Grain-oriented electrical steel (GOES)

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Data-center power supplies require a GOES grade that lacks substitutes at scale, and Nippon Steel controls much of the global capacity.

High-silicon steel sheet engineered for low core loss and high magnetic permeability in transformer cores. Grid transformers and data-centre power supplies require this specific grade; no substitutes exist at scale. Nippon Steel, JFE, Thyssenkrupp, Baowu, and NLMK control most global capacity, exercising pricing power.

Why the concentration exists

The manufacturing process for grain-oriented electrical steel is significantly more complex than for non-oriented grades. The material undergoes specialized cold-rolling and annealing processes that develop optimal magnetic properties along the coil's rolling direction. Available thicknesses range from 0.18 mm to 0.35 mm, with common designations including M3, M4, M5, and M6 grades. High-permeability grain-oriented steel, known as Hi-B, achieves magnetic flux density values of 1.92 to 1.95 Tesla.[2][4][8][14]

Patents covering grain-oriented electrical steel production are concentrated among a small number of steelmakers. Nippon Steel Corporation holds multiple patents dating from 1984 through 2017, while JFE Steel Corporation and POSCO also maintain significant intellectual property portfolios in this field. European patent EP2775007B1, granted in December 2018, covers production processes for grain-oriented electrical steel. This intellectual property concentration creates barriers to entry for potential new producers.[5][16]

What the evidence shows

High Permeability GOES held 57.78% share of the grain oriented electrical steel market in 2024.

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There is a limited number of domestic manufacturers capable of producing high-grade GOES as of 2024.

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RESCORED JUL 2026oligopolyscaling

Who supplies it

The United States relies on a single domestic producer for grain-oriented electrical steel. Cleveland-Cliffs, through its AK Steel subsidiary, operates GOES production at Butler Works in Pennsylvania and Zanesville Works in Ohio. The Commerce Department identified 13 GOES manufacturers globally in 2020, with four located in China, two in Japan, and the remainder distributed across Germany, India, Poland, the Czech Republic, Russia, Brazil, and South Korea. This limited number of qualified producers constrains supply options for transformer manufacturers outside China.[3][13]

Who controls it

BaosteelNippon Steel CorporationPOSCO

$8.6B market · 20245.6% CAGRsource

What it depends on, and what depends on it

Over 90% of the world's electrical power passes through large power transformers containing cores made from grain-oriented electrical steel. This critical role in power infrastructure makes GOES a strategic material for electricity transmission and distribution networks. The material's low core loss properties are essential for energy efficiency in grid infrastructure. Transformer manufacturers in North America import the majority of their electrical steel from Mexico, Canada, South Korea, and China due to insufficient domestic production volume.[11][13]

Lamination manufacturers process prime-grade cold-rolled grain-oriented steel from qualified mills into transformer core components. These laminations are produced in standard E and I shapes as well as larger configurations for power transformer applications. Thickness options for finished laminations include 0.23 mm, 0.27 mm, and 0.30 mm specifications. The laminations achieve magnetic induction levels of 1.8 to 2.0 Tesla in operational transformers.[6][7]

Where it sits in the stack

Takes in: Hot-rolled silicon steel coil, hydrogen/nitrogen annealing atmosphere, MgO coating

Sends on: Cold-rolled decarburised high-temperature annealed insulation-coated GOES sheet for transformer core laminations

depends onSteel and steel alloys

feeds intoSteel and steel alloys Inductors and magnetic components Transmission, grid and interconnection Capacitor banks, shunt reactors and series compensation Tap-changers (on-load and off-circuit)Synchronous condensers

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What would break it

Material availability has been identified as a leading cause of delays in transformer production. The United States faces particular vulnerability because Cleveland-Cliffs' production facilities cannot produce widths greater than their current capabilities. Domestic output is insufficient to fully meet demand from U.S. transformer manufacturers, forcing reliance on imports. This supply constraint has contributed to grain-oriented electrical steel prices roughly doubling since 2020.[1][12][13]

A potential substitution threat exists through proposed energy efficiency standards in the United States. The Department of Energy proposed rules in December 2022 that would mandate amorphous steel cores for nearly all distribution transformers produced or imported into the U.S. starting in 2027. Amorphous steel cores offer lower core losses than conventional grain-oriented electrical steel. If implemented, these standards could reduce demand for traditional GOES in the distribution transformer segment.[3]

What to watch

New production capacity is under development in India through a joint venture between JFE Steel and JSW Steel. The partnership, established in February 2024, plans to begin full-scale production of grain-oriented steel sheet by the fiscal year ending March 2028. This facility would add new supply capacity outside the traditional producing regions. The venture aims to serve growing demand in the Indian market and potentially export markets.[9]

Nippon Steel is expanding its electrical steel sheet manufacturing capacity at its Setouchi Works Hirohata facility. The company invested approximately 104 billion yen in this expansion, which is expected to increase manufacturing capacity by roughly 40% by the first half of 2024. This expansion strengthens Japan's position as a major GOES supplier to global markets. The additional capacity will help address growing demand from transformer manufacturers.[15]

Cleveland-Cliffs secured a $400 million indefinite-delivery contract from the Defense Logistics Agency in September 2025 for grain-oriented electrical steel supply. The contract extends through September 2030 and provides guaranteed demand for the sole U.S. producer. Additionally, the Biden administration awarded Cleveland-Cliffs $500 million under the CHIPS and Infrastructure framework to upgrade its electrical steel plants. These investments aim to strengthen domestic supply capabilities for this critical material.[10][12]

Related nodes

No other tracked node in the atlas currently shares this parent.

On the plate

Power transformers · The anatomy of a datacentre

Sources

Full scorecard, owner shares, supply edges and the full tracked roster are in the desk letter.

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