Electrical Steel Market Projected to Achieve US$ 68 Billion by 2031 | Persistence Market Research

Introduction

The electrical steel market is poised for significant growth over the next decade, driven by rising demand in industries such as electric vehicles (EVs), renewable energy, and energy-efficient electrical equipment. Electrical steel, a critical material used in the manufacturing of transformers, electric motors, and generators, plays a vital role in improving the energy efficiency of electrical systems. This report delves into the key factors driving market growth, emerging trends, technological advancements, challenges, and regional dynamics influencing the global electrical steel market.

Electrical steel, also known as silicon steel or transformer steel, is used primarily in the core of electrical devices such as motors, transformers, and generators. The demand for energy-efficient electrical devices, coupled with the growth of the automotive and renewable energy sectors, is fueling the increasing adoption of electrical steel. With a projected compound annual growth rate (CAGR) of 7.6%, the electrical steel market is expected to grow from US$ 40.7 billion in 2024 to US$ 68 billion by 2031, according to Persistence Market Research.

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Market Projections and Forecast

The global electrical steel market is set to expand significantly in the coming years. By 2024, the market is valued at approximately US$ 40.7 billion and is expected to reach US$ 68 billion by 2031, representing a robust CAGR of 7.6%. The ongoing transition toward energy-efficient and sustainable technologies in various industries is one of the key drivers of this growth. Furthermore, the increasing demand for electrical steel in the production of electric vehicles (EVs) and renewable energy infrastructure is accelerating market expansion.

Market Dynamics

Drivers of Market Growth

Surge in Demand for Electric Vehicles (EVs)
The global transition towards electric vehicles is driving a substantial demand for electrical steel, particularly for the manufacturing of electric motors. Electrical steel is essential for the efficient operation of EV motors, providing better magnetic properties that are crucial for enhancing the performance of these vehicles. As governments and automakers focus on reducing carbon emissions, the EV market is expected to experience sustained growth, directly benefiting the electrical steel market.

Growth of Renewable Energy Sector
The rapid expansion of renewable energy sources, such as wind and solar power, has a significant impact on the demand for electrical steel. Wind turbines, which require electrical steel for their generators, are expected to drive growth in the market, as renewable energy adoption continues to rise. Similarly, the energy efficiency requirements in the power transmission and distribution networks are increasing the need for transformers and electrical motors, further fueling market demand.

Energy-Efficiency and Sustainability Initiatives
There is an increasing global push for energy-efficient systems and sustainability, particularly in the electrical and electronic industries. Electrical steel, with its enhanced magnetic properties, plays a key role in improving the energy efficiency of transformers, generators, and electric motors. This push for sustainability is likely to result in higher demand for electrical steel, as it is critical in meeting energy efficiency goals.

Technological Advancements in Steel Production
Innovations in steel manufacturing techniques, such as the development of high-silicon electrical steel and improvements in production efficiency, have increased the appeal of electrical steel in industrial applications. The advancements in the steel production process have allowed manufacturers to produce thinner, lighter, and more efficient electrical steel, boosting its performance and applicability in diverse sectors.

Challenges in the Market

High Production Costs
The production of electrical steel involves advanced technology, which leads to higher costs compared to traditional steel. The high cost of raw materials, particularly silicon, and the need for specialized manufacturing processes add to the production expenses. This can be a limiting factor, especially for smaller players in the market, as they face challenges in maintaining competitive pricing while meeting demand.

Supply Chain Disruptions
The electrical steel market, like many other industries, is susceptible to supply chain disruptions, particularly in the procurement of raw materials. Any interruption in the supply of silicon or other essential materials used in the production of electrical steel can hinder production rates and increase costs. Furthermore, fluctuations in the prices of raw materials may lead to market volatility.

Regulatory and Environmental Concerns
As the demand for electrical steel increases, so do the concerns related to its production, particularly regarding environmental impacts. Regulatory bodies worldwide are increasingly focused on reducing the carbon footprint of manufacturing processes. Manufacturers must comply with stringent regulations related to emissions, recycling, and waste disposal, which can increase operational costs.

Market Trends and Technological Innovations

Demand for High-Silicon Electrical Steel
A major trend in the electrical steel market is the growing demand for high-silicon steel, which is more efficient in terms of energy conversion and power density. This type of electrical steel is being increasingly used in the production of electric motors, transformers, and generators to improve performance. High-silicon steel reduces energy loss in electrical devices, making it a preferred choice for energy-efficient applications.

Focus on Miniaturization and Lightweight Steel
The miniaturization of electrical devices, particularly in the automotive and consumer electronics sectors, is driving the need for thinner and more compact electrical steel. Manufacturers are focusing on developing electrical steel with improved magnetic properties and reduced weight, enabling the design of smaller and more efficient motors and transformers.

Advanced Coatings for Enhanced Durability
To improve the performance and longevity of electrical steel, manufacturers are developing advanced coatings that reduce energy losses due to friction and wear. Coatings such as insulation layers or surface treatments help to improve the durability of electrical steel in harsh operating conditions, increasing its appeal in industrial and automotive applications.

Growth of Smart Grids and Power Infrastructure
With the increasing focus on smart grids and advanced power distribution networks, electrical steel plays a crucial role in the development of these technologies. Smart grids rely on advanced transformers and energy-efficient electrical equipment to manage energy flow efficiently. This trend is expected to drive substantial demand for electrical steel in the coming years.

Market Segmentation

By Product Type:

Grain-Oriented Electrical Steel (GOES)
Non-Grain Oriented Electrical Steel (NGOES)

By Application:

Transformers
Motors
Generators
Inductors and Chokes
Misc.

By End-use Industry:

Energy and Power Generation
Automotive
Manufacturing
Electronics
Aerospace

By Region

North America
North America is expected to be a significant market for electrical steel, driven by growing demand for electric vehicles, renewable energy, and industrial applications.

Asia-Pacific
The Asia-Pacific region is anticipated to experience the highest growth in the electrical steel market, driven by rapid industrialization, a growing automotive sector, and significant investments in renewable energy infrastructure.

Europe
Europe is a key market, with strong demand for electrical steel driven by the automotive sector's transition to electric vehicles, along with investments in renewable energy.

Key Companies Profiled in the Report

ArcelorMittal
POSCO
JFE Steel Corporation
Tata Steel Limited
NSSMC (Nippon Steel & Sumitomo Metal Corporation)
Baosteel
Thyssenkrupp Steel
Steel Authority of India Limited (SAIL)
Hyundai Steel

Future Outlook

The electrical steel market is poised for robust growth as it continues to play a vital role in improving the efficiency of energy systems across multiple industries. The increasing adoption of electric vehicles, coupled with the growth of renewable energy infrastructure, will be key drivers of market expansion. The transition toward energy-efficient and sustainable manufacturing processes, supported by technological advancements in steel production, will further fuel market demand.

As the electrical steel market evolves, companies that focus on producing high-performance, energy-efficient products and adopting innovative manufacturing techniques will be well-positioned to capitalize on growth opportunities. With an expected CAGR of 7.6% from 2024 to 2031, the electrical steel market will remain a crucial component of global efforts to advance energy efficiency and sustainability.

Conclusion

The global electrical steel market is witnessing significant growth, driven by the increasing demand for energy-efficient applications, electric vehicles, and renewable energy. With projections indicating a market value of US$ 68 billion by 2031, the sector is poised for a transformative period of expansion. The ongoing developments in manufacturing technologies, along with a strong focus on sustainability, will further enhance the market's growth prospects, making electrical steel an integral part of the future energy and automotive landscapes.

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