Electrical steel prices in the United States softened from January into early February 2026 as sluggish demand from the automotive and construction sectors weighed on market sentiment. Ample electrical steel supply, cautious downstream purchasing, and rising inventories pushed the market into a bearish phase despite stable upstream feedstock conditions.
Electrical steel market began January with relatively stable trading activity. Mills operated at normal rates, and early-month buying interest kept prices range-bound. However, sentiment weakened by mid-January as downstream buyers reduced procurement and on-hand inventories began to build.
Electrical steel demand from the automotive sector remained a major concern. Electrical steel, widely used in electric vehicle (EV) motors and hybrid drivetrains, saw reduced offtake as vehicle sales declined sharply. U.S. vehicle sales totaled 1,107,423 units in January 2026, down 25% month-on-month. Sales of light vehicles fell to a seasonally adjusted annual rate of 14.9 million units, compared to 16 million units in December.
Buyers slowed purchases after the holiday season, while broader macroeconomic challenges continued into 2026. High borrowing costs, geopolitical uncertainty, and concerns over a possible short-term U.S. government shutdown negatively impacted consumer confidence. This directly affected EV production plans and reduced demand for electrical steel used in traction motors.
Industrial manufacturing also showed limited momentum. Demand for electrical steel in industrial motors and power generators remained subdued as capital investment decisions were delayed.
The construction sector, another indirect demand driver through electrical transformers and grid infrastructure, also faced strain. Builder confidence for newly built single-family homes fell to 37 in January, down two points from the previous month. High mortgage rates, affordability pressures, and elevated material costs led to weaker housing activity.
Approximately 40% of homebuilders reported cutting prices to stimulate demand, while the use of sales incentives remained high. Oversupply in new housing and persistent cost pressures limited new construction starts, reducing incremental demand for transformer-grade electrical steel used in power distribution systems.
On the supply side, upstream flows such as scrap, iron ore, and ferroalloys remained stable, allowing electrical steel mills to maintain steady output. With no significant raw material disruptions, producers continued supplying the market, leading to comfortable availability and growing inventories.
By early February, selling pressure intensified. Benchmark coil prices declined further on a weekly basis, reflecting cautious buyer behavior and ongoing inventory-driven weakness. The broader tone shifted from neutral to bearish as seasonal demand failed to materialize.
As per the Chemanalyst data, the near-term outlook for U.S. electrical steel remains weak. Continued softness in automotive production, subdued construction activity, and stable mill output are expected to keep prices under pressure. A meaningful recovery will likely depend on improved vehicle sales, stronger grid investments, and a pickup in manufacturing activity.
