Transformer Steel Becomes a Trade Flashpoint in Europe

The measures target grain-oriented electrical steel, or GOES, and transformer cores made with that steel. GOES is essential for most transformer cores, so changing its import price affects a crucial part of the electricity supply chain. The package was introduced after EU producers argued that low-priced imports were weakening their industry.

On 18 September, the European Commission unveiled preliminary safeguard measures. They raised the minimum prices for imported GOES metal and imported transformer cores. The action followed earlier EU minimum prices on electrical steel from some countries, which had applied since 2015 but did not satisfy European steelmakers.

The measures are temporary. They are scheduled to expire in February 2027, when the Commission must decide whether to make them permanent. Energy-sector groups argue that the higher prices could make transformer production more difficult, while EU steelmakers say protection is needed during a period of rising imports and pressure on local production.

Grain-oriented electrical steel is a specialized alloy of iron and silicon. Unlike ordinary steel, which mainly uses carbon for strength, GOES uses silicon to improve electrical properties. Its defining feature is microscopic crystal grains aligned in one direction.

That alignment suits transformer cores because alternating current repeatedly reverses the magnetic field inside them. When the field flips along the grains’ preferred direction, the steel wastes less energy. A GOES core therefore produces less heat and audible noise while helping the transformer operate more efficiently.

This performance makes GOES the dominant material in transformer cores today. Quality varies among producers, and higher-performance grades lose less energy. The article says the best GOES generally comes from South Korea and Japan, while European producers cannot currently make those highest-performance grades because the production method is a heavily protected trade secret.

Europe’s need for GOES is growing as renewable energy, electrification, data centers, and grid expansion increase demand for transformers. The European Commission reported that EU GOES consumption rose 32 percent between 2021 and 2025. This signals a sharp change from the decades when European electricity demand stayed relatively flat.

Imports grew even faster. The volume of GOES entering the EU more than doubled during the same period. More than half of those imports now come from China, which has raised concerns about excess capacity at Chinese steel mills and pressure on European producers.

Domestic steelmakers lost market share despite the larger market. Their share fell from 66 percent to 43 percent between 2021 and 2025. Thyssenkrupp also cut GOES production from December 2025, citing a massive increase in low-priced imports, especially from Asia.

Transformers are needed for Europe’s expanding electricity system, including renewable power, electrification, data centers, and planned grid upgrades. GOES is the dominant core material, so restrictions on this steel can affect transformer manufacturing. If imported GOES becomes more expensive, manufacturers may face higher material costs.

If supplies become harder to obtain, transformer makers could struggle to secure the volumes or grades they need. The energy sector says European producers currently cannot supply either the necessary volumes or the highest-performance grades. That combination could make transformers more difficult to build and potentially delay projects that depend on them.

The wider concern is Europe’s electrification effort. The article reports that energy-sector groups believe import restrictions could slow the expansion of electricity infrastructure. EU steelmakers see safeguards as protection against low-priced imports, but critics argue that limiting supply during rising demand could worsen the transformer shortage rather than solve it.

European steelmakers support the safeguards because imports have expanded rapidly while their share of the EU market has fallen. More than half of current imports come from China, fuelling fears that excess capacity at Chinese mills is undermining European producers. Thyssenkrupp cut GOES production after citing a massive inflow of low-priced imports, especially from Asia.

Their argument is industrial protection. Higher minimum import prices could reduce pressure from cheaper overseas products and give EU producers more room to maintain production. The Commission’s measures cover both GOES metal and transformer cores, closing a gap that earlier EU steel tariffs did not address.

Energy-sector companies and associations see a different risk. They say European producers cannot provide the required volumes or highest-performance grades. Restricting imports could therefore increase costs and reduce supply for transformer manufacturers, making it harder to expand Europe’s grids and electrification.

The EU has only two GOES producers: Thyssenkrupp and Stalprodukt. Their limited number reflects the specialized nature of the material and Europe’s historically modest demand. European electricity use stayed relatively flat for decades, so demand for transformers and other grid components also remained limited.

Today, demand is rising because of renewables, electrification, data centers, and EU grid expansion plans. Yet the article says European producers cannot supply the volumes required by transformer manufacturers. They also cannot make the highest-performance grades, which lose less energy and support more efficient transformers.

The quality gap is tied to technical know-how. The article says the world’s best GOES generally comes from South Korea and Japan, where production methods are heavily protected trade secrets. As European imports grew and local market share fell, Thyssenkrupp reduced production, making the supply challenge even more visible.

A transformer changes voltage through electromagnetic induction. Alternating current flows through one winding and creates a magnetic field that repeatedly reverses in the core. That changing field induces a voltage in another winding. The number of turns in each winding determines whether the transformer raises or lowers voltage.

The article focuses on the core material. Because alternating current flips the magnetic field many times per second, the aligned grains in GOES reduce losses when the field moves along their preferred direction. The result is less wasted energy, emitted heat, and audible noise than with less suitable steel.

Lower core losses matter across the power grid because transformers operate wherever electricity is moved between voltage levels. More efficient transformers waste less electricity and produce less heat. As Europe adds renewables, electrification, data centers, and grid capacity, efficient transformers become increasingly important to the expansion described in the article.