The global electrical steel market was valued at USD 46.8 billion in 2025 and is projected to reach a valuation of USD 84.6 billion by the end of 2035, rising at a CAGR of 6.8% during the forecast period, i.e., 2026–2035.
The market is witnessing substantial expansion due to the growing demand for energy-efficient electrical equipment, rapid industrialization, rising electricity consumption, and increasing investments in electric mobility infrastructure. Electrical steel plays a critical role in reducing energy losses in transformers, motors, generators, and inductors, making it indispensable for modern power systems and high-efficiency industrial applications. The accelerating deployment of renewable energy projects and smart grid infrastructure is further strengthening market growth worldwide.
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Electrical Steel Industry Demand
Electrical steel, also known as silicon steel or lamination steel, is a specialty steel material designed to exhibit superior magnetic properties such as high permeability and low core loss. It is primarily used in the production of transformers, motors, generators, and electromagnetic devices where energy efficiency and magnetic performance are essential.
The market demand for electrical steel has increased significantly as governments and industries focus on reducing carbon emissions and improving energy efficiency. Electrical steel is widely utilized in power transmission systems, electric vehicles, renewable energy equipment, industrial machinery, and household appliances.
One of the primary demand drivers is the rapid modernization of global power infrastructure. Aging transmission and distribution networks are being upgraded with advanced transformers and smart grid systems that require high-performance grain-oriented electrical steel. In addition, increasing electricity demand from urbanization and industrial growth is creating substantial opportunities for electrical steel manufacturers.
The growing electric vehicle industry is another major contributor to market demand. Electric motors used in EVs require non-oriented electrical steel with superior magnetic efficiency and thermal performance. Rising EV adoption across developed and emerging economies is therefore driving large-scale consumption of advanced electrical steel grades.
The expansion of renewable energy projects such as wind and solar power installations is also accelerating market growth. Wind turbine generators and renewable power transformers rely heavily on electrical steel to minimize energy losses and improve operational efficiency.
Demand is additionally supported by several operational advantages associated with electrical steel products, including:
• High energy efficiency and reduced power losses
• Improved magnetic performance
• Long operational life
• Cost-effectiveness in large-scale power applications
• Ease of fabrication and administration in industrial equipment
• Reliability in high-temperature operating conditions
• Contribution to sustainability and energy conservation goals
Technological developments in steel processing, coating technologies, and material engineering are further enhancing product quality and expanding industrial applications.
Electrical Steel Market: Growth Drivers & Key Restraint
Growth Drivers –
Rising Demand for Energy-Efficient Power Infrastructure
Governments and utility providers across the world are investing heavily in energy-efficient transmission and distribution systems. Electrical steel is essential in transformers and grid equipment because it reduces core losses and improves electrical performance. The modernization of smart grids, rural electrification programs, and renewable energy integration are significantly boosting demand for grain-oriented electrical steel.
Expansion of Electric Vehicle Production
The rapid expansion of the electric vehicle industry is one of the strongest growth catalysts for the market. Non-oriented electrical steel is widely used in EV motors due to its superior magnetic properties and efficiency. Automotive manufacturers are increasingly adopting high-grade electrical steel materials to improve vehicle performance, battery efficiency, and driving range. Government incentives supporting EV adoption are further accelerating market growth.
Industrial Automation and Technological Advancements
The increasing adoption of industrial automation systems, robotics, and high-efficiency machinery is driving the need for advanced electric motors and generators. Technological advancements in steel manufacturing processes are enabling the production of thinner, high-performance electrical steel sheets with lower energy losses and improved durability. Continuous innovation in coatings and magnetic materials is expanding the application scope of electrical steel across multiple industries.
Restraint –
The market faces challenges related to fluctuations in raw material prices, particularly silicon, iron ore, and alloying materials. Electrical steel manufacturing requires advanced processing technologies and strict quality standards, which increase production costs. Additionally, energy-intensive manufacturing operations and environmental compliance requirements create financial pressure for producers, especially in highly competitive markets.
Electrical Steel Market: Segment Analysis
Segment Analysis by Product Type –
Grain-Oriented Electrical Steel (GOES)
Grain-oriented electrical steel is primarily used in transformers, inductors, and large power distribution systems due to its excellent magnetic permeability and low hysteresis loss in a specific direction. The segment benefits strongly from expanding power infrastructure projects, renewable energy integration, and increasing electricity demand worldwide.
Utilities and transmission companies increasingly prefer GOES materials for high-voltage transformers because they improve efficiency and reduce operational losses. The growing development of smart grids and cross-border electricity transmission networks is further supporting segment growth.
Manufacturers are focusing on producing ultra-thin and high-permeability GOES products to meet the rising demand for energy-efficient transformers and industrial electrical equipment.
Non-Oriented Electrical Steel (NOES)
Non-oriented electrical steel is extensively used in rotating machinery such as electric motors, generators, compressors, and automotive applications. The segment is experiencing strong growth due to the rapid adoption of electric vehicles, industrial automation, and energy-efficient appliances.
NOES materials offer uniform magnetic properties in all directions, making them highly suitable for dynamic motor applications. Rising demand for EV traction motors, industrial robots, HVAC systems, and consumer appliances is driving substantial growth in this segment.
Technological advancements in motor design and increasing emphasis on reducing carbon emissions are expected to further enhance the demand for high-grade non-oriented electrical steel products.
Segment Analysis by Application –
Transformers
The transformer segment represents one of the largest application areas for electrical steel. Rising electricity demand, power grid modernization, and renewable energy integration are driving significant investments in transformer infrastructure globally.
Electrical steel is critical in transformer cores because it minimizes energy losses and improves power transmission efficiency. Increasing deployment of smart transformers and energy-efficient distribution systems is further supporting segment growth.
Utility-scale renewable energy projects and industrial electrification programs continue to create strong demand for advanced transformer-grade electrical steel materials.
Generators
Electrical steel is widely used in generators across power plants, industrial facilities, renewable energy systems, and backup power equipment. The growing expansion of wind energy projects and industrial power generation systems is fueling demand for generator-grade electrical steel.
Manufacturers are increasingly adopting high-performance electrical steel to improve generator efficiency, operational reliability, and thermal stability. The rising use of portable and standby generators in commercial and residential sectors is also contributing to segment expansion.
Segment Analysis by End Use Industry –
Automotive
The automotive industry is a major consumer of electrical steel, particularly with the rapid shift toward electric mobility. Electric motors, hybrid systems, charging infrastructure, and auxiliary automotive components rely heavily on high-efficiency non-oriented electrical steel.
Automakers are focusing on lightweight and energy-efficient motor systems to improve vehicle range and performance. This has led to growing demand for premium electrical steel grades with enhanced magnetic properties.
Government regulations supporting fuel efficiency and emission reduction are expected to further accelerate market demand from the automotive sector.
Industrial Machinery
Industrial machinery applications include motors, compressors, pumps, robotics, HVAC systems, and manufacturing equipment. The increasing adoption of automation technologies and energy-efficient industrial systems is driving strong demand for electrical steel.
Industries are prioritizing operational efficiency and reduced electricity consumption, leading to higher adoption of advanced electrical steel-based motor systems. Growth in manufacturing activities and industrial infrastructure development continues to support segment expansion globally.
Electrical Steel Market: Regional Insights
North America
North America represents a technologically advanced market driven by modernization of aging power infrastructure, rising renewable energy investments, and increasing electric vehicle production. The region is witnessing growing demand for energy-efficient transformers and industrial motors.
Government initiatives promoting clean energy and industrial decarbonization are supporting the adoption of advanced electrical steel products. The automotive sector, particularly EV manufacturing in the United States and Canada, remains a significant demand contributor.
The region also benefits from strong research and development capabilities, advanced manufacturing technologies, and increasing investments in smart grid systems.
Europe
Europe is a major market for electrical steel due to stringent energy-efficiency regulations and aggressive carbon neutrality targets. The region has a strong focus on sustainable power infrastructure, electric mobility, and renewable energy integration.
Countries across Europe are investing heavily in EV production, wind energy projects, and high-efficiency industrial equipment, creating substantial demand for both GOES and NOES products.
The presence of leading automotive manufacturers and advanced electrical equipment industries further strengthens regional market growth. In addition, government policies encouraging low-emission technologies continue to accelerate adoption of premium electrical steel materials.
Asia-Pacific (APAC)
Asia-Pacific dominates the global electrical steel market owing to rapid industrialization, urbanization, and large-scale infrastructure development. Countries such as China, Japan, South Korea, and India are major producers and consumers of electrical steel products.
The region benefits from expanding power generation capacity, strong manufacturing activities, and increasing demand for consumer electronics and industrial machinery. China remains a key market due to extensive investments in power transmission infrastructure and electric vehicle manufacturing.
Japan and South Korea are leading innovators in high-performance electrical steel technologies, while India is witnessing growing demand from industrial expansion, renewable energy projects, and smart city initiatives.
Rising electricity consumption, favorable government policies, and strong automotive production are expected to maintain APAC’s dominant market position during the forecast period.
Top Players in the Electrical Steel Market
Major companies operating in the global Electrical Steel Market include Nippon Steel & Sumitomo Metal Corporation, POSCO, ArcelorMittal, Baosteel Group Corporation, JFE Steel Corporation, Thyssenkrupp AG, Voestalpine AG, United States Steel Corporation, AK Steel Holding Corporation, Tata Steel Limited, NLMK Group, Shougang Group, Ansteel Group Corporation, Hyundai Steel Company, JSW Steel Ltd., and Aperam S.A.. These companies are actively investing in advanced manufacturing technologies, product innovation, strategic partnerships, and capacity expansion initiatives to strengthen their global market presence and meet the rising demand for high-performance electrical steel products.
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