Electrical Steel Market Is Driven By Increasing Demand For...

Electrical Steel Market Is Driven By Increasing Demand For Transformers And Motors

Сообщение 2024-02-27 13:01:30

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Key players operating in the electrical steel market include Yara International ASA, The Mosaic Company, Nutrien Ltd., BASF SE, Agrium Inc. (acquired by Nutrien). Electrical steel finds widespread application in power generation, transmission and distribution systems. Rising investments in grid infrastructure expansion, especially in developing nations has augmented the demand for transformers and motors. This has provided a fillip to the electrical steel market. Further, rapid urbanization and industrialization has triggered higher electricity demand, necessitating capacity additions, which is a key market driver. With government focus shifting towards renewable sources of energy like wind and solar, demand for equipment utilizing electrical steel such as generators and transformers is set to rise significantly.

Growing demand for energy efficient equipment in line with carbon emission reduction targets has accelerated the replacement of older power grids and induction motors with high grade electrical steel variants featuring low losses. The global electrical steel market is also witnessing increased adoption in the automotive industry owing to rising penetration of electric and hybrid vehicles. Major automakers are investing heavily in electrical steel to improve performance of electric motors used in EVs and HEVs. Furthermore, ongoing grid modernization projects aimed at upgrading transmission and distribution infrastructure to make it stronger, smarter and resilient has stimulated electrical steel consumption. The market is anticipated to gain further traction over the forecast period led by these factors.

The key driver behind the growth of the electrical steel market is rapid infrastructure development across both developed and developing economies. There is significant investment in construction of roads, railways, commercial buildings, power transmission lines and expanding electricity access in rural areas. This requires robust grid infrastructure and augmenting the distribution networks which spurs the demand for transformers, motors and generators using electrical steel. Additionally, steady growth of the automotive industry especially electric vehicles is augmenting consumption of electrical steel for efficient motors used in EVs and HEVs. Rising energy demand from industrialization along with integration of renewable energy is also propelling the electrical steel market.

Current Geopolitical Situation and its Impact on Electrical Steel Market Growth

The Electrical Steel Market Size is facing various geopolitical challenges that are hampering its growth prospects. The ongoing Russia-Ukraine war has disrupted the supply chain of major raw materials used in electrical steel production such as iron ore. Both Russia and Ukraine are major exporters of iron ore globally. Due to sanctions on Russia and challenges in logistics due to the war, iron ore supply and its prices have witnessed significant fluctuations. This has increased input costs for electrical steel manufacturers substantially.

Political instability in countries like China and India is also posing threats. Recent COVID-19 lockdowns in China led to the closure of various manufacturing facilities, putting production and exports on hold. This affected the global electrical steel supply. Labor issues and protectionist measures in India are discouraging foreign investments and technical collaborations in the domestic electrical steel industry.

Geographical Regions with High Electrical Steel Consumption

Asia Pacific accounts for the largest share of the global electrical steel market by value. Factors such as rapid industrialization, growing demand from the energy sector due to rising electricity consumption, and supportive government policies for electric vehicle adoption are driving electrical steel consumption in the region. Countries like China, Japan, South Korea and India are major markets. Asia Pacific is expected to retain its dominance during the forecast period as well due to ongoing infrastructure projects and measures to reduce dependence on fossil fuel-based energy.

Fastest Growing Region in Electrical Steel Market

Europe is projected to be the fastest growing regional market during the forecast period. This can be attributed to stringent emission norms forcing increased electrification of transportation. The region is actively working to decarbonize its transportation sector through electric vehicles and related charging infrastructure development. The European Union has allocated huge investments for the same through initiatives such as the European Green Deal. This is generating robust demand for electrical steel from the automotive as well as energy industries and supporting the market growth.