Transformers continue to represent the principal application for grain oriented electrical steel because of the material's magnetic characteristics and suitability for efficient transformer cores. The grain oriented electrical steel market is projected to grow from USD 16.4 billion in 2025 to USD 22.85 billion by 2035, according to Market Research Future, with a CAGR of 3.37%.

In 2024, transformers accounted for 78.4% of the market. This strong share reflects the essential role of transformers in electricity generation, transmission, and distribution. As electricity demand increases and grids become more complex, utilities are investing in equipment capable of delivering power efficiently while minimizing energy losses.

Grid modernization is therefore an important market driver. Aging infrastructure in developed markets requires replacement and upgrading, while developing economies are expanding transmission and distribution networks to support industrialization and urbanization. Both trends contribute to demand for transformer-grade electrical steel.

Renewable energy is adding another layer of demand. Solar and wind installations often require new transformer capacity to connect generation facilities to electricity networks. The transition toward decentralized and variable renewable generation also encourages investment in modern grid infrastructure.

Power generation was the largest end-use industry in 2024, accounting for 52.3% of the market. The automotive sector followed with 21.8%, reflecting increasing electrification and demand for efficient electrical components.

Asia-Pacific dominates the global market, representing 71.1% in 2024. China is a major contributor, while India is benefiting from grid expansion. Europe is expected to record a 3.6% CAGR, supported by renewable energy integration and energy-efficiency policies.

Manufacturing innovation is also changing the industry. Producers are developing advanced grades with improved magnetic performance and lower losses. Automation and digital manufacturing can help improve consistency and production efficiency.

As power networks expand and electricity systems transition toward cleaner generation, transformer demand is expected to remain an important foundation for the electrical steel industry. Investments in efficient grids, renewable energy, and advanced transformer technology will continue to influence market development through 2035.