Electrical Steel Market Is Anticipated To Witness High Growth Owing To Rising Demand From Transformers Industry

 

Electrical Steel Market

Electrical steel, also known as silicon steel, is a specialized alloy steel used in the manufacturing of transformer cores, motors, and inductors due to its low hysteresis loss and eddy current loss. It is composed of iron, less than 6% silicon, and a small amount of other alloying elements. Electrical steel has high permeability, ensuring high induction with minimum hysteresis and eddy current losses. The steel is processed into thin laminations then insulated from each other to reduce energy loss in transformers due to eddy currents. The rising demand for transformers in the power industry is driving the electrical steel market due to its superior properties like high magnetic permeability and low core loss.

The Global electrical steel market is estimated to be valued at US$ 43.97 Mn in 2024 and is expected to exhibit a CAGR of 8.6% over the forecast period 2024 to 2030.

Key Takeaways
Key players operating in the electrical steel market are Yara International ASA, The Mosaic Company, Nutrien Ltd., BASF SE, Agrium Inc. (acquired by Nutrien.). Yara International is one of the leading producers and suppliers of electrical steel globally. The Mosaic Company offers a variety of silicon steel products for distribution transformers and power transformers.

There is high growth potential in emerging economies due to rapid urbanization and industrialization which is creating opportunities for electrical steel market players to expand their geographic reach. Countries like China, India, Brazil, Mexico are witnessing rising demand from the construction and power generation sectors.

The key players are focused on global expansion strategies to strengthen their position. For instance, Yara has manufacturing sites across Europe and is expanding its footprint in Asia Pacific through partnerships and collaborations. BASF too is investing in production facilities in China to cater to the growing localized demand.

Market drivers
The rapid growth of the transformers industry for applications in power grids, renewable energy plants, construction industry is the major market driver. Transformers require electrical steel as the core material due to its high magnetic permeability and low core loss properties. According to the International Energy Agency (IEA), global power capacity is expected to grow by over 60% between 2018-2040. This rising power demand will necessitate increasing investments in T&D infrastructure projects involving new transformers and substations.

Market restraints
Fluctuations in raw material prices can hamper the profitability of Electrical Steel Market Demand manufacturers. Iron ore and silicon, the key raw materials, witness price volatility due to various economic and geopolitical factors impacting supply. Logistical challenges and trade barriers also pose a restrain for the imports and exports of specialized steel products between regions. Strict environmental norms regarding CO2 emissions during steel manufacturing pose technical challenges for players to adopt low carbon production techniques.

Segment Analysis
The electrical steel market is dominated by the grain-oriented electrical steel segment. This segment accounted for over 60% share of the overall market in 2024 due to high permeability and low core losses offered by grain-oriented electrical steel. It finds widespread adoption in transformers used in power transmission grids. The non-grain oriented electrical steel segment will witness significant growth on account of expanding transportation and industrial sector. Rising installations of motors and generator applications will push the demand for non-grain oriented electrical steel in the coming years.

Global Analysis
The Asia Pacific region dominated the global electrical steel market in 2024 and accounted for more than 50% share. Rapid industrialization and infrastructure development across China, India, and Southeast Asian countries offered a fillip to the regional market. North America is anticipated to emerge as the fastest growing market owing to upgradation of aging power infrastructure and grid networks in the U.S. and Canada. Recovery in the manufacturing sector will further augment the electrical steel consumption in the region between 2024-2030. Europe is forecast to retain its position as the second largest electrical steel market globally during the forecast period.

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