Philippines Electrical Steel Market

Philippines Electrical Steel Market Overview

• The Philippines Electrical Steel Market is valued at USD 110 million, based on a five-year historical analysis. This growth is primarily driven by the increasing demand for electrical steel in power generation, automotive, and industrial applications, alongside the government's push for infrastructure development through programs such as Build, Build, Build and the expansion of transmission and distribution networks. The market is also supported by rising investments in electric motors and transformers for rail, metro, and industrial projects, as well as growing adoption of energy-efficient and low-loss electrical equipment.
• Key cities such as Manila, Cebu, and Davao dominate the market due to their significant industrial activities and infrastructure projects. Manila, being the capital, serves as a hub for trade and commerce, while Cebu and Davao are vital for regional distribution, shipbuilding, and manufacturing clusters, which drive demand for transformers, motors, and other electrical equipment that use electrical steel.
• The core regulatory framework supporting demand for electrical steel in renewable power and efficient grid equipment is provided by the Renewable Energy Act of 2008 (Republic Act No. 9513) issued by the Congress of the Philippines and implemented by the Department of Energy, together with its Implementing Rules and Regulations. This law mandates incentives for renewable energy projects, grid integration of variable renewable energy, and efficiency standards for generation and transmission assets, which in turn encourages investments in high?grade electrical steel for transformers, generators, and associated equipment used in solar, wind, hydro, and biomass projects.

Philippines Electrical Steel Market Segmentation

By Type:The electrical steel market can be segmented into three main types: Grain-Oriented Electrical Steel, Non-Grain-Oriented Electrical Steel, and High-Silicon Electrical Steel. Grain-Oriented Electrical Steel is primarily used in power and distribution transformers due to its superior magnetic flux density and low core loss characteristics. Non-Grain-Oriented Electrical Steel is utilized in various rotating machines, including motors, generators, compressors, pumps, and industrial drives, where isotropic magnetic properties are required. High-Silicon Electrical Steel is gaining traction in high-frequency and high-temperature applications, particularly in electric vehicle traction motors, high?efficiency industrial motors, and specialized power electronics-related components. In the Philippines, Non?Grain?Oriented grades account for a significant share of demand due to the large base of motors and industrial equipment, while Grain?Oriented grades remain critical for the growing installed base of power and distribution transformers.

By End-User:The end-user segmentation of the electrical steel market includes Power Generation & Utilities, Transformer Manufacturers, Motor, Generator & Industrial Equipment Manufacturers, Automotive & E-Mobility OEMs, Consumer Appliances & HVAC Manufacturers, and Others. The Power Generation & Utilities segment is the largest consumer of electrical steel, driven by the increasing demand for energy-efficient power and distribution transformers, upgrades in transmission and distribution networks, and the integration of utility?scale solar, wind, and other renewable projects into the grid. Transformer Manufacturers follow closely, as they require high-quality Grain-Oriented and advanced high?permeability grades of electrical steel for low?loss transformer cores to meet energy-efficiency and reliability requirements of utilities and large industrial users. Motor, Generator & Industrial Equipment Manufacturers represent another important segment, supported by investments in industrial automation, pumps, compressors, and factory equipment, while Automotive & E?Mobility OEMs and Consumer Appliances & HVAC Manufacturers are emerging contributors as adoption of high?efficiency motors, air conditioners, and electric vehicle components gradually increases.

Philippines Electrical Steel Market Competitive Landscape

The Philippines Electrical Steel Market is characterized by a dynamic mix of regional and international players. Leading participants such as Nippon Steel Corporation, JFE Steel Corporation, POSCO International Corporation, thyssenkrupp Electrical Steel GmbH, ArcelorMittal, Voestalpine AG, Baosteel Group Corporation, Shougang Group Co., Ltd., China Baowu Steel Group Corporation Limited, Tata Steel Limited, JSW Steel Limited, NatSteel Holdings Pte. Ltd., Kewei Steel Group Co., Ltd., SteelAsia Manufacturing Corporation, and local transformer and motor OEMs (e.g., First Philec, ELMACO) contribute to innovation, geographic expansion, and service delivery in this space.

Philippines Electrical Steel Market Industry Analysis

Growth Drivers

• Increasing Demand for Energy-Efficient Electrical Equipment:The Philippines is experiencing a surge in demand for energy-efficient electrical equipment, driven by a growing awareness of sustainability. In future, the energy-efficient equipment market is projected to reach approximately PHP 57.5 billion, reflecting a 15% increase from the previous year. This growth is supported by the government's commitment to reducing energy consumption by 20% in future, encouraging manufacturers to adopt electrical steel that enhances efficiency in transformers and motors.
• Government Initiatives Promoting Renewable Energy:The Philippine government has set ambitious targets for renewable energy, aiming for a 35% share in the energy mix in future. This initiative is expected to drive the electrical steel market, as renewable energy sources like wind and solar require high-quality electrical steel for efficient energy conversion. In future, investments in renewable energy projects are anticipated to exceed PHP 115 billion, significantly boosting demand for electrical steel components in the sector.
• Expansion of Manufacturing Sectors:The manufacturing sector in the Philippines is projected to grow by 6% in future, driven by increased production capabilities and foreign investments. This expansion is particularly evident in the automotive and electronics industries, which are major consumers of electrical steel. With the manufacturing output expected to reach PHP 1.27 trillion, the demand for high-grade electrical steel will rise, supporting the overall market growth in the Philippines.

Market Challenges

• Fluctuating Raw Material Prices:The electrical steel market faces significant challenges due to fluctuating raw material prices, particularly for iron and silicon. In future, the price of silicon is projected to rise by 10% due to supply chain disruptions and increased global demand. This volatility can lead to increased production costs for manufacturers, potentially impacting profit margins and pricing strategies in the electrical steel market.
• Limited Local Production Capacity:The Philippines currently has limited local production capacity for electrical steel, with only two major manufacturers operating at full capacity. In future, local production is expected to meet only 40% of the domestic demand, leading to a reliance on imports. This situation poses challenges for market players, as imported products may be subject to tariffs and longer lead times, affecting supply chain efficiency.

Philippines Electrical Steel Market Future Outlook

The Philippines electrical steel market is poised for significant growth, driven by increasing investments in renewable energy and the expansion of manufacturing sectors. As the demand for energy-efficient solutions rises, manufacturers are likely to innovate and adopt advanced technologies in production. Additionally, the government's supportive policies will further enhance market dynamics, creating a favorable environment for local producers. The integration of smart technologies and sustainable practices will also play a crucial role in shaping the future landscape of the electrical steel market.

Market Opportunities

• Growth in Electric Vehicle Market:The electric vehicle (EV) market in the Philippines is expected to grow significantly, with sales projected to reach 57,500 units in future. This growth presents a substantial opportunity for electrical steel manufacturers, as EVs require high-performance electrical components, driving demand for specialized electrical steel products.
• Technological Advancements in Electrical Steel Production:Innovations in production techniques, such as the use of advanced alloys and manufacturing processes, are expected to enhance the quality of electrical steel. In future, investments in R&D are projected to exceed PHP 5.75 billion, enabling manufacturers to produce lighter, more efficient electrical steel, thus opening new markets and applications.