US Warns Lack of Transformer Steel Threatens National Security

The Bureau of Industry and Security of the US Department of Commerce said in a November 18 report that if AK Steel stops producing grain oriented electrical steel, or GOES, a key material used in transformer manufacturing, it could be viewed as a national security threat to its power grid.

American company AK Steel - a subsidiary of Cleveland-Cliffs, the largest flat steel manufacturer in North America - may stop production of grain oriented electrical steel due to unprofitability, according to a report from the Bureau of Industry and Security.

“The national security threat posed by imports of GOES (among other steel products) was addressed by a 2017 Section 232 investigation, which imposed 25% tariffs on steel imports from most countries in 2018. , GOES imports in 2019 were significantly lower than in 2018 (by 56%), ”the report says.

He noted that while AK Steel remained the leader in the domestic market, its electrical steel production was unprofitable, in part due to years of pressure from cheaper imports.

The report says that if production of GOES AK is stopped, the US will be completely dependent on foreign sources of materials critical for the production of transformers.

“There is insufficient or no production capacity in the country for certain GOES grades and qualities, which are becoming more and more in demand to meet distribution transformer efficiency standards, as well as general market trends towards more efficient transformers using higher GOES grades,” it said.

“The United States lacks the capacity to manufacture transformer cores and plates, which are key components of transformers. Transformer manufacturers in the United States rely on foreign sources (especially in Canada and Mexico) to ensure these critical components meet more than 75% (non-captive) demand, ”it said.