Analysis and Forecast of Downstream Sub-market Applications in the Grain-Oriented Silicon Steel Industry
China’s steel industry has entered a stage of fierce competition for existing market share. In 2023, crude steel production reached 1.005 billion tons, and steel product output reached 1.4 billion tons, representing a year-on-year increase of 1.1%. Driven by technological and industrial revolutions, the steel industry is accelerating structural upgrading and developing towards mid-to-high-end products. On the consumption side, demand for construction steel has declined, while demand for high-quality special steels such as medium and heavy plates, automotive steel sheets, and silicon steel has increased. High-end steel will become the main focus of future development, and grain-oriented silicon steel is expected to become a key development area for the steel industry.
Analysis of the supply situation of my country’s grain-oriented silicon steel industry
Silicon steel is an indispensable soft magnetic alloy material for national industry, agriculture, transportation, national defense, and people’s daily lives. It is the cornerstone of the green, low-carbon, and efficient development of the power industry and a key material for upgrading various electrical products. It is widely used in industrial motors, home appliances, new energy vehicles, transformers, and other fields.
Gross-oriented silicon steel, due to its high magnetic permeability, low coercivity, and high resistivity, is widely used in various types of transformers, including main transformers, distribution transformers, and dry-type transformers, primarily in the transformer (core) manufacturing industry. The manufacturing technology of oriented silicon steel is highly complex and has a narrow process window. Especially for high-grade, high-magnetic-induction oriented silicon steel, the technological barriers are extremely high, representing the highest level of steel manufacturing and being hailed as the “crown jewel” of steel products.
With the promotion and implementation of the national “dual-carbon” strategy and the continuous progress of electrification and intelligentization in society, the international and domestic markets for medium- and high-grade non-oriented silicon steel and high-magnetic-induction oriented silicon steel have shown a long-term stable growth trend. In recent years, my country’s grain-oriented silicon steel production has continued to grow, reaching 2.6502 million tons in 2023, accounting for 17.35% of total silicon steel production. Among them, high magnetic induction grain-oriented silicon steel (HiB) accounted for 59% of the production, while general grain-oriented silicon steel (CGO) accounted for 41%.
Analysis and Forecast of my country’s Grain-Oriented Silicon Steel
Production from 2020 to 2031
In 2025, China is expected to add 6 new grain-oriented silicon steel production lines, increasing capacity by 700,000 tons, mainly concentrated in North China and Central China.
Analysis and Forecast of Downstream Sub-application Areas in the Oriented Silicon Steel Industry
As a key raw material for transformers, reactors, instrument transformers, and other voltage regulation and transformation equipment, the development of grain-oriented silicon steel carries the green mission of energy conservation and emission reduction, and is one of the important supports for implementing the national “dual-carbon” strategy. With the support of national strategies and policies, high-quality grain-oriented silicon steel will have good development potential.
(1) Conventional Transformers
Driven by national energy policies, China’s smart grid construction has entered a new stage, and the intelligent transformation of distribution transformers is accelerating. The State Grid plans to transform 294,800 distribution transformers during the 14th Five-Year Plan period, and the Southern Power Grid has invested 187 billion yuan in rural power grid transformation and upgrading. Transformer power loss accounts for about 40% of the transmission and distribution process. In 2023, China’s transformer power loss was approximately 240 billion kWh, generating 236 million tons of CO2 emissions. Upgrading the grade of grain-oriented silicon steel will help upgrade transformer energy efficiency, reduce power loss, improve energy utilization efficiency, and contribute to carbon emission reduction.
(2) Ultra-High Voltage Projects
With the accelerated construction of wind and photovoltaic power generation bases, ultra-high voltage transmission has become a key solution to the problems of new energy grid connection and cross-regional power transmission. The State Grid Corporation of China plans to invest 380 billion yuan in ultra-high voltage (UHV) power transmission projects during the 14th Five-Year Plan period, with UHV equipment investment accounting for 25%, of which transformer equipment investment is close to 100 billion yuan. This will drive demand for supporting equipment and further increase consumption of grain-oriented silicon steel.
(3) New Energy Power Generation
It is estimated that by the end of the 14th Five-Year Plan period, wind power and photovoltaic installed capacity will reach 599 million kW and 763 million kW, respectively. By 2030, wind power and photovoltaic installed capacity will reach 800 million kW and 1.025 billion kW, respectively, and by 2050, they will reach 2.2 billion kW and 3.45 billion kW, respectively. New energy power generation requires a large number of transformers; a 1GW wind power or photovoltaic base requires 500 transformers. It is estimated that by 2025, the investment in the new energy transformer market will exceed 120 billion yuan, and by 2035, it will exceed 1 trillion yuan. With the future trend of a significant increase in wind power and photovoltaic installed capacity, transformers and upstream grain-oriented silicon steel will also experience explosive growth. In summary, transformers, as key equipment for power generation and transmission, are the most important downstream industry for grain-oriented silicon steel, with silicon steel costs accounting for approximately 30% to 40% of the production cost of a single transformer. With the implementation of ultra-high voltage projects across China, the transformer market is showing a growth trend, and the significant increase in power transformer production will drive the growth in demand for grain-oriented silicon steel.