Electrical steel industry surges to strengthen sustainability in the energy revolution

By OEM Update Editorial April 23, 2024 6:32 pm IST

 The global electrical steel industry is undergoing a transformation due to a growing emphasis on sustainability and energy efficiency, driving demand for innovative products. The market is also influenced by the increasing use of renewable energy sources like solar and wind power.

Electrical steel market Navigating the future worldwide electrical steel market is expected to develop rapidly, with a cumulative annual growth rate (CAGR) of 7.6 percent. This expansion will raise the market value from US$40.7 billion in 2024 to US$67.9 billion in 2031. The electrical steel market is critical to the current energy industry since it is a specialised alloy designed for superior magnetic characteristics. It is widely used in generators, electric motors, and transformers. Its particular composition reduces energy losses by minimising core losses and eddy currents, guaranteeing effective energy conversion, and making it an essential component in power distribution and transmission systems. The rising need for energy efficiency in various sectors is driving market growth.

Several reasons contribute to the rapid expansion of the global electrical steel market. The most significant of them is the growing need for energy, which is being driven by global industrialization and urbanisation processes. Countries’ significant expenditures in extending and modernising power infrastructure result in an increase in demand for electrical equipment and transformers, driving the need for electrical steel, as researched by Persistence Market Research. Furthermore, the increased use of renewable energy sources such as solar and wind power drives market growth.

Key market growth several main reasons contribute to the global electrical steel market’s significant expansion. For starters, growing industrialization and urbanisation promote an increase in power demand. As nations engage heavily in extending and modernising their power infrastructures, demand for electrical equipment and transformers rises, boosting the need for electrical steel.

Additionally, the market benefits from the rising adoption of renewable energy sources like solar and wind power, which further boosts demand for electrical steel in various applications. These factors collectively contribute to the significant expansion of the electrical steel market, driving its growth trajectory upward.

Global Electrical Steel Market Challenges

Despite its potential growth trajectory, the global electrical steel market has several challenges that may impede its progress. One notable constraint is the unpredictability of raw material costs, particularly for critical components required in the fabrication of electrical steel. Fluctuations in raw material pricing can have an influence on firms’ overall profitability as well as disrupt supply systems. Furthermore, rigorous environmental rules and sustainability concerns provide hurdles to the business, requiring producers to invest in eco-friendly production techniques and materials, which may result in higher prices.

Geopolitical tensions and trade conflicts can disrupt global supply chains and affect market dynamics. Lastly, the market may also face challenges related to technological advancements and innovations in alternative materials, which could potentially offer competition to traditional electrical steel products. These restraints highlight the need for industry players to adapt to changing market conditions and invest in strategies to mitigate risks while capitalising on growth opportunities.

Global Electrical Steel Market Opportunities

Despite its expansion, the global electrical steel market offers various attractive opportunities to industry participants. The growing need for energy-efficient solutions across all industries has considerable potential. Governments and companies are prioritising sustainability and reducing energy losses, creating an increasing need for innovative electrical steel products that may improve power generation, delivery, and consumption.

The increasing switch to renewable energy sources creates a profitable potential for electrical steel makers. Transformers and other electrical equipment are required for solar and wind power plants, which increases the demand for specialised electrical steel with high magnetic permeability and low energy losses.

The expansion of electric vehicle (EV) manufacturing presents a burgeoning opportunity for the electrical steel market. Electric motors and powertrains in EVs rely on high-performance electrical steel to ensure optimal efficiency and performance. As the automotive industry shifts towards electrification, the demand for electrical steel in EV components is expected to grow substantially.

Global Electrical Steel Market

East Asia, dominated by South Korea, Japan, and China, holds the largest market share in the global electrical steel industry. China, a key consumer and producer, is driven by its booming manufacturing sector, urbanisation, and growing energy needs. The region’s focus on technological advancements and smart grid integration further boosts demand for electrical steel.

South Asia and Oceania are experiencing significant growth in the electrical steel market due to population expansion, industrialization, and renewable energy adoption, requiring substantial investments in power infrastructure to meet the surge in electricity demand.

Global Electrical Steel Industry Trends

The worldwide electrical steel business is undergoing a transformation as a result of a rising emphasis on sustainability and energy efficiency, which is driving demand for innovative goods. Manufacturers are investing in research to provide novel solutions for reducing energy losses and increasing power transmission and distribution efficiency.

Technological improvements, particularly in electric vehicles (EVs) and renewable energy, are driving up demand for electrical steel. The growing popularity of electric vehicles has increased the manufacture of electric motors, creating a large need for high-quality electrical steel with outstanding magnetic characteristics. Renewable energy sources such as solar and wind power are also driving infrastructure expenditures, hence increasing demand for electrical steel.

The global electrical steel industry is influenced by geopolitical developments, trade dynamics, technological advancements, and supply chain shifts, prompting manufacturers to adapt strategies to navigate uncertainties and capitalise on emerging opportunities.