Demand for grain-oriented electrical steel sheets for transformers used in power transmission and distribution is rapidly increasing in Japan.
Renewable energy-derived power generation projects are being implemented in order to ensure carbon neutrality and in offshore wind power generation, which is being constructed mainly in Europe, the transformers required for longer transmission distances must be large-scale and high-quality.
Tight supply
While the demand for grain-oriented electrical steel is increasing, there are only a few steelmakers in the world that can supply high-grade products, and the tight supply-demand scenario is likely to get prolonged.
Offshore wind farms require tens of kilometres of power transmission. Due to the long distance, transformers tend to be large machines that handle high-voltage direct current, and there is also a strong need for higher efficiency to reduce power loss.
On the other hand, grain-oriented electrical steel uses a unique manufacturing method such as annealing and so it is difficult to produce high quality. Although companies such as Baowu Steel Group of China and Novolipetsk Steel (NLMK) of Russia are increasing their production capacity, it seems that there is a limit to mass production.
Prices surge
Nippon Steel is investing in measures to improve grain-oriented steel quality, but efforts are unlikely to bear fruit until 2023. Due to the strong demand for non-oriented electrical steel sheets used in the motors of electric vehicles and machine tools, the production capacity of grain-oriented materials is limited.
With the expansion of electric power demand worldwide due to the proliferation of electric vehicles (EV) and electrolysis to produce hydrogen, the supply and demand of grain-oriented steel are becoming tight worldwide.
The sea freight of container ships has risen sharply and grain-oriented exports to European heavy electric manufacturers in Japan are likely to touch the level of over $4,000/t in H1 CY ’22.
~Inputs from Japan Metal Daily.
Leave a Reply