The global electrical steel market size is expected to be valued at US$ 45.1 billion in 2026 and projected to reach US$ 76.3 billion, growing at a CAGR of 7.8% between 2026 and 2033.

Market growth is driven by the electrification of global transportation through accelerating EV adoption, unprecedented investment in power grid infrastructure to support renewable energy integration, and tightening industrial motor efficiency mandates that require higher-grade electrical steel. The International Energy Agency (IEA) projects global electricity demand to grow by over 25% by 2030, driving significant additions in transformer and motor capacity that directly increase electrical steel consumption across product categories and regions throughout the forecast period.

Drivers - Global Power Grid Expansion and Renewable Energy Integration

Grid infrastructure investment is the primary demand driver for electrical steel, with rising investment in transmission and distribution networks sustaining strong procurement of grain-oriented electrical steel (GOES) for power transformer cores throughout the remainder of the decade and beyond. The International Energy Agency (IEA) estimates global electricity networks require annual investment exceeding US$ 600 billion through 2030 to meet energy transition demands, representing a 50% increase over 2022 investment levels, with renewable energy capacity additions requiring transformer installations across both transmission and distribution networks.

The U.S. Infrastructure Investment and Jobs Act allocated over US$ 65 billion for grid modernization, while the European Union's REPowerEU plan commits billions to electricity network expansion, creating government-backed procurement pipelines for transformer-grade GOES. With the IEA tracking around 1,000 GW of new renewable capacity additions annually by 2030, each requiring transformer integration into national grids, GOES demand remains structurally supported by a generation of infrastructure investment.

Accelerating Electric Vehicle Production and Industrial Motor Efficiency Mandates

Rising electric vehicle production is creating strong demand for thin-gauge, high-permeability non-grain-oriented electrical steel (NGOES). This demand enables suppliers qualifying next-generation grades for OEM traction motor programs to secure multi-year, high-volume contracts. The International Energy Agency (IEA) reported global EV sales reached 14 million units in 2023, representing 18% of total new car sales, and projects cumulative global EV deployment to reach 240 million vehicles by 2030, with each traction motor requiring 8 to 20 kg of high-performance electrical steel.

Concurrently, the European Union's Ecodesign Regulation, mandating IE3 and IE4 minimum efficiency standards for industrial motors from 2021 and 2023, respectively, is driving the systematic replacement of the global industrial motor installed base with higher-efficiency designs requiring upgraded NGOES grades. EV adoption and tightening motor efficiency regulations together represent key demand drivers, supporting sustained global demand for high-quality thin- and medium-gauge NGOES throughout the forecast period.

Restraints - Energy-Intensive Manufacturing and Carbon Border Adjustment Mechanism (CBAM) Pressure

Electrical steel production, particularly GOES, requires multiple cold-rolling, decarburization annealing, and high-temperature finishing cycles, making it one of the most energy-intensive specialty steel processes globally. This creates structural cost and regulatory pressure that is increasingly difficult to absorb without compressing producer margins or increasing customer prices. The World Steel Association estimates primary steelmaking generates around 1.85 tons of CO2 per ton of crude steel, while the additional processing stages in electrical steel manufacturing further increase emissions intensity per unit.

The European Union's Carbon Border Adjustment Mechanism (CBAM), introduced in phases from 2026, increases carbon-related costs on imported steel. At the same time, European electrical steel manufacturers face rising compliance expenses and intense competition from lower-cost Asian producers, reducing investment in new regional production capacity despite accelerating energy transition demand.

China's Dominant Market Position and State-Subsidized Supply Chain Distortion

China's structural dominance in global electrical steel production creates a persistent pricing and supply chain risk for manufacturers and end-users across Europe, North America, and Southeast Asia, constraining supplier pricing power and limiting investment incentives in alternative production geographies. The World Steel Association estimates China accounts for around 55% to 60% of global electrical steel production, with state-owned enterprises, including China Baowu Steel Group and HBIS Group, operating with below-market capital costs supported by government backing, sustaining a price floor that disadvantages private-sector producers globally.

During periods of peak domestic demand or changes in export policies, excess Chinese electrical steel enters international markets at heavily discounted prices. This pricing pressure compresses margins for regional producers such as ArcelorMittal and voestalpine AG, which cannot compete with subsidized Chinese prices without incurring unsustainable operating losses.

Opportunities - Thin-Gauge NGOES Emerging as a Key Growth Opportunity in EV Motor Applications

The transition to mass-market electric vehicles represents the largest growth opportunity for the electrical steel industry since the industrial electrification of the 20th century. Suppliers that qualify ultra-thin, low-loss NGOES grades for OEM traction motor programs are well positioned to secure premium-priced, long-term volume contracts that generate higher revenue per ton than conventional steel grades. With the IEA projecting 240 million EVs on global roads by 2030 and each EV requiring 8 to 20 kg of high-performance NGOES per traction motor, the cumulative demand expansion is measurable and supported by OEM capital commitments.

Nippon Steel Corporation and JFE Steel Corporation currently supply some of the highest-performance EV motor grades globally, including ultra-thin grades with core loss below 1.0 W/kg at 1.5T/50Hz, and maintain multi-year supply agreements with Toyota, Honda, and Hyundai that competitors cannot easily replace without years of OEM requalification. Companies investing in thin-gauge production lines and securing automotive OEM qualification approvals before 2027 are well positioned to strengthen their long-term supply chain presence as EV production continues to expand throughout the forecast period.

Grid Modernization in Emerging Markets as a Multi-Decade GOES Demand Expansion Opportunity

Power grid expansion across emerging markets, particularly India, Southeast Asia, the Middle East, and Sub-Saharan Africa, is creating a long-term demand opportunity for grain-oriented electrical steel (GOES) manufacturers. Companies investing in local supply networks, regional distribution capabilities, and long-term utility partnerships are well positioned to capture this growing demand. India has committed over INR 3.05 lakh crore (around US$ 36 billion) to power distribution infrastructure under the Revamped Distribution Sector Scheme (RDSS) and the National Infrastructure Pipeline, targeting universal household electrification and major transmission capacity additions requiring millions of transformers and substantial volumes of GOES.

The African Development Bank estimates Sub-Saharan Africa requires more than US$ 40 billion annually in power sector investment to address one of the world's largest infrastructure deficits, while Middle Eastern countries are committing hundreds of billions to grid electrification and renewable energy capacity under national energy transition programs. Established GOES manufacturers, including ArcelorMittal, Tata Steel, and SAIL, are well positioned to capitalize through local production, government-to-government commercial frameworks, and first-mover distribution advantages in markets where institutional procurement processes continue to evolve.

Product Type Insights

Non-grain-oriented electrical steel (NGOES) represents the leading product type, holding around 65% share of the electrical steel market in 2026, supported by its widespread applications across industrial motors, EV traction motors, alternators, generators, and small distribution transformers. Unlike GOES, which has magnetic properties optimized in a single crystallographic direction for transformer core laminations, NGOES provides isotropic magnetic performance essential for rotating machinery.

The IEA estimates that over one billion industrial electric motors operate globally, with the EU Ecodesign Regulation mandating progressive efficiency upgrades that create a systematic replacement cycle and sustain NGOES procurement volumes independent of economic cycles.

Grain-oriented electrical steel (GOES) represents the fastest-growing product type, driven by expanding power grid infrastructure, renewable energy integration, and rising global demand for high-efficiency transformers. GOES offers superior magnetic properties in the rolling direction, making it the preferred material for transformer cores used in transmission and distribution networks.

Thickness Insights

The medium gauge (0.35-0.65 mm) segment is expected to hold around 48% share of the market in 2026, reflecting its position as the standard specification for industrial motors, distribution transformers, and conventional generators, which represent the majority of installed electrical equipment globally. Medium gauge provides a balance between magnetic performance, mechanical formability, and punch-press tooling compatibility, making it the preferred specification for high-volume motor lamination stamping operations across major industrial regions.

The World Steel Association reports that industrial motor production, which primarily consumes medium-gauge NGOES, involves hundreds of millions of units annually across major markets, supporting consistent, high-volume procurement demand.

The thin gauge (<0.35 mm) segment is projected to grow at the fastest CAGR during the forecast period, driven by EV traction motor applications that require the lower core losses achievable only with sub-0.35 mm sheet thickness. This technical advantage enables thin-gauge grades to command significant pricing premiums over standard medium-gauge products.

End Product Insights

Transformers represent the leading end product segment, holding an estimated 38% market share in 2026, driven by large-scale and ongoing global investment in power grid infrastructure for renewable energy integration, electrification expansion, and replacement of aging equipment.

Transformers are the primary application for grain-oriented electrical steel, which commands premium pricing due to its superior directional magnetic properties, making transformers the highest revenue-per-ton end product in the electrical steel value chain. The IEA projects annual transformer fleet additions in the hundreds of thousands of units globally to support new energy capacity connections and replace aging infrastructure, sustaining elevated GOES procurement demand.

EV motors represent the fastest-growing end product segment, driven by accelerating global electric vehicle adoption and rising demand for high-performance electrical steel in traction motor applications. Global EV sales are expanding from 14 million units in 2023 to more than 30 million units by 2030 based on IEA projections, creating a substantial increase in demand for thin-gauge non-grain-oriented electrical steel (NGOES). EV traction motors require advanced NGOES grades with lower core losses, higher magnetic efficiency, and improved performance at high operating speeds, making thin-gauge steel a critical material for next-generation electric drivetrains.

End-Use Industry Insights

Energy and power generation represents the dominant end-use industry, accounting for nearly 42% of the electrical steel market share in 2026. This reflects the scale and capital intensity of global power infrastructure, which serves as the primary institutional purchaser of both grain-oriented (transformer) and non-grain-oriented electrical steel grades.

National grid operators, independent power producers, and renewable energy developers collectively support multi-year, large-volume procurement cycles that exceed individual industrial or automotive demand events in both scale and duration. The IEA's World Energy Outlook projects over US$ 600 billion in annual electricity network investment through 2030, reinforcing Energy and Power Generation as the core demand foundation of the global electrical steel industry.

Automotive represents the fastest-growing end-use industry, driven by the accelerating transition toward electric vehicles and rising consumption of advanced electrical steel grades for traction motor applications. Unlike traditional internal combustion engine vehicles, EVs rely on high-efficiency electric motors that require premium thin-gauge non-grain-oriented electrical steel (NGOES) to minimize energy losses, improve motor efficiency, and support higher operating speeds.

North America Electrical Steel Market Trends and Insights

North America is expected to hold around 13% share of the electrical steel market in 2026, with demand supported by the U.S. Infrastructure Investment and Jobs Act's US$ 65 billion grid modernization allocation, expanding EV production at domestic assembly plants, and stricter Department of Energy (DOE) energy efficiency standards for distribution transformers and industrial motors. The U.S. Inflation Reduction Act (IRA) promotes domestic clean energy manufacturing and EV adoption, directly supporting demand for both GOES used in grid transformers and premium NGOES used in EV motors. The region is transitioning from a net importer toward domestic production expansion, with greenfield investments in U.S. and Mexican electrical steel capacity accelerating to reduce reliance on Asian imports amid reshoring initiatives.

U.S. Electrical Steel Market Insights

The U.S. accounts for about 80% of North America's electrical steel market revenue, driven by the DOE's updated distribution transformer efficiency standards effective from 2025, the IRA's domestic clean energy manufacturing incentives, and the rapid expansion of EV assembly programs by Ford, GM, and Tesla. The U.S. Department of Energy projects over 100 GW of new renewable energy capacity additions requiring grid transformer installations through 2030, supporting sustained GOES procurement demand and encouraging domestic capacity expansion investments by regional steel producers throughout the forecast period.

Europe Electrical Steel Market Trends and Insights

Europe is projected to hold nearly 11% share of the electrical steel market in 2026, with demand influenced by the EU's REPowerEU renewable energy acceleration plan, the European Green Deal industrial decarbonization agenda, and the EU Ecodesign Regulation's progressive industrial motor efficiency requirements. There is a high demand for high-grade GOES for transmission transformers and ultra-thin NGOES for EV motor laminations as automotive OEMs, including Volkswagen, BMW, and Stellantis, expand EV production. CBAM implementation and increasing ESG-driven investment priorities are encouraging green steel production investments.

Germany Electrical Steel Market Insights

Germany accounts for roughly 24% of the European electrical steel market revenue, supported by its position as Europe's largest automotive manufacturing hub, producing over four million vehicles annually, and its importance in European grid modernization as the region's largest electricity market. Volkswagen, BMW, and Mercedes-Benz EV programs are generating sustained demand for premium thin-gauge NGOES, while voestalpine AG and Thyssenkrupp supply specialized electrical steel grades to German industrial motor and transformer manufacturers. Germany's focus on domestic clean technology manufacturing supports structurally strong electrical steel demand.

U.K. Electrical Steel Market Insights

The U.K. is anticipated to hold a significant share of the European market in 2026, supported by power grid infrastructure investments under National Grid's multi-decade transmission reinforcement programs and the government's £22 billion offshore wind investment commitment. Tata Steel's U.K. operations remain an important domestic electrical steel capability. The U.K.'s 2030 ban on new internal combustion engine vehicle sales, among the earliest such mandates globally, is accelerating domestic EV production and increasing demand for NGOES ahead of many European markets.

France Electrical Steel Market Insights

France is projected to hold a considerable share of the European market in 2026, driven by nuclear power infrastructure maintenance, new Small Modular Reactor (SMR) development programs requiring specialized electrical steel for generator components, and EDF and RTE grid modernization initiatives. Stellantis' French EV production programs are supporting rising demand for automotive-grade NGOES. France's Plan France 2030 reindustrialization initiative includes strategic investment in domestic industrial motor and transformer manufacturing, supporting long-term electrical steel procurement demand throughout the forecast period.

Asia Pacific Electrical Steel Market Trends and Insights

Asia Pacific is expected to maintain its leading position in the global electrical steel market while holding around 60% share in 2026, supported by China's position as both the world's largest electrical steel producer and consumer. The region's leadership is driven by extensive power grid expansion, high EV production volumes, and the world's largest industrial motor fleet. China Baowu Steel Group and HBIS Group rank among the world's largest electrical steel producers, while China's domestic electrical steel consumption exceeds 10 million tons annually, surpassing other individual national markets. Regional growth is further supported by India's infrastructure electrification programs, Japan and South Korea's technological leadership in advanced grades, and Southeast Asia's expanding industrial motor and transformer demand.

India Electrical Steel Market Insights

India accounts for around 10% of the Asia Pacific electrical steel market revenue and represents one of the region's fastest-growing demand centers, driven by the Revamped Distribution Sector Scheme (RDSS)'s INR 3.05 lakh crore power infrastructure commitment and National Infrastructure Pipeline grid expansion targets. SAIL and Tata Steel are the primary domestic electrical steel suppliers, although India remains dependent on imports for premium GOES grades. India's target of 500 GW renewable energy capacity by 2030 requires large-scale transformer deployment, creating sustained demand for GOES and encouraging international suppliers to invest in domestic production capabilities.

Japan Electrical Steel Market Insights

Japan is expected to hold a substantial share of the Asia Pacific electrical steel market in 2026, driven by rising demand for advanced electrical steel grades. Nippon Steel Corporation and JFE Steel Corporation produce some of the world's most advanced thin-gauge NGOES products for EV traction motors, achieving core loss specifications below 1.0 W/kg, and maintain long-term supply agreements with Toyota, Honda, and Hyundai. Japan's technological advantage in high-performance grades supports continued opportunities despite relatively stable overall steel production volumes.

South Korea Electrical Steel Market Insights

South Korea is anticipated to hold a notable share of the Asia Pacific electrical steel market in 2026, supported by POSCO's advanced grain-oriented and non-grain-oriented electrical steel production capabilities serving domestic OEMs and export markets. Hyundai Motor Group and Kia's EV production expansion, targeting more than 2 million annual EV units by 2026, is creating strong domestic demand for premium thin-gauge NGOES. South Korea's focus on EV supply chain development is driving collaboration between POSCO and automotive OEMs on next-generation electrical steel grades, strengthening the country's position as a global center for high-performance electrical steel innovation.

The global electrical steel market is highly consolidated, with leading producers maintaining competitive advantages through advanced metallurgical expertise, proprietary manufacturing processes, and extensive qualification records. Demand for high-performance electrical steel in EV motors, transformers, and energy-efficient systems is strengthening the position of established producers with large-scale manufacturing capabilities and advanced technologies, creating high barriers for new market entrants.

Key strategic priorities include the development of low-carbon steel production methods, expansion of localized manufacturing capacity, and deeper integration with automotive and energy value chains. Producers are increasingly focusing on next-generation thin-gauge grades, high-permeability materials, and customized solutions through collaboration with end users. Meanwhile, smaller and mid-sized manufacturers face growing pressure to invest in technology upgrades, sustainability initiatives, and capacity expansion to compete effectively in an increasingly innovation-driven market.

Key Industry Developments

• In June 2026, POSCO and Hyundai Motor partnered to develop next-generation high-efficiency electrical steel technology for EV motors, focusing on advanced silicon steel sheets to improve electric vehicle energy efficiency and performance.
• In December 2025, ArcelorMittal announced a new electrical steel production line at its Mardyck facility in France, representing a major investment to expand capacity and support growing demand from automotive, energy, and industrial applications.
• In August 2025, JFE Steel Corporation announced expansion of electrical steel manufacturing capacity in India with JSW Steel, increasing GOES production capacity across Vijayanagar and Nashik facilities to 350,000 tons annually to meet rising power infrastructure demand.