Market evolution: Hot rolled silicon steel strip (CN 72261910) — 2015–2025

Introduction

This report examines the trade evolution of EU-27 external trade for hot-rolled silicon-electrical steel strip (Customs code 72261910) between 2015 and 2025. This niche flat-rolled alloy steel product is critical for manufacturing electrical components such as transformer cores and electric motors. Over the observed decade, the EU's market for this product underwent a profound structural transformation. The Union shifted from a net exporter to a significant net importer, characterized by surging import volumes, volatile supply chains, and growing dependency on a concentrated set of foreign suppliers. Key dynamics include the rise of new Asian suppliers, fluctuating export fortunes to neighbouring markets, and a marked decline in the sector's overall trade intensity.

The Great Reversal: From Net Exporter to Net Importer

The most striking trend in the decade-long data is the fundamental reversal of the EU's trade position. The Union moved from a position of modest net exportation to one of substantial net importation, driven by an explosive growth in import values and volumes that far outpaced exports.

A Surge in Import Value and Volume

EU imports of this product grew at an extraordinary rate. Import value increased from €30,250 in 2015 to €525,720 in the final data year, a rise of 1,638% (General Overview). More strikingly, import quantities expanded from a negligible 3.7 tonnes to 71.6 tonnes, a 1,840% increase. This indicates a massive scaling-up of foreign-sourced material entering the EU market.

The Deteriorating Trade Balance

Conversely, EU export performance was more volatile and ultimately less robust. While export value saw a 170% increase over the period, the volumes exported actually fell by 49% (General Overview). The combination of surging, voluminous imports and stagnating export volumes turned the EU's trade balance strongly negative. It swung from a surplus of €134,292 in 2015 to a deficit of €82,215 in the final year, with the deficit peaking at over €716,000 during the period.

Shifting Geographies of Trade

The partners driving these changes also evolved significantly. On the import side, Malaysia emerged as the dominant supplier, with import values rising 2,308% to €936,655 (General Overview). The United Kingdom also became a major source, with imports growing 1,003%. Traditional suppliers like Türkiye and South Korea saw their shares collapse, with Korean imports falling by 99.5%. On the export side, the EU's customer base changed. Exports to Egypt grew by 2,696%, while shipments to Switzerland and Morocco collapsed by 96% and 87% respectively, indicating a loss or pivot away from these markets.

Market Consolidation and Domestic Production Dynamics

The structural shift in trade was accompanied by significant changes in market concentration and EU domestic production, suggesting underlying industrial adjustments.

Rising Import Concentration, Diversifying Export Channels

The concentration of EU imports, as measured by the Herfindahl-Hirschman Index (HHI), increased by 82% over the period, rising from 4,839 to 8,810 (Market Structure). An HHI above 2,500 indicates a highly concentrated market, meaning the EU became increasingly reliant on a narrow set of suppliers, principally Malaysia and the United Kingdom. In contrast, the concentration of EU exports decreased by 27%, suggesting exporters found more diverse, albeit smaller, markets.

Germany's Specialisation and Modest Production Growth

Within the EU, production of this steel grade is highly concentrated. In 2025, Germany exhibited a strong Revealed Symmetric Comparative Advantage (RSCA) of 0.64, accounting for 96% of the reported EU production share for the product (Market Structure). Despite Germany's specialisation, overall EU production volumes grew by only 53.5% from 2015 to 2025, a pace far slower than the growth in import demand. This production gap underscores the structural need for imports to meet EU consumption.

Vulnerability to Supply Shocks and Declining Trade Engagement

The new trade equilibrium exposed the EU to greater external risks while also showing a declining orientation toward international trade for this specific product.

High Volatility and Notable Supply Shocks

Trade flows proved highly volatile, with several key relationships showing high coefficients of variation (CV). For instance, EU imports from the United Kingdom and Switzerland had CVs above 2.4, indicating extreme year-to-year instability (Volatility & Shocks). The data also identifies specific shocks, such as an 838% price spike for EU exports to Morocco in 2021, and a complete supply disruption from Colombia in 2017 (Volatility & Shocks). These events highlight the market's susceptibility to sudden disruptions.

Growing Net Import Reliance and Falling Trade Intensity

The EU's net import reliance for this product deteriorated significantly. Starting from a position of slight net exporter reliance (-10.95%), it fell to -25.18%, a 130% change toward greater import dependency (Autonomy & Vulnerability). Simultaneously, the product's trade intensity (total trade relative to production) and export propensity (exports relative to production) declined by 40% and 28% respectively (Autonomy & Vulnerability). This indicates that while the EU became more reliant on imports, the sector overall became less globally integrated.

Conclusion

Between 2015 and 2025, the EU market for hot-rolled silicon electrical steel underwent a structural crisis. The bloc transformed from a self-sufficient net exporter into a dependent net importer, with import volumes growing nearly twenty-fold. This shift was characterised by a pivot toward Asian supply chains, particularly Malaysia, and a high concentration that increased vulnerability. Domestically, production growth was insufficient to meet demand, despite German specialization. The resulting market is more volatile, less trade-intensive, and carries significant strategic vulnerability, as evidenced by declining net import reliance and exposure to supply shocks. This evolution likely reflects broader trends of industrial offshoring, cost competition, and shifting patterns in the European green energy transition, which drives demand for electrical steel in motors and transformers.