With the formal implementation of the "Transformer Energy Efficiency Improvement Plan 2021-2023" and the "Power transformer energy efficiency Limit Value and energy efficiency Grade" in June 2021, the price of electrical steel has risen sharply, taking 30Q130 in Wuhan as an example, its price rose to about 16,000 yuan/ton on December 31, 2021. 14% higher than May 31, 2021 (14,000 yuan/ton); The implementation of the policy will effectively drive the demand for high-efficiency energy-saving transformers in the future, as the core material of transformers, the performance of high-magnetic-induction-oriented electrical steel directly affects the energy consumption and energy efficiency of transformers, and its demand performance may be better than that of general oriented electrical steel products.

The market generally knows that the demand for oriented electrical steel is mainly in the transformer field, but it has ignored its value as a new material for photovoltaic and wind power. According to the prediction of China Electric Power structure in 2022-2025 and the calculation method of "The value and market opportunity of oriented electrical steel under the" dual-carbon "strategy", Everbright Securities calculated that the newly installed capacity of transformers in 2022-2025 corresponding to the amount of oriented electrical steel is 164, 176, 187, 2.01 million tons, respectively. Among them, the newly installed capacity of photovoltaic and wind power gradually increased the demand for oriented electrical steel, accounting for the proportion of new transformers in the power industry that year increased from 59% in 2021 to 78% in 2025.

According to China Metallurgical News, at present, domestic and foreign enterprises or research institutions have developed oriented electrical steel sheets to replace non-oriented electrical steel as a drive motor stator, with higher efficiency and comparable cost. It is expected that the total demand of new energy vehicles for non-oriented electrical steel in 2022-2025 will be 51.9, 68.5, 85.9 and 1,036,000 tons. If the replacement rate of 50% future oriented electrical steel for non-oriented electrical steel can reach 10%, the demand of new energy vehicles for oriented electrical steel in 2025 will be 104,000 tons. Equivalent to 4.23% of the forecast 2025 demand for oriented electrical steel (without taking into account drive motors).

Oriented electrical steel production is mainly concentrated in Asia, Europe and the Americas. Since 2022, under the influence of the Russia-Ukraine incident, NLMK(2021 oriented electrical steel products global production market share of 8.4%) product exports have been affected, since March, the domestic price of electrical steel has further risen, as of June 22, the price of Wuhan oriented electrical steel 30Q130 has risen to 16,800 yuan/ton. This is the highest level since 2012.

China's oriented electrical steel supply is relatively concentrated, the future production capacity increment is mainly concentrated in 2024, according to our calculation for the transformer new, replacement driven by the demand for oriented electrical steel, as well as the net export volume of oriented electrical steel, it is expected that the supply and demand of oriented electrical steel will maintain a tight balance in 2022-2023, and the prosperity will continue to rise.