The global electrical steel market was valued at USD 28.53 billion in 2023 and is projected to grow at a compounded annual growth rate (CAGR) of 4.7% from 2024 to 2030. A primary driver of this market growth is the increasing global demand for electricity generation. Electrical steel, as its name suggests, is specifically engineered to exhibit enhanced electrical properties. These include high permeability, which allows for efficient magnetic field conduction; high electrical resistivity, which reduces energy losses; low hysteresis loss, which minimizes energy dissipation during magnetization; and low magnetostriction, which decreases noise and vibration. These attributes make electrical steel highly desirable for a wide range of applications involving electricity generation, consumption, and distribution.
Applications of Electrical Steel
Electrical steel is critical in various applications, including generators, electric motors, relays, solenoids, and other electromagnetic devices. These components are essential in power distribution systems and related applications. For instance, the United States ranks as the second-largest electricity generator globally, producing approximately 4,243 TWh of electricity in 2022—a 6.4% increase from the previous year. This growing demand for electricity is coupled with the expansion of the electric vehicle (EV) industry. Electrical steel's unique magnetic properties make it indispensable in the rotors and stators of EV motors, where it enhances motor efficiency by minimizing core energy losses, thereby extending the vehicle's range.
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Application Segmentation Insights
In terms of application segments, the transformer category held the largest revenue share, exceeding 52.0% of the overall market in 2023. The growing complexity of electrical grids, the rising penetration of EVs, an increase in digital loads, and the growth of decentralized power generation have all heightened the demand for transformers. According to the International Energy Agency (IEA), an estimated investment of USD 24,234 billion is anticipated between 2014 and 2035, aimed at adding approximately 24.2 million kilometers of power distribution lines.
The surge in transformer demand has compelled companies to enhance their production capabilities. A notable example is the commissioning of a new power transformer plant in Kerala, India, in February 2021. This facility, with an investment of ₹12.5 crores (approximately USD 1.7 million), is expected to have an annual production capacity of 1,500 MVA for manufacturing power transformers rated up to 25 MVA and 132 kV class.
On the other hand, the motor segment is expected to register the fastest growth rate during the forecast period. The high frequency, superior permeability, and excellent magnetic properties of electrical steel make it particularly suitable for electric motors. The increasing emphasis on EV production is driving the demand for these motors, thereby supporting overall market growth.
Electric motors, particularly those used in automotive applications, offer speeds four times higher than those employed in industrial machinery. While this high speed is advantageous for performance, it also generates significant heat, which can adversely affect motor performance by increasing core losses and placing considerable mechanical stress on motor components. Electrical steel addresses these challenges due to its inherent properties, which enhance reliability and increase the durability of motors.
In summary, the electrical steel market is poised for significant growth, driven by expanding electricity generation needs, rising electric vehicle production, and the growing complexity of electrical infrastructure. The unique properties of electrical steel make it an essential component in key applications, positioning it favorably in the evolving energy landscape.
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