Electrical Steel Market - Snapshot

Electrical steel is a type of specialty steel manufactured by modifying the magnetic properties of conventional steel to induce high permeability. It is used in the manufacture of the core of power transformers, generators, inductors, etc. Its high permeability ensures low core loss in electrical components. Electrical steel is also known as laminate steel or silicon steel, as silicon is added to it. It is primarily used for lamination processes in the cores of electrical components.

electrical steel market

Increase in demand for electric hybrid vehicles coupled with stringent regulations to prevent energy loss to propel growth

Developed and developing countries are increasingly shifting toward sustainable energy systems. The electric/hybrid vehicle industry is also in the growth phase. This industry requires high-grade electrical steel for various applications. Companies such as ArcelorMittal and ThyssenKrupp are producing high-grade electrical steel to meet the increase in demand for electrical steel. They are improving the magnetic properties of electrical steel and introducing higher grades. This is expected to fuel the market during the forecast period. Rise in production of electrical steel is anticipated to be primarily driven by growth in various application segments, where electrical steel is largely consumed (e.g. transformer and motor industries).

Governments of various developed countries have enacted regulations for the usage of transformers, which prevent the loss of energy and have low emissions of carbon dioxide. Implementation of such regulations is estimated to drive the demand for electrical steel with enhanced properties to manufacture more efficient cores.

Challenges in processing of electrical steel and threat from external substitutes to hamper market

Electrical steel improves efficiency and reduces losses in many applications; however, its magnetic properties are insufficient to meet the complex requirements of precision and efficiency. Nickel iron alloys offer more innovative and intelligent solutions than electrical steel. They are ideal substitutes for electrical steel. Nickel iron alloys play an important role in the production of relays, sensors, and motor laminations. They also offer better magnetic permeability and magnetic induction than electrical steel. Hence, increase in adoption of nickel iron alloys in electro-technical applications is projected to hamper the global electrical steel market during the forecast period.

Large amount of mechanical stress and strain is generated during the processing of cold-rolled electrical steel. The process includes bending, cutting, and punching operations. This, in turn, deteriorates the magnetism of electrical steel; the degree of deterioration depends upon the width of the sheet being punched. For instance, if the width decreases 10X, then the total magnetism loss is around 40% that of the initial loss. Hence, there is need for stress-relief annealing before installing the component in the motor core in order to retain the original magnetism of electrical steel. Reprocessing of electrical steel is a critical and delicate process. This can hamper the global electrical steel market to a certain extent during the forecast period.

Developments & innovations in terms of product and technology in electrical steel market

In 2017, Nippon Steel & Sumitomo Metal Corporation (NSSMC) Group acquired NISSHIN STEEL CO.,LTD., an integrated blast furnace steel manufacturer that specializes in surface-treated steel, stainless steel, and ordinary and special steel. NISSHIN STEEL CO.,LTD became a subsidiary of NSSMC through this acquisition. In 2015, Shangdong Iron & Steel Group (SISG) signed a strategic cooperation agreement with CZCG. As per the agreement, CZCG invested US$ 314 Bn in SISG’s subsidiary RiZhao Co.,LTD’s. The company has shut all production lines of its subsidiary Jigang Group Co Ltd, one of the leading steelmakers in China. Out of the 5.7 million tons of steel capacity at Jigang, around 4 million tons has been transferred to a new site at the Rizhao Quality Steel Products Base with total investment of US$ 8.34 Bn. In October 2017, JFE Steel Corporation along with Meranti Steel Pte. Ltd. (Meranti), JFE Shoji Trade Corporation (JFE Shoji), Marubeni-Itochu Steel Inc. (MISI), and Hanwa Co., Ltd. (Hanwa) formed a joint venture to produce and sell hot-dip galvanized and colored flat steel products for the building & construction sector in Myanmar. The total investment for the project stands at approximately US$ 85 Mn. The plant is expected to become operational by 2020. In 2016, JFE Steel Corporation developed 1470 mpa-grade cold-rolled ultra-high strength steel sheets for the automotive industry by utilizing the patented ‘JFE-CAL’ water-quenching technology. In 2016, the product was also selected as the winner in the Trade and Industry Minister’s Award in Japan for eco-products exhibition. In May 2016, ArcelorMittal partnered with JMAG to assist the latter in its electrical steel data for designing simulation software, which is expected to be used in designing electrical machines.

Asia Pacific to expand at fast pace in terms of consumption of electrical steel

Currently, countries in Asia Pacific dominate the electrical steel market in terms of year-on-year increase in demand for electrical steel based products in construction and automotive industries. Asia Pacific constituted nearly 55% share of the global electrical steel market in 2017. The market in the region is expected to expand at a significant CAGR during the forecast period, due to the expansion in construction and automobile industries and presence of prominent players in Asia Pacific. Additionally, rise in export of electrical steel (increase of 78% from 2016 to 2017) from developing countries such as India is anticipated to drive the electrical steel market in Asia Pacific during the forecast period.

Highly competitive market with dominance of top players

The global electrical steel market is a highly competitive. Leading players dominate the market. Key players operating in the electrical steel market are Nippon Steel & Sumitomo Metal Corporation (NSSMC) Group, Shandong Iron and Steel Group Co Ltd, JFE Steel Corporation, SAIL (Steel Authority of India Limited), Shagang Group Inc., ArcelorMittal, Ansteel Group Corporation, Baosteel Group (Baowu Steel Group Corporation Limited), POSCO, Voestalpine Group, Tata Steel Limited, United States Steel Corporation, Jindal Steel and Power Limited, and HBIS Group.

Electrical Steel Market - Overview

Electrical steel is used in high-power consumer appliances such as air conditioners, refrigerators, and high-power coolers. Consumer appliance manufacturers are focusing on using electrical steel that is environment-friendly (less heat losses) instead of regular steel. This helps them save around 15% to 30% of energy. Electronic components made from electrical steel that are used in consumer appliances include compressor motors and relays. These appliances are installed in cabins, confined spaces, or rooms; therefore, they are ideally required to be compact owing to space constraints. Hence, electrical steel used in compressor motors, relays, switches, etc. enables consumer appliance manufacturers to lower product size and also offer products with reduced noise output vis-à-vis those appliances that are manufactured with components made from regular steel.

Recently, amendments were carried out in trade policies of the global electrical steel market. These amendments were at regional and global level and were implemented for the ease of trade between nations and for their own regional business prospects. Amendments included setting up a minimum price for the import of particular grade of electrical steel from particular regions/countries. The anti-dumping duties were modified in order to avoid the oversupply of electrical steel in some markets. There were changes in legislatures such as advancements of free trade agreements (FTA) and negotiations with transpacific partnerships. Furthermore, the European Union decided to set a minimum price for the import of a particular-grade electrical steel from Japan, China, South Korea, Russia, and the U.S. Government initiatives as well as liberalization of policies are expected to offer lucrative opportunities to electrical steel companies. According to Canacero, a steel association, steel exports are falling in Mexico. Exports dropped 25% in January-July 2015. Some economic risks identified by Mizuno (Malaysia’s Steel Association) can affect the global electrical steel market. They include high unemployment in developed markets, slowdown in developed markets and China, and financial issues in Europe.

This report analyzes and forecasts the electrical steel market at the global and regional level. The market has been forecast based on revenue (US$ Mn) and volume (kilo tons) from 2017 to 2026, considering 2017 as the base year. The study includes drivers and restraints of the global electrical steel market. It also covers impact of these drivers and restraints on demand for electrical steel during the forecast period. The report also highlights opportunities in the electrical steel market at the global and regional level.

The report includes detailed value chain analysis, which provides a comprehensive view of the global electrical steel market. Porter’s Five Forces model for the electrical steel market has also been included to help understand the competitive landscape. The study encompasses market attractiveness analysis, wherein products and application are benchmarked based on their market size, growth rate, and general attractiveness.

The study provides a decisive view of the global electrical steel market by segmenting it in terms of type, application, end-user industry, and region. In terms of type, the electrical steel market has been classified into grain oriented and non-grain oriented. Based on application, the electrical steel market can be divided into transformer, inductor, motor (rotor, stator, and others), and others. In terms of end-user industry, the global electrical steel market can be segregated into automotive, manufacturing, energy, household appliances, and others. Regional segmentation includes current and forecast demand for electrical steel in North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

The report provides the actual size of the electrical steel market for 2017 and estimated size for 2018 with forecast for the next eight years. The global electrical steel market has been provided in terms of revenue. Market numbers have been estimated based on type, transport, application, and end-user industry of the electrical steel market. Market revenue and volume size have been provided in terms of global, regional, and country level markets.

The report comprises profiles of major companies operating in the global electrical steel market. Key players operating in the electrical steel market include Nippon Steel & Sumitomo Metal Corporation (NSSMC) Group, Shandong Iron and Steel Group Co Ltd, JFE Steel Corporation, SAIL (Steel Authority of India Limited), Shagang Group Inc., ArcelorMittal, AnSteel Group Corporation, BaoSteel Group (Baowu Steel Group Corporation Limited), POSCO, Voestalpine Group, Tata Steel Limited, United States Steel Corporation, Jindal Steel and Power Limited, and HBIS Group. Market players have been profiled in terms of attributes such as company overview, financial overview, business strategies, and recent developments.

The global electrical steel market has been segmented as follows:

Electrical Steel Market, by Type

  • Grain Oriented
  • Non-grain Oriented

Electrical Steel Market, by Application

  • Transformer
  • Inductor
  • Motor
    • Rotor
    • Stator
    • Others
  • Others

Electrical Steel Market, by End-user Industry

  • Automotive
  • Manufacturing
  • Energy
  • Household Appliances
  • Others

Electrical Steel Market, by Region

  • North America
    • U.S.
    • Canada
  • Europe
    • Germany
    • U.K.
    • France
    • Spain
    • Italy
    • Russia & CIS
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • ASEAN
    • Rest of Asia Pacific
  • Latin America
    • Brazil
    • Mexico
    • Rest of Latin America
  • Middle East & Africa (MEA)
    • GCC
    • South Africa
    • Rest of Middle East & Africa

Key Takeaways

  • Currently, Asia Pacific is a leading consumer as well as producer of electrical steel in terms of revenue and volume. This is ascribed primarily to the rise in urbanization and industrialization in developing economies such as China and India. The surplus of steel is significantly high due to overcapacity. This has led to closure of various steel mills in China. This is expected to impact the global supply as well as demand for electrical steel and counterparts.
  • The prices of steel plates, rebars, cold-rolled coils, and hot rolled coils have been rising across the globe. This trend is likely to continue in the near future.
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