The U.S. electrical steel market is projected to reach USD 8.7 billion by 2035, up from USD 4.4 billion in 2025, reflecting a robust CAGR of 7.1% over the forecast period, according to the latest market insights. This growth is fueled by accelerating electrification, expanding electric vehicle (EV) production, grid modernization initiatives, and increasing renewable energy deployments across the country.
Electrification and EV Production Driving Demand
The shift toward electric mobility is a key growth driver for the U.S. electrical steel market. Electrical steel is a critical material for EV motors, particularly high-efficiency grades such as non-grain-oriented (NGO) steel. According to the U.S. Department of Energy, EV sales are expected to exceed 50% of new vehicle sales by 2030, creating strong domestic demand for advanced electrical steels.
Automakers are scaling up domestic EV production, prompting U.S.-based steel manufacturers to invest in production capacity and low-loss steel variants. These efforts aim to reduce import reliance, meet performance standards, and leverage federal clean energy incentives supporting EV adoption and energy efficiency.
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Grid Modernization and Renewable Integration
Electrical steel is vital for transformers, generators, and other power infrastructure components. Investments in grid modernization, fueled by the Inflation Reduction Act and infrastructure spending, are driving demand for high-performance grain-oriented electrical steel (GOES) for transmission and distribution systems.
The deployment of renewable energy, including wind and solar, is further boosting demand. Inverters and power transformers integral to distributed energy systems rely on GOES, underscoring the critical role of electrical steel in achieving energy efficiency and sustainability goals.
Regional Insights and Market Trends
The U.S. electrical steel market exhibits strong regional momentum:
Midwest & Industrial Heartland: Ohio, Michigan, and Pennsylvania are modernizing legacy steel mills to produce advanced GOES and NGO steel, supplying components for transformers, EV motors, and industrial applications.
South & Southwest: Georgia, Kentucky, Tennessee, and Texas are emerging hubs for EV and battery manufacturing, driving demand for high-efficiency steel in motors and charging infrastructure. Texas, in particular, leads in wind and solar capacity, requiring efficient transformers and inverters.
West Coast & Northeast: California and northeastern states are upgrading aging grids and implementing energy-efficiency regulations, boosting adoption of low-loss, high-performance steels.
Challenges and Restraints
The market faces challenges including a limited number of domestic GOES producers, creating supply bottlenecks. Cleveland-Cliffs remains the primary domestic GOES supplier, necessitating imports to meet rising demand. Labor shortages in metallurgical and engineering roles, competition for raw materials, and lengthy permitting processes further constrain production capacity.
Segment Analysis
By Product Type: Grain-oriented electrical steel continues to dominate, essential for transformers and high-efficiency motors due to low core loss and high magnetic permeability. Non-grain-oriented and semi-processed steels are gaining traction in EV motors and industrial applications.
By Application: Transformers remain the largest application segment, supporting power generation, transmission, and distribution infrastructure. Inductors, motors, and portable power systems are secondary but growing segments.
By End-Use Industry: The energy sector leads demand, driven by grid upgrades and renewable integration. Automotive, manufacturing, and household appliances follow, reflecting the expanding EV and industrial equipment markets.
By Region: The Southwest dominates, supported by energy production, renewable installations, and industrial activity. The Midwest and West Coast also show strong growth due to EV manufacturing and energy efficiency regulations.
Competitive Landscape and Key Players
Leading U.S. manufacturers include Cleveland-Cliffs, AK Steel, Allegheny Technologies Inc., and U.S. Steel (Big River Steel). Cleveland-Cliffs, following its AK Steel acquisition, has strengthened vertical integration from mining to finished electrical steel products. U.S. Steel’s recent $450 million NGO line at Big River Steel in Arkansas produces high-recycled-content steel with significant CO₂ emission reductions.
Allegheny Technologies focuses on high-performance alloys for niche industrial and energy applications. Mid-sized firms, including Arnold Magnetic Technologies and Gibbs Wire & Steel Company, LLC, serve precision-engineered laminations and motor components. Distributors such as Continental Steel & Tube Co. and AAA Metals Company enhance market accessibility and processing services.
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Recent Developments
October 2023: U.S. Steel launched the “InduX” NGO electrical steel line in Osceola, Arkansas, using 90% scrap with 70–80% lower Scope 1 & 2 CO₂ emissions.
July 2024: Cleveland-Cliffs invested $150 million to convert the Weirton, WV, facility into a transformer manufacturing plant using domestically produced GOES.
Outlook
The U.S. electrical steel market is positioned for sustained growth, anchored by electrification, EV expansion, renewable energy integration, and grid modernization. Companies emphasizing green steel production, domestic sourcing, and technological innovation are likely to gain competitive advantage. Continued investment in capacity, workforce development, and advanced steel grades will be critical to meet the nation’s evolving energy and mobility infrastructure needs.
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