The production capacity of oriented electrical steel is growing rapidly, and the oversupply signal is already present. According to the statistics of the Electrical Steel Branch of the Chinese Society of Metals, in 2022, China's oriented electrical steel production capacity of 2.16 million tons, the output of 2.174 million tons, an increase of 19%. Transformer is the most important application field of oriented electrical steel. In 2022, the apparent consumption of oriented electrical steel in China will be 1.827 million tons, an increase of about 16%. According to incomplete statistics, more than 10 new oriented electrical steel projects since the beginning of this year, mainly distributed in Hebei, Hunan, Jiangsu and other places, involving a production capacity of about 1.08 million tons, of which 450,000 tons of production capacity has been put into production, 260,000 tons of production capacity to be put into production, and 210,000 tons of production capacity under construction, in addition, there are three projects (total production capacity of 160,000 tons) in the state of suspended construction.
Before 2030, the annual demand increase is less than 200,000 tons, mainly for high-magnetic induction varieties. Taking into account the planned capacity of new power generation installed in the country, the update iteration of stock transformers, and the upgrading and replacement of general oriented electrical steel by high magnetic induction-oriented electrical steel under the new standard, it is expected that the annual demand increase of oriented electrical steel before 2030 will be less than 200,000 tons, and the high magnetic induction-oriented electrical steel will be the main one. The increase in demand is significantly smaller than the growth rate of production capacity, and the contradiction between supply and demand has initially emerged. Considering the supply increase and demand, it can be seen that only from January to October 2023, the production capacity has been put into production and the production capacity to be put into production has exceeded 800,000 tons, even if the above new capacity is landed at 50% capacity utilization rate, the new production will exceed 400,000 tons, higher than the demand increase of 100,000 to 200,000 tons/year.
In 2022, China's non-oriented electrical steel production capacity totaled 12.83 million tons, the output ended four consecutive years of positive growth, down 540,000 tons year-on-year to 10.923 million tons, and the capacity utilization rate was 89%. From the perspective of product scale, the output of high-grade non-oriented electrical steel is 3.108 million tons, accounting for 28.4%, mainly supplied by a small number of state-owned enterprises, private enterprises, except Shagang, the annual output of high-grade products of other enterprises is less than 10,000 tons. Non-oriented electrical steel is mainly used in new energy vehicles, small and medium-sized motors, home appliances, large generators and other industries. In recent years, the apparent consumption fluctuates around 10 million tons, of which small and medium-sized motors and home appliances account for more than 80%. In 2022, the apparent consumption of non-oriented electrical steel stopped increasing and turned down, from 11.11 million tons to 10.28 million tons, a decrease of 7%. According to incomplete statistics, there are 8 new reconstruction projects of non-oriented electrical steel this year, of which 1.42 million tons of production capacity has been put into production and will be put into production, 750,000 tons of production capacity under construction, a total of 2.17 million tons (high-grade product production capacity exceeds 1.8 million tons). Another five planned projects have a capacity of about 2.31 million tons, with a total new capacity of about 4.38 million tons.
Before 2030, the annual demand increase of non-oriented electrical steel is less than 300,000 tons, and the demand for low grade products is gradually declining, and the demand increase is mainly for medium and high grade products. From the total point of view, the future demand capacity is not enough to support the new capacity and output planning; In terms of variety, some low-grade products will gradually be replaced by high-grade products. At present, the demand for non-oriented electrical steel is generally stable, but the market is in a trend of differentiation. With the requirements of energy efficiency improvement of home appliances and motors, low-grade products will continue to be replaced by high grades, and the non-oriented electrical steel market will be further differentiated, of which the proportion of high-grade products will be further increased.
The current problem is that electrical steel products are facing structural excess, and there is a trend of further expansion. The scale of new production capacity is much higher than the increase in demand, and the contradiction between oversupply and demand continues to accumulate.
