[SMM Silicon Steel In-Depth - Capacity Chapter] Silicon Steel Landscape Undergoes Dramatic Changes: High-End Surges, Low-End Exits the Market, Structural Capacity Reshaping Imminent!

Policy Support for High-Efficiency and Energy-Saving Development, 2020-2025

Under the national policy coordination and strategic deployment, China's silicon steel industry, as a key strategic material supporting power equipment, new energy, and high-end manufacturing, has consistently developed in a regulated manner toward self-sufficiency, high-end upgrading, and green, low-carbon transformation. At the policy level, the focus has been on four key drivers: localization of critical materials, mandatory improvement of energy efficiency standards, optimization of the industrial structure, and green, low-carbon transition, guiding the industry from early technology introduction and absorption to independent innovation and high-quality development.

Source: SMM compilation based on publicly available information

Guided by the 14th Five-Year Plan for the Raw Material Industry, New Materials Development, and Industrial Green Development, the state has explicitly identified high magnetic permeability grain-oriented silicon steel and high-grade non-oriented silicon steel for high-efficiency motors as key breakthrough areas. Under the combined effect of policy guidance and market regulation, China's silicon steel industry has achieved a leap from import dependence to becoming the world's largest producer, consumer, and exporter, forming an industrial structure dominated by leading enterprises with a rapidly increasing share of high-end products.

Silicon Steel Capacity Release Nearing Completion

Producers to Focus on Adjusting Production Structure, 2026-2030

From 2020 to 2025, driven by rapid growth in core demand and continuous breakthroughs in production technology, domestic silicon steel capacity experienced a peak period of commissioning. According to SMM statistics, by the end of 2025, China's non-oriented silicon steel capacity reached approximately 21.16 million mt, up 21.7% YoY compared to 2024 and a significant increase of 93.1% YoY compared to 2020. For grain-oriented silicon steel, China's capacity in 2025 was about 4.51 million mt, up 26.7% YoY from 2024 and an increase of 131.3% YoY from 2020, representing a doubling of capacity.

Source: SMM compilation based on publicly available information

Furthermore, according to SMM statistics, from 2026 to 2030, China still has over 7 million mt of non-oriented silicon steel capacity under construction or planning, and more than 2 million mt of grain-oriented silicon steel capacity awaiting commissioning. In terms of timing, the planned commissioning is concentrated in 2026-2027, indicating that the release of silicon steel capacity is nearing its end.

Non-Oriented and Grain-Oriented Silicon Steel Capacity

Exhibits Regional Concentration

With Significant Industrial Agglomeration Effects

Source: SMM compilation based on publicly available information

Currently, China's non-oriented and grain-oriented silicon steel capacity shows significant regional concentration, primarily clustered in east China, north China, and central China, forming a development pattern with evident industrial agglomeration effects.

By the end of 2025, China's non-oriented silicon steel capacity had reached 21.16 million mt, with east China accounting for approximately 7.33 million mt, representing 34.6% of the national share; north China contributing about 4.99 million mt, accounting for 23.6%; central China providing around 4.07 million mt, making up 19.2%; and the remaining regions supplying roughly 4.77 million mt, constituting 22.6%.

Capacity was more concentrated in the grain-oriented segment. By the end of 2025, China's grain-oriented silicon steel capacity had reached 4.51 million mt, with east China accounting for approximately 1.46 million mt, representing 32.4% of the national share; north China contributing about 1.36 million mt, accounting for 30.2%; central China providing around 1.2 million mt, making up 26.6%; and the remaining regions supplying roughly 490,000 mt of non-oriented silicon steel, constituting 10.8%.

Silicon Steel Capacity Additions Primarily Focused on High-End Products

Low-End Capacity to Gradually Exit the Market

Source: SMM, based on incomplete public data compilation

With the implementation of policies such as the dual-carbon strategy, new-type power system construction, and the promotion of NEVs and high-efficiency motors, demand from high-end sectors like NEVs and ultra-high voltage power grids surged. Coupled with continuous upgrades in energy efficiency standards like GB20052, the industry was compelled to transition towards low iron loss, high magnetic induction, ultra-thin specifications, and low-carbon production. The product structure of silicon steel continued to upgrade, with the proportion of high-grade and premium grades increasing significantly. High-grade non-oriented silicon steel for new energy applications already accounted for 49%, while high magnetic induction grain-oriented silicon steel exceeded 80%.

Silicon Steel Industry Forms Competitive Landscape of State-Owned Enterprises Dominating Core Technology,

Private Enterprises Seizing Niche High-End Segments

Source: SMM, based on incomplete public data compilation

Driven by the substantial profits in high-end silicon steel, private enterprises accelerated technological breakthroughs and capacity deployment, achieving breakthroughs in niche high-end segments and continuously increasing their market participation. This trend directly led to a gradual contraction in the market share of state-owned enterprises in the silicon steel industry, forming a competitive landscape characterized by "state-owned enterprises dominating core technology, private enterprises seizing niche high-end segments."

Specifically, from 2020 to 2025, the state-owned share of non-oriented silicon steel capacity decreased from 75% to 58%, while the private share increased from 25% to 42%. For grain-oriented silicon steel capacity, the state-owned share declined from 54% to 43%, and the private share rose from 46% to 57%.

Non-Oriented Silicon Steel Faces Multiple Challenges Including Structural Surplus,

Low-End Market Exit, and Cost Pressure

Source: SMM, based on incomplete public data compilation

On one hand, the core drivers for non-oriented silicon steel capacity stem from NEV motors, industrial high-efficiency motors, and home appliance energy efficiency upgrades, with robust demand for high-end, high-grade products.

On the other hand, the silicon steel industry is significantly dragged down by factors such as overcapacity in low-end products, low capacity utilization rates, high costs of raw materials and energy, and fluctuating growth in downstream demand. Coupled with technological upgrade barriers and capacity control requirements, it presents a pattern of "shortage in high-end, redundancy in low-end, and overall constrained capacity expansion."

The increase in grain-oriented silicon steel capacity is primarily constrained by three core barriers: technology,

capital, and cycle time.

Data source: SMM compilation based on incomplete public information

The growth in GO silicon steel capacity is strongly boosted by the construction of ultra-high voltage power grids, demand for new energy supporting transformers, upgrades in energy efficiency standards, and high-end import substitution. Downstream demand is rigid and concentrated in high-value-added products such as HiB.

However, capacity release is rigidly constrained by extremely high technological barriers, large investments, long expansion cycles, and strict capacity replacement policies, resulting in a pattern of "strong demand boost, slow supply release." Overall expansion is steady but difficult to scale up rapidly.

Silicon steel capacity release is dominated by high-grade products

Low-grade product capacity is minimal

Data source: SMM compilation based on incomplete public information

SMM compiles some projects in the domestic silicon steel market scheduled for commissioning from 2026 to 2030. Based on available information, the capacity to be commissioned for both non-oriented silicon steel and GO silicon steel is primarily high-end production lines, such as high-grade lines, new energy grade lines, and HiB lines, with minimal low-grade capacity.

Considering the above information, looking ahead to the next five years, multiple projects in the silicon steel market are currently awaiting commissioning. However, the issue of oversupply in the domestic silicon steel market persists. Further capacity expansion is expected to intensify the supply-demand imbalance, keeping silicon steel prices under pressure. Meanwhile, as the cost base, hot-rolled coil prices remain firm, leading to continuously shrinking profits for silicon steel producers. Even leading enterprises see meager profits or even losses from producing low-grade products, with only high-grade production maintaining relatively good profitability. Combined with mandatory upgrades in energy efficiency standards at the policy level, the commissioning of high-end silicon steel capacity and the phasing out of outdated capacity are imminent. The structural reshaping of silicon steel capacity has officially begun!!!

SMM will continue to track the latest developments in domestic silicon steel capacity construction. Welcome to leave comments and scan to follow!

Data source statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.

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