors segment is expected to grow at a CAGR of 8.1% during the forecast period 2026-2034, driven by increasing demand for energy-efficient motors and the expansion of electrification across industrial and mobility applications. The transformers, rotors, stators, inductors, and other segments continue to support power transmission, electrical machinery, and magnetic component requirements.
The energy & power segment accounted for a share of 31.4% in 2025, owing to the extensive use of electrical steel in transformers, power equipment, and other electricity infrastructure. The automotive segment supports the production of electric motors and other vehicle electrical components, while the manufacturing segment uses electrical steel across industrial motors and machinery. The household appliances segment incorporates electrical steel into motors, compressors, and other electromagnetic components, while the others segment covers additional end-user applications.
The automotive segment is expected to grow at a CAGR of 8.4% during the forecast period 2026-2034, driven by increasing vehicle electrification and rising demand for efficient electric motors and electrical components. The energy & power, manufacturing, household appliances, and others segments continue to support electrical steel demand across power infrastructure, industrial equipment, and consumer applications.
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The Asia Pacific electrical steel market, which accounted for 46.8% of the regional share in 2025, is positioned for continued demand as the IEA projects China’s electricity demand to grow by an average of 4.9% annually through 2030, while India and Southeast Asia are forecast to grow by 6.4% and 5.3% annually, respectively, supporting investment in power infrastructure, transformers, motors, and other electrical equipment that use electrical steel.
The Japan electrical steel market is expected to benefit from continued power-grid modernization and transformer demand as Japan’s electricity-supply planning for 2026 onward focuses on maintaining supply-demand balance and strengthening electricity infrastructure, supporting applications for electrical steel in transformers and power equipment. The China electrical steel market is positioned for stronger demand as China plans to establish a new power-system framework by 2030, integrate more than 2.8 billion kW of new energy capacity into the grid, and support more than 110 million electric vehicles through expanded charging infrastructure, requiring continued investment in transformers and grid equipment using electrical steel.
The South Korea electrical steel market is expected to benefit from rising electricity requirements, with the country’s power plan projecting electricity consumption to reach approximately 637.6 TWh by 2030 and 690.7 TWh by 2035, increasing the need for power-generation, transmission, and transformer equipment that incorporates electrical steel. The India electrical steel market is supported by government estimates that annual CRGO electrical-steel requirements will exceed 300,000 tonnes by 2030, while domestic production capacity is planned to reach 300,000 tonnes annually from 2027–28 onward, reducing import dependence and strengthening local supply for transformer manufacturing.
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The European Electrical Steel Market, expected to grow at a CAGR of 8.4% during 2026–2034, is supported by the region’s accelerating grid modernization, renewable-energy integration, electric-vehicle adoption, and expansion of electricity infrastructure, which are increasing demand for electrical steel in transformers, generators, motors, and other energy-efficient electrical equipment.
U.K. Electrical Steel Market: The U.K. electrical steel market is positioned for stronger demand as Ofgem estimates up to £70 billion of investment in Great Britain’s electricity transmission network between 2025–26 and 2030–31, while NESO expects electricity demand to increase by more than 30% by the mid-2030s, supporting future requirements for transformers and other electrical equipment using electrical steel. Germany Electrical Steel Market: The German electrical steel market is expected to benefit from major grid expansion, with German grid operators forecasting around €50 billion of transmission-grid investment through 2030, while Germany’s electricity demand could reach up to 750 TWh by 2030, increasing the need for transformers and grid equipment incorporating electrical steel. France Electrical Steel Market: The France electrical steel market is supported by RTE’s plan for around €100 billion of electricity-transmission network investment over 15 years, alongside a projected rise in electricity consumption to 510 TWh in 2030 and 580 TWh in 2035 under its rapid-decarbonization pathway, driving future demand for transformers and other electrical equipment.
The North America Electrical Steel Market, which accounted for 20.4% of the regional share in 2025, is expected to benefit from rising power-system investment, with the IEA projecting U.S. electricity demand to increase by more than 420 TWh through 2030 and global annual grid investment to rise by roughly 50% by 2030, supporting future demand for transformers, generators, and other electrical equipment that use electrical steel.
The United States electrical steel market is poised for stronger demand as the IEA projects U.S. electricity consumption to add more than 420 TWh through 2030, with data centers accounting for about half of the increase, supporting investment in transformers, generators, and grid equipment that use electrical steel.
The Canadian electrical steel market is expected to benefit from rising power-system investment as Canadian electricity demand is projected to double by 2050, while electricity required is forecast to reach 681 TWh by 2030 and 752 TWh by 2035, increasing the need for transmission, transformers, and other electrical equipment using electrical steel.
The electrical steel market is moderately fragmented, with participation from integrated steel producers, specialty steel manufacturers, electrical steel producers, and regional suppliers serving power generation, transformers, motors, generators, and other electrical equipment applications. The leading players in the global electrical steel market are Cogent Power, Nippon Steel & Sumitomo Metal Corporation, POSCO, Baosteel, and China Baowu Steel Group Corporation Limited, while publicly available sources do not provide a verified cumulative market share for these exact five companies; broader industry data indicates that the top five major producers collectively held about 44% of the market in 2025, but that group differs from the five specified above.
Established players compete primarily on magnetic properties, steel grade quality, production capacity, product consistency, energy efficiency, technical expertise, and established relationships with equipment manufacturers. Emerging and regional players in the electrical steel market ecosystem compete through specialized grades, thinner-gauge materials, improved core-loss performance, customized products, cost-efficient production, and flexible supply capabilities. Competition is also shaped by manufacturing technology, raw material efficiency, processing capabilities, quality consistency, and the ability to meet the performance requirements of increasingly efficient electrical equipment.
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Author's Details
Research Head
Ismail Sutaria is a market intelligence and strategy professional with over 12 years of experience advising organizations across the chemicals, packaging, industrial machinery, and energy & power sectors. He specializes in delivering data-driven market assessments, commercial due diligence, industry benchmarking, demand forecasting, competitive strategy, and growth advisory that enable businesses to make confident investment and expansion decisions in complex industrial markets.
His expertise spans specialty and commodity chemicals, advanced and sustainable packaging solutions, industrial automation, manufacturing equipment, process engineering, renewable energy, conventional power generation, electrical infrastructure, and industrial technologies. Ismail has developed deep domain knowledge in evaluating market ecosystems, technology evolution, regulatory frameworks, supply-demand dynamics, pricing trends, value chain structures, and competitive landscapes across global and regional markets.
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