Electrical Steel Market Expected to Reach $31.5 Billion by 2033

According to a new report published by Allied Market Research, titled, “electrical steel market" was valued at $18.1 billion in 2023, and is projected to reach $31.5 billion by 2033, growing at a CAGR of 5.7% from 2024 to 2033.

Electrical steel, also known as silicon steel or transformer steel, is a specially engineered material that exhibits low energy loss and high magnetic permeability in alternating magnetic fields. It is primarily used in the production of magnetic cores for electrical transformers, motors, generators, and other electromagnetic devices. The inclusion of silicon, typically ranging from 1% to 6.5%, enhances the electrical resistivity and reduces the core loss, improving efficiency. Electrical steel is manufactured in two primary forms such as grain-oriented (GO) and non-grain-oriented (NGO), each designed for specific applications based on magnetic flux requirements. 

Market Dynamics

The expansion of the automotive industry, particularly with the rapid growth of electric vehicles (EVs), is a key driver of increased demand for electrical steel. In electric vehicles, electrical steel is essential for producing the core components of electric motors, which rely on its magnetic properties to operate efficiently. Electric motors, which convert electrical energy into mechanical motion, demand materials with high magnetic permeability and low energy loss to optimize performance and extend battery life. Electrical steel, particularly the non-grain-oriented (NGO) variety, is perfectly suited for this role due to its ability to minimize core losses during the motor's operation. As the global automotive industry shifts towards sustainable solutions, with EV production accelerating in response to stringent emission regulations and consumer demand for cleaner transportation, the need for electrical steel in motor manufacturing is projected to rise sharply. 

Moreover, the automotive industry pushes toward electrification. Hybrid vehicles and the broader electrification of vehicle components, such as alternators and battery systems contribute to the increasing demand for electrical steel. In addition to motors, electrical steel is used in transformers and inductors found in various electronic control units within vehicles, ensuring energy-efficient power distribution. With automakers scaling up production to meet the rising demand for EVs and hybrid vehicles globally, electrical steel has become a critical material for ensuring the energy efficiency and performance of modern automotive systems. All these factors are expected to drive the demand for the global electrical steel market. 

However, fluctuations in raw material prices pose a significant challenge to the growth of the electrical steel market. Electrical steel production primarily relies on iron ore, coal, and alloying elements such as silicon, which are all subject to market volatility due to factors such as global demand, geopolitical tensions, and supply chain disruptions. When raw material prices increase, it directly impacts the manufacturing costs of electrical steel, making it more expensive for end-users such as transformer manufacturers and the automotive industry. These price variations create uncertainty in the market, causing manufacturers to hesitate in expanding production or adopting new technologies, thereby limiting market growth. All these factors hamper the electrical steel market growth. 

Moreover, technological innovations have enabled manufacturers to develop thinner and lighter electrical steel sheets that improve the performance of electric motors, particularly in EVs. Thinner electrical steel minimizes heat generation and enhances the energy efficiency of motors, contributing to longer driving ranges and better battery performance in electric vehicles. These improvements have made electrical steel more attractive to the growing EV market, where efficiency and lightweight components are crucial for overall vehicle performance. In addition, advancements in production techniques such as laser scribing and coating technologies have helped reduce eddy current losses, improving the overall magnetic performance of electrical steel. These technological breakthroughs make electrical steel more competitive in existing markets and create new opportunities in emerging industries such as renewable energy, where high-performance materials are essential for wind turbines and energy storage systems. 

Segment Highlights 

The electrical steel market is segmented into type, application, end use, and region. By type, the market is bifurcated into grain-oriented electrical steel and non-grain-oriented electrical steel. By application, the market is divided into transformers, motors, inductors, generators, and others. By end use, the market is classified into energy and power generation, automotive, manufacturing, household appliances, and others. Region-wise the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. 

The major players operating in the electrical steel market include POSCO, JFE Steel Corporation, Cleveland-Cliffs Inc., Baosteel Co., Ltd., NIPPON STEEL CORPORATION, Slovenian Steel Group, Aperam, Tata Steel, ArcelorMittal, and voestalpine Stahl GmbH.