The Philippines Electrical Steel Market Report is estimated to be valued at USD 103.1 Mn in 2024 and is expected to reach USD 142.1 Mn by 2031, growing at a CAGR of 5.5% from 2024 to 2031.

The Philippines electrical steel market is expected to witness robust growth over the forecast period, owing to increasing investments and government initiatives to develop power infrastructure in the country.

Market Driver - Growth in Construction Industry

The construction industry in Philippines has been experiencing significant growth over the past few years and this is directly fueling the demand for electrical steel in the country. More construction projects mean higher need for infrastructure which will require electrical components and equipment. Electrical steel is a vital raw material used in production of transformers, motors and generators that provide power in buildings, factories, townships etc.

As per data from Philippines Statistics Authority, the approved building permits in the country increased by over 35% year-on-year during 2020-2021 period. This clearly indicates higher construction activity is underway. Mega projects like roads, bridges, airports, power grids are in different stages of development. For example, Philippines government's "Build, Build, Build" program launched in 2017 envisions massive infrastructure expansion covering 6,740 projects worth over $180 billion until 2022. Successful and timely completion of these projects will spur secondary growth across many industries including electrical steel.

By 2025, real estate and construction is projected to contribute nearly 13% to the country's GDP as per Philippines Development Plan 2017-2022.

Market Driver – Rising Focus on Renewable Energy

The Philippines government has recently announced ambitious targets for renewable energy and aims to drastically reduce the country's dependence on fossil fuels in the coming decade. This renewed focus on clean and sustainable sources of energy such as solar, wind and hydro are expected to drive significant growth in the country's electrical steel market.

As solar and wind farms increase to meet the rising energy demand, there will be a parallel rise in the need for electrical steel that forms the core component of transformers and generators installed in these renewable energy power projects. Electrical steel is specially produced steel with tight specifications on its magnetic properties to ensure maximum energy efficiency. Both solar farms and wind turbines require step-up transformers to increase the voltage for efficient transmission and distribution.

The Philippines government has set a target of reducing carbon emissions by 75% by 2030 and achieving 35% renewable share in the energy mix according to its 'Nationally Determined Contribution' published in 2020 for the Paris Agreement.

Market Challenge – Price Volatility of Raw Materials

The volatility in the prices of key raw materials used in manufacturing electrical steel is one of the major factors restraining the growth of Philippines electrical steel market. Electrical steel or silicon steels are grades of alloy steels known for their excellent magnetic properties which make them useful in equipment like transformers. However, manufacturing of electrical steel is a raw material intensive process that requires inputs like iron ore, scrap steel, coking coal etc.

For example, during the pandemic-induced economic slowdown of 2020-21, lockdowns had sharply reduced demand from key steel consuming industries worldwide. This had led to a crash in international steel and iron ore prices which provided brief relief to Philippines electrical steel makers in terms of reduced raw material costs. However, the situation reversed rapidly in 2022 as post-pandemic economic recovery took hold. Demand for steel shot up from China and other developing nations leading to a price surge, whereas global supply could not keep pace due to production constraints during the pandemic years.

Market Opportunity – Developing Transportation Infrastructure

Developing transportation infrastructure presents a huge opportunity for growth in the Philippines electrical steel market. The Philippine government has recently laid significant emphasis on modernizing and expanding the country's road, rail and port networks. Megaprojects like Subic-Clark Railway, North-South Commuter Railway and construction of new roads, highways and bridges will require massive amounts of electrical steel in the coming years.

Electrical steel is a vital material used in equipment related to transportation sector such as electric vehicles, railway tracks, signaling systems etc. The ongoing and planned infrastructure development indicates a steady rise in demand for such equipment. For example, the Department of Transportation aims to construct over 900 Km of rail lines by 2028 under its 'Build, Build, Build' program. This will drive the requirement for electrical steel sheets, rails, transformers and other components used in rail transport.

Moreover, encouraging policies for electric vehicles adoption coupled with growing need for clean mobility will push the EV market. As per the International Energy Agency, the Philippine government aims to put 3.5 million EVs on roads by 2030.

Insights, By Product Type: Widespread Versatility and Cost-Effectiveness

The non-grain oriented sub-segment contributes the largest share of 80.6% in the Philippines electrical steel market due to its widespread versatility and cost-effectiveness. This type of steel does not require a specific grain structure like grain-oriented steel, allowing it to be used in a variety of applications that do not demand ultra-high permeability.

Non-grain oriented steel sees application in motors up to around 3,000 HP. Its use in fractional horsepower motors that power everyday appliances like fans, washing machines, and refrigerators gives it broad exposure across many industries. It also finds application in medium-sized transformers and inductors where cost is a major consideration for manufacturers. The ability of non-grain oriented steel to achieve a balance of adequate magnetic properties at an economical price point compared to specialty grain-oriented grades makes it the preferred choice.

Electric motors incorporating non-grain oriented steel alone account for a huge installed base in the Philippines, both for industrial equipment and consumer durable goods. Steady growth in manufacturing and a burgeoning appliances market contribute to sustained demand. Expanding electrification in rural areas also brings new motor installations.

Insights, By Application: Motors Sub-segment Holds the Highest Share

Of all the key applications for electrical steel in the Philippines, motors sub-segment generates the greatest demand with a market share of 66.6%. Motors are ubiquitous throughout the industrial sector for powering factory equipment like conveyors, production lines, pumps and compressors. They are also essential components running everything from small household fans to large chillers and air conditioners.

Motors require a high volume of electrical steel to fabricate their laminated cores. Non-oriented grades suit smaller motors while grain-oriented steel performs in high-efficiency inductors. Core stamping and production of finished motors are major employment sectors for the electrical steel downstream industry. Robust activity in motor manufacturing underpins domestic consumption.

Rising investments in industries like food processing, automotive and electronics bolster demand for industrial motors and machinery. At the same time, a growing middle class and expanding infrastructure drive the appliances and HVAC sectors. Motors in public transport and power generation also contribute to the thriving application segment. With such entrenched usage across diverse power requirements, the electric motor segment will remain a pillar propping up electrical steel consumption.

The major players operating in the Philippines Electrical Steel Market Report include Thyssenkrupp, NatSteel Asia, Kewei Steel Group, Nippon Steel Corporation, JFE Steel Corporation, Posco International, Voestalpine AG, and Arcelor Mittal.

• On November 3, 2022, POSCO developed a new type of electrical steel 20% lighter than conventional. The new steel is expected to be used in various applications, including electric vehicles and wind turbines.

• By Product Type
  • Non-grain Oriented
  • Grain-oriented
• By Application
  • Motors
  • Inductors
  • Transformer