Electrical steel, also known as silicon steel, is a critical material in the global transition toward sustainable energy and electrification. From transformers and electric motors to electric vehicles (EVs) and renewable energy systems, electrical steel plays a pivotal role in enhancing energy efficiency and reducing carbon footprints. As of 2025, the global electrical steel market is experiencing significant growth, driven by technological advancements and increasing demand across various sectors.

Market Overview and Growth Projections

The global electrical steel market was valued at approximately USD 41.84 billion in 2024 and is projected to reach USD 75.53 billion by 2033, growing at a compound annual growth rate (CAGR) of 6.5% during the forecast period . Another report estimates the market size at USD 50.44 billion in 2025, with expectations to surpass USD 93.51 billion by 2034, representing a CAGR of 7.10%  This robust growth is attributed to the rising demand for energy-efficient solutions, the proliferation of electric vehicles, and investments in renewable energy infrastructure.

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Key Drivers of Market Growth

1. Electrification of Transportation

The automotive industry's shift towards electric vehicles is a significant factor driving the demand for electrical steel. EVs require high-efficiency electric motors, which rely heavily on non-grain-oriented electrical steel. As governments worldwide implement stricter emission regulations and offer incentives for EV adoption, the need for electrical steel in the automotive sector continues to rise.

2. Expansion of Renewable Energy Infrastructure

The global push for renewable energy sources such as wind and solar power necessitates the development of efficient power generation and distribution systems. Electrical steel is essential in manufacturing transformers and generators that facilitate the integration of renewable energy into the grid. The increasing investment in renewable energy projects globally is expected to further boost the demand for electrical steel.

3. Modernization of Power Grids

Aging power infrastructure is being upgraded to meet the growing energy demands and to incorporate renewable energy sources. Electrical steel is crucial in the production of transformers and other grid components that ensure efficient power transmission and distribution. The modernization of power grids, particularly in developed regions, is a significant driver of market growth.

Regional Market Insights

Asia-Pacific

Asia-Pacific dominates the global electrical steel market, accounting for a substantial share in 2024. Countries like China, Japan, and India are major consumers and producers of electrical steel. The rapid industrialization, urbanization, and government initiatives to promote electric vehicles and renewable energy are key factors contributing to the region's market leadership 

North America

The North American electrical steel market is expected to grow at a CAGR of 6.6% from 2025 to 2030, reaching USD 5.17 billion by 2030 The United States, in particular, is investing heavily in upgrading its power grid and expanding EV infrastructure, driving the demand for electrical steel.

Europe

Europe is witnessing significant growth in the electrical steel market, driven by the EU's focus on decarbonization and renewable energy. The region's commitment to reducing carbon emissions and increasing the share of renewables in the energy mix is expected to propel the demand for electrical steel in the coming years.

Market Segmentation

The electrical steel market can be segmented based on product type, application, and end-use industry.

Product Type

• Grain-Oriented Electrical Steel (GOES): Primarily used in transformers due to its high magnetic permeability, GOES accounts for a significant share of the market.

• Non-Grain-Oriented Electrical Steel (NGOES): Used in electric motors and other applications requiring isotropic magnetic properties.

Application

• Transformers: The largest application segment, driven by the need for efficient power transmission and distribution.

• Electric Motors: Growth in the automotive and industrial sectors fuels the demand for electrical steel in motor manufacturing.

• Generators: Essential for power generation, especially in renewable energy systems.

End-Use Industry

• Energy: The largest end-use sector, encompassing power generation, transmission, and distribution.

• Automotive: The shift towards electric vehicles is increasing the demand for electrical steel in this sector.

• Industrial Machinery: Includes applications in manufacturing equipment and machinery requiring efficient motors.

Challenges and Opportunities

Challenges

• Raw Material Prices: Fluctuations in the prices of raw materials like iron and silicon can impact production costs.

• Environmental Regulations: Stringent environmental regulations may affect manufacturing processes and costs.

• Supply Chain Disruptions: Global supply chain issues can lead to delays and increased costs in production and distribution.

Opportunities

• Technological Advancements: Innovations in manufacturing processes can lead to cost reductions and improved product quality.

• Sustainability Initiatives: Growing emphasis on sustainability presents opportunities for developing eco-friendly electrical steel products.

• Emerging Markets: Increasing industrialization and urbanization in emerging markets offer new avenues for growth.

Conclusion

The electrical steel market is poised for significant growth, driven by the global trends of electrification, renewable energy adoption, and technological advancements. As industries and governments continue to invest in sustainable infrastructure, the demand for high-quality electrical steel is expected to rise, presenting opportunities for manufacturers and stakeholders in the value chain. Embracing innovation and sustainability will be key to capitalizing on the burgeoning market and contributing to a greener, more electrified future.

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