Electrical Steel Market to Achieve US$73.3 Bn by 2032 - Persistence Market Research

The global electrical steel market is witnessing remarkable growth as industries and governments worldwide increasingly prioritize electrification, renewable energy integration, and energy efficiency. Electrical steel, also known as silicon steel, is a critical material used in the cores of transformers, electric motors, and generators due to its excellent magnetic properties. The demand for electrical steel has surged in response to trends such as electric vehicle adoption, grid modernization, and renewable energy expansion, all of which require high-performance materials for power generation and conversion. With ongoing technological advancements and a focus on energy efficiency, the electrical steel market is positioned for significant growth in the coming years.

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According to Persistence Market Research, the global electrical steel market was valued at US$43.6 billion in 2025 and is projected to reach US$73.3 billion by 2032, growing at a compound annual growth rate of 7.7% between 2025 and 2032. This growth is fueled by several electrification trends, including the rising adoption of electric vehicles, the need for high-performance traction motors, modernization of power grids with energy-efficient transformers, and the integration of renewable energy systems requiring advanced power conversion infrastructure. Increasing industrialization, urbanization, and investments in smart grids are also supporting this market expansion globally.

Market Overview

Electrical steel is essential in reducing energy losses in transformers and motors due to its superior magnetic properties. There are two primary types of electrical steel: grain-oriented and non-grain-oriented. Grain-oriented electrical steel is typically used in transformers where unidirectional magnetic properties are required, while non-grain-oriented steel is used in electric motors and generators for applications requiring multi-directional magnetic flux. The growing emphasis on energy efficiency across residential, industrial, and commercial sectors has led to increased adoption of electrical steel in key applications such as transformers, motors, and generators. With governments and private enterprises investing heavily in modernizing electrical infrastructure and expanding renewable energy capacity, the electrical steel market is poised for continued growth.

Market Segmentation

The global electrical steel market is diverse and can be segmented by type, application, end-user industry, and region. This segmentation allows manufacturers, investors, and stakeholders to better understand the areas driving growth and investment opportunities.

By Type
Electrical steel is divided into two main types:
• Grain-Oriented Electrical Steel (GOES): Known for its superior magnetic properties in one direction, grain-oriented steel is primarily used in transformer cores to reduce core losses and improve efficiency. GOES is critical for high-voltage applications and large power transformers, which are essential for grid stability and efficient power distribution.
• Non-Grain-Oriented Electrical Steel (NGOES): This type of steel is used in applications where multi-directional magnetic properties are required, such as in electric motors and generators. NGOES is widely used in industrial equipment, renewable energy systems, and the growing electric vehicle sector.

By Application
The applications of electrical steel are varied and include:
• Transformers: The largest application segment for electrical steel, transformers require high-efficiency steel to minimize energy losses. This segment is driven by investments in grid modernization and the need to upgrade aging infrastructure worldwide.
• Electric Motors: Electric motors in industrial machinery, household appliances, and vehicles depend on electrical steel for performance and efficiency. The rapid adoption of electric vehicles and automation across industries is boosting demand for NGOES.
• Generators: Generators, both for industrial and residential applications, require electrical steel in their cores to ensure efficient power generation. As demand for reliable power increases, this segment sees continuous growth.
• Others: Electrical steel is also used in inductors, relays, and magnetic components across various electronics and industrial devices, contributing to the overall market.

By End-User Industry
The electrical steel market serves several key industries:
• Energy and Power Generation: Utilities, renewable energy developers, and industrial power plants constitute the largest end-user segment. Transformers and generators in these sectors heavily rely on high-performance electrical steel to maintain energy efficiency and reduce operational costs.
• Automotive: With the rise of electric vehicles, automotive manufacturers are increasingly demanding non-grain-oriented electrical steel for electric motors and traction systems. This trend is a major growth driver for the industry.
• Industrial: Electrical steel is widely used in manufacturing plants, automation systems, and heavy machinery. Industrial automation and robotics rely on efficient motors and transformers that use high-quality electrical steel.
• Electronics and Consumer Appliances: Household and commercial electronics, including air conditioners, refrigerators, and industrial equipment, contribute to steady demand for electrical steel, ensuring operational efficiency and energy savings.

By Region
The global electrical steel market varies regionally due to differences in industrial growth, renewable energy adoption, and government policies:

Asia Pacific: This region dominates the market due to industrialization in China, India, Japan, and Southeast Asia. Significant investments in EV infrastructure, renewable energy projects, and energy-efficient transformers fuel growth in Asia Pacific.

North America: North America shows strong growth driven by government initiatives promoting renewable energy and electrification of transportation. Grid modernization and smart grid projects are also increasing demand.

Europe: Europe emphasizes energy efficiency and sustainability, with investments in renewable energy integration and electric mobility supporting electrical steel consumption.

Middle East and Africa: Infrastructure development and industrial expansion in this region, coupled with generator demand, are driving growth in electrical steel. Countries like Saudi Arabia, UAE, and South Africa are leading adoption in industrial and energy sectors.

Rest of the World: Emerging economies in Latin America and other regions are witnessing increasing industrialization and energy infrastructure investments, further boosting demand.

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Key Drivers of Market Growth

Several factors are propelling the growth of the electrical steel market:
Electrification of Transportation: The global shift to electric vehicles is significantly increasing demand for electrical steel used in high-efficiency traction motors and regenerative braking systems.

Grid Modernization: Aging electrical grids worldwide require upgrades to accommodate renewable energy sources. Electrical steel in transformers reduces energy losses and supports reliable power distribution.
Renewable Energy Expansion: Wind and solar power installations depend on generators and transformers that incorporate electrical steel, driving market demand.

Industrial Automation and Electrification: Automated machinery, robotics, and industrial equipment increasingly rely on motors and transformers using electrical steel, ensuring energy efficiency and operational reliability.

Energy Efficiency Regulations: Governments and regulatory bodies worldwide are enforcing energy efficiency standards for industrial equipment and transformers, increasing the use of advanced electrical steel.

Challenges Facing the Market

Despite its growth, the electrical steel market faces challenges:
Raw Material Cost Fluctuations: Electrical steel production depends on high-purity iron, silicon, and other materials, whose price volatility can impact costs and profitability.

Environmental Regulations: Stringent environmental policies may require manufacturers to invest in cleaner production technologies, increasing operational costs.

Technological Complexity: Advanced applications in electric vehicles, renewable energy systems, and high-voltage transformers require specialized steel, posing challenges for production and quality assurance.

Competition from Alternative Materials: Although limited, alternative materials for motors and transformers can create competitive pressure in specific applications.

Key Players in the Market
The electrical steel market is moderately concentrated, with leading players driving innovation and market penetration:

ArcelorMittal: A global leader in steel production, ArcelorMittal offers both grain-oriented and non-grain-oriented electrical steel for transformers, motors, and industrial equipment.

POSCO: South Korea-based POSCO supplies high-performance electrical steel for automotive, energy, and industrial applications.

Nippon Steel Corporation: Nippon Steel produces high-quality electrical steel, focusing on automotive and renewable energy applications worldwide.

Baowu Steel Group: A major Chinese manufacturer, Baowu Steel supplies electrical steel for domestic and international markets, particularly for transformers and electric motors.

Thyssenkrupp Steel Europe: This German company provides electrical steel for industrial and automotive sectors, with a strong focus on innovation and efficiency.

JFE Steel Corporation: JFE Steel offers specialized electrical steel products for transformers, motors, and generators, emphasizing performance and reliability.

Tata Steel: Tata Steel produces high-quality electrical steel for industrial, automotive, and energy sectors, with a strong presence in Asia and Europe.

These companies are investing in research and development, strategic partnerships, and mergers to expand production capacities, improve efficiency, and maintain competitiveness in a rapidly evolving market.

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Future Outlook

The electrical steel market is expected to continue its growth trajectory through 2032. Several trends will shape its future:

Electric Vehicle Expansion: As EV adoption accelerates globally, the demand for high-performance traction motors using electrical steel will grow significantly.
Renewable Energy Integration: Wind turbines, solar inverters, and other renewable energy systems will require efficient electrical steel components for power conversion and distribution.

Smart Grid Deployment: Governments investing in smart grids and advanced transformers will drive demand for grain-oriented electrical steel to improve grid reliability and reduce losses.

Technological Advancements: Innovations in steel composition and manufacturing processes will enhance magnetic properties, reduce losses, and support emerging applications in transportation, energy, and industry.

Sustainability Initiatives: As environmental awareness increases, electrical steel production will focus on energy efficiency, recyclable materials, and reduced carbon emissions, aligning with global sustainability goals.

Conclusion

The global electrical steel market is entering a phase of robust growth driven by electrification trends, renewable energy integration, and increasing demand for energy-efficient technologies. From electric vehicles to smart grids and renewable energy systems, electrical steel remains a critical material enabling reliable and efficient power conversion. With projected growth from US$43.6 billion in 2025 to US$73.3 billion by 2032 at a CAGR of 7.7%, stakeholders in this market have significant opportunities for investment, innovation, and expansion. Key players such as ArcelorMittal, POSCO, and Nippon Steel are actively enhancing their capabilities to meet increasing demand and maintain a competitive edge. While challenges such as raw material price fluctuations and environmental regulations exist, technological advancements and global sustainability initiatives are expected to drive continued growth and position electrical steel as an indispensable component of the modern electrified world.

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