More Domestic Electrical Steel Output Needed: Trade Groups

Groups represented in a May 22 letter sent to the president included the Alliance for Automotive Innovation, American Public Power Association, Edison Electric Institute, GridWise Alliance, International Brotherhood of Electrical Workers, Leading Builders of America, National Association of Home Builders, National Electrical Manufacturers Association, and National Rural Electric Cooperative Association.

“We write to urge your administration to make it clear that electrical steel is critical to the national and economic security of the United States and to prioritize actions that will create a sustainable supply,” the groups said in the letter.

The groups are concerned about “the skyrocketing demand and limited availability of domestically produced electrical steel.” Further, they pointed out electrical steel “is vital to expanding electrification in the United States.”

“To deliver on the ambitious goals and visions of the Infrastructure Investment and Jobs Act (IIJA), and Inflation Reduction Act (IRA), it is vital that the federal government recognize and support the domestic production of electrical steel to meet the unprecedented demand for electrification and grid modernization and resilience initiatives,” the letter said.

The Steel Manufacturers Association (SMA) agreed with the sentiment.

“Domestic production of electrical steel is important to our economy and national security,” SMA said in a statement provided to SMU.

“We strongly encourage the Biden administration to prioritize the production of electrical steel as demand is set to increase due to the growth of the electric vehicle market, the need to upgrade our electrical grid and the limited amount of current production,” SMA added.

Electric motors, transformers, electric vehicle chargers, generators, and other critical electrical equipment all require electrical steel due to its unique properties that reduce power loss, according to the trade groups’ letter to the president.

They point to both grain-oriented electrical steel (GOES) and non-grain oriented electrical steel (NOES).

“Shortages of domestic electrical steel are contributing to significant and persistent supply chain challenges across our industries,” the letter stated.

The groups said the US is dependent on a single manufacturer for GOES, as reported by the Department of Energy (DOE) in 2022. Also, they noted that two domestic manufacturers have committed recently to increase GOES production, but “even with this expanded output, domestic supply levels will still fall far short to meet electrification goals and satisfy demand created by the IIJA and IRA.”

Cleveland-Cliffs is a producer of GOES and NOES, according to its website, while US Steel’s non-grain oriented (NGO) steel line at its Big River Steel operation in Arkansas is expected to start up in Q3.

The federal government can guarantee purchase of GOES and NOES up to a defined amount, the letter said, “as needed by critical electrical industries, to serve a more electrified economy as well as incentivize expanded manufacturing capacity.”

The groups proposed that, as a first step, the president convene an “Electrical Summit,” which would bring together stakeholders to discuss “current challenges to sustaining and growing domestic production of electric steel.”

The summit would bring together electric utilities, electrical manufacturers, automobile manufacturers, steel manufacturers, labor unions, home builders and others, according to the letter.

Similarly, SMA said its members are poised to help the administration explore policies “that will satisfy this anticipated growth in demand for this important steel product category.”

By Ethan Bernard, ethan@steelmarketupdate.com