Electrical Steel Market Analysis

Electrical Steel Market Analysis

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Based on product, the electric steel market is divided into grain-oriented electric steel and non-grain-oriented electric steel. Non-grain electrical steel held the dominant market share of USD 24.4 billion in 2023 and will grow at 6.4% CAGR through 2032, due to its versatile applications in various electrical devices. Unlike grain-oriented steel, NGO electric steel has uniformly distributed magnetic properties, making it ideal for use in rotating machinery such as motors and generators. The increasing demand for electric vehicles (EVs) is a major driver for the NGO electric steel segment, as this material is essential for the efficient functioning of EV motors.

Additionally, NGO electric steel is extensively used in household appliances, power tools, and industrial machinery, further broadening its market scope. The ongoing advancements in manufacturing processes are improving the quality and performance of NGO electric steel, making it a preferred choice for high-efficiency applications. As industries continue to prioritize energy efficiency and performance, the demand for NGO electric steel is expected to rise significantly.

Based on application, the market is categorized into large power transformers, distribution transformers, small transformers, power generators, audio transformers, and others. Large transformers accounted for USD 6.2 billion in 2023 and is projected to grow at 7% CAGR through 2032. Large power transformers, essential for high-voltage power transmission, rely on high-quality electric steel to minimize energy losses and ensure efficient performance.

The growth of renewable energy projects, such as wind farms and solar power plants, is a significant driver for this segment, as these projects require robust and efficient transformers to connect to the grid. Additionally, the modernization and expansion of electrical grids, particularly in developing regions, are increasing the demand for large power transformers. Governments and utilities are investing heavily in upgrading aging infrastructure to improve reliability and capacity, thereby boosting the market for electric steel. The rise in urbanization and industrialization also necessitates the development of efficient power transmission systems, further driving the demand for large power transformers and, consequently, electric steel.

By end user, the energy segment emerges as the fastest-growing category within the electric steel market, fueled by several pivotal growth drivers. As the world transitions towards a more sustainable energy landscape, there's an increasing need for efficient energy storage solutions to address the intermittency of renewable energy sources like wind and solar power. Energy storage systems serve as vital components in managing the variability of renewable energy generation, ensuring grid stability, and meeting fluctuating energy demands. Electric steel plays a crucial role in the manufacturing of key components within these energy storage systems, including transformers and inverters.

Transformers are essential for stepping up or down voltages within the system. On the other hand, inverters are crucial for converting direct current (DC) electricity from batteries into alternating current (AC) electricity that can be used to power homes, businesses, and industries. These components rely on high-quality electric steel due to its superior magnetic properties and low energy losses, ensuring the efficiency and reliability of energy storage systems. With the rapid growth of renewable energy deployment and the increasing adoption of energy storage solutions worldwide, driven by advancements in battery technology, supportive government policies, and the need for grid resilience, the demand for electric steel in the energy storage segment is poised to experience significant growth in the coming years.

In addition, electrical steel supports the development of smart grid technologies, which is another emerging segment in the electrical steel market. Smart grids use advanced digital communication and control technologies to improve the efficiency, reliability, and sustainability of electricity supply. Electrical steel is used to make components such as sensors, relays, and smart meters that are integral to the operation and monitoring of smart grid networks.

These components enable real-time monitoring of power consumption, facilitate dynamic pricing models, and improve fault and outage management, ultimately optimizing network performance and increasing energy efficiency. As the global drive to modernize and digitize the grid accelerates due to increasing energy demand, aging infrastructure, and the need for grid resilience due to climate change, the demand for electrical steel in the smart grid segment is set to grow notably.

North America dominated the electrical steel market in 2023. It generated a revenue of USD 9.3 billion in 2023 and will grow at 6.2% CAGR during the forecast period. In North America, the market is experiencing robust growth, driven by several factors unique to the region. The United States and Canada are at the forefront of renewable energy adoption, with significant investments in wind, solar, and hydroelectric power projects.

This transition toward renewable energy is increasing the demand for electric steel in the production of energy-efficient transformers and generators. Besides, North America is witnessing substantial infrastructure development, including the modernization of electrical grids and the expansion of urban areas, which further fuels the demand for electric steel. The region's strong automotive industry, particularly the growing market for electric vehicles, is also a major driver for electric steel, as high-efficiency motors are essential for EV performance. Furthermore, stringent government regulations aimed at improving energy efficiency and reducing greenhouse gas emissions are encouraging the adoption of advanced electrical materials, including high-grade electric steel. With its technological advancements, strong industrial base, and commitment to sustainability, North America is poised to be a significant player in the global market.

In North America, the USA stands out as a dominant player in the electrical steel market. Several factors contribute to the USA’s prominence in this sector. The United States stands at the forefront of renewable energy adoption, with significant investments in wind, solar, and hydroelectric power projects. This transition towards renewable energy sources is leading to an increased demand for electric steel, particularly in the production of energy-efficient transformers and generators necessary for grid integration. Furthermore, North America is experiencing substantial infrastructure development, including the modernization of electrical grids and the expansion of urban areas. This infrastructure growth further fuels the demand for electric steel as it is essential for the efficient operation of power transmission and distribution systems.

In addition, the region's strong automotive industry, particularly the growing market for electric vehicles, is a major driver for electric steel demand, as high-efficiency motors are vital components in electric vehicles. Moreover, stringent government regulations aimed at improving energy efficiency and reducing greenhouse gas emissions are encouraging the adoption of advanced electrical materials, including high-grade electric steel. With its technological advancements, strong industrial base, and commitment to sustainability, North America, particularly the United States, is poised to remain a significant player in the global Electric Steel Market.