Driven by Energy Efficiency: New Opportunities for Silicon Steel in Home Appliances and Electric Vehicles

The silicon steel industry is a vital sector in manufacturing electrical steel, also known as silicon steel sheets, which are indispensable for the power, electronics, and military industries. It is the largest produced functional metal material primarily used in various motors, generators, and transformer cores. Electrical steel sheets' manufacturing technology and product quality are significant indicators of a country's special steel production and scientific and technological development levels. Particularly, the manufacturing process of oriented silicon steel is complex, with strict composition control, long production processes, and many factors affecting performance, making it a benchmark for a country's special steel manufacturing technology level.

Silicon steel, an alloy with a silicon content of 0.5% to 4.5%, is known for its high magnetic permeability, low coercivity, and high electrical resistivity. It can be classified into non-oriented and oriented silicon steel based on the grain orientation and crystal alignment. Oriented silicon steel has grains aligned in the rolling direction, offering excellent magnetic flux density in this direction, and is suitable for static devices like transformers. Non-oriented silicon steel has grains oriented in various directions, providing good magnetic flux density in all directions, and is suitable for rotating devices such as industrial motors, new energy vehicle drive motors, and various home appliance motors.

The development of traditional and emerging energy generation equipment supports the growth in oriented silicon steel production.

Oriented silicon steel is predominantly used in transformers, and its development benefits directly from the increase in installed capacities of various energy sources such as thermal power, solar power, and wind power. According to data from the National Bureau of Statistics, by the end of 2023, the total installed capacity of power generation in China reached 291,965 million kilowatts, a year-on-year increase of 13.9%. Among them, thermal power installed capacity was 139,032 million kilowatts, growing by 4.1%; hydropower installed capacity was 42,154 million kilowatts, growing by 1.8%; nuclear power installed capacity was 5,691 million kilowatts, growing by 2.4%; grid-connected wind power installed capacity was 44,134 million kilowatts, growing by 20.7%; grid-connected solar power installed capacity was 60,949 million kilowatts, growing by 55.2%. The installed capacities of thermal power, wind power, and solar power have high growth rates. With the resumption of thermal power construction and the rapid development of new energy, the market for oriented silicon steel is expected to maintain continuous high-speed growth. Moreover, the design life of transformers is generally 30 years, and the replacement demand for existing transformers is expected to support the long-term demand for oriented silicon steel.

The growth in new energy vehicles and home appliance motors brings demand increments for non-oriented silicon steel.

Non-oriented silicon steel is mainly used in new energy vehicles, small and medium-sized motors, home appliances, electric bicycles, large generators, and intelligent manufacturing fields. In the new energy vehicle sector, non-oriented silicon steel, as the core material for the stator and rotor cores of permanent magnet synchronous motors, fully benefits from the explosive growth in new energy vehicle production and sales. The use of non-oriented silicon steel in the home appliance sector is also driven by energy efficiency upgrades. With economic development and urbanization, the number of energy-consuming home appliances per capita has increased significantly, and the home appliance industry has great energy-saving potential. The energy efficiency improvement of refrigeration products is a microcosm of the recent trend of energy efficiency upgrades in the home appliance industry. At present, the home appliance industry generally uses medium and low-grade non-oriented silicon steel, with a penetration rate of only 18% for high-grade products. Under the main line of energy efficiency upgrades, the increase in the penetration rate of high-grade non-oriented silicon steel is inevitable.

China's silicon steel export scale continues to expand, and some imported oriented silicon steel is gradually being replaced by domestic products.

With the improvement of China's silicon steel sheet technology, China became a net exporter of electrical steel in 2017, completely getting rid of the long-term dependence on imports. In 2023, China exported 1.238 million tons of electrical steel sheets, a year-on-year decrease of 3.8%, and imported 281,000 tons of electrical steel sheets, a year-on-year decrease of 7%. Although China's export volume decreased in 2023, it still ranks among the top, with the top four export countries being India, Mexico, Italy, and the United States, accounting for 15.3%, 12.8%, 8%, and 8% of total exports, respectively. India, as the first importing country, is also gradually increasing its demand for high-end steel, and local steel enterprises are unable to meet the steel demand of the country's manufacturing enterprises in terms of both quantity and quality. China's product quality and technical level of silicon steel meet the steel demand of the country.

In terms of supply pattern, the concentration of China's silicon steel industry is high.

In 2023, the output of the top six steel enterprises in China's electrical steel production accounted for 76.18%, namely Wuhan Iron and Steel (WISCO), Shougang, Lianyuan Iron and Steel, Ansteel, Baosteel, and Shagang. Affected by the high-grade silicon steel technology barriers and rapid development trends, large enterprises have obvious advantages, and the market concentration is expected to further increase in the future. Among them, WISCO has become the world's largest single-site silicon steel product manufacturing base with the most varieties. WISCO's first professional production line for high-grade non-oriented silicon steel facing the new energy vehicle industry started construction in June 2023 and is expected to be completed in June 2025, with an annual production capacity of 550,000 tons. The new production line can provide high-grade materials for 4.4 million new energy vehicles each year. In terms of other steel mills, Baosteel's expansion plan shows that by 2024, it will have a production capacity of 1.16 million tons of high magnetic sensitivity oriented silicon steel; Shougang is expected to have a production capacity of 300,000 tons of high magnetic sensitivity oriented silicon steel by 2025; Taiyuan Iron and Steel is expected to form a production capacity of 160,000 tons of high magnetic sensitivity oriented silicon steel by 2025.

In summary, on the demand side, the development of traditional and emerging energy generation equipment supports the growth in oriented silicon steel production, and the growth in new energy vehicles and home appliance motors brings demand increments for non-oriented silicon steel, supporting the growth cycle of silicon steel production in 2012, 2015, and 2020. Under the background of "carbon peak" and "carbon neutrality," new energy power generation and energy-efficient electrical equipment still have a certain growth space, supporting the growth of silicon steel demand. In terms of exports, China, thanks to the improvement of silicon steel production technology, has become a net exporter from a net importer, and with the support of the "Belt and Road" policy and global new energy development, China's silicon steel exports are still at a high level. On the supply side, China's silicon steel industry concentration is high, and the top steel mill all have new production line plans, and it is expected that silicon steel production capacity will further increase. It is necessary to be vigilant that silicon steel products face structural overcapacity. The production difficulty of low-grade silicon steel is relatively low, the supply capacity is greater than the actual demand, and the product market competition is fierce. At present, oriented silicon steel, especially high magnetic sensitivity oriented silicon steel, is in a tight balance, while non-oriented silicon steel, especially low-grade steel, has appeared overcapacity.

As Baosteel's annual agreement agent, Baohui Steel Limited has a stock of tens of thousands of tons in Chengbei, which can meet customers' immediate purchase and special specifications. If you have any needs for Sui silicon steel and other products, please contact us, and a silicon steel expert will provide you with one-to-one service to ensure that you purchase the highest quality Baosteel silicon steel at a market-low price.