China transformer exports maintained strong growth, with the US demand gap supporting opportunities for Chinese suppliers

Overview

This report is Goldman Sachs’ June update on China Grid Tech power transformer export tracking, with a core focus on China transformer exports, the US domestic supply-demand gap, US transformer prices, and investment opportunities in related grid equipment companies. The report argues that although China’s total transformer export yoy growth slowed from 72% in May to 47% in June, exports to the US rose 172% yoy and 52% mom, indicating that overseas demand—especially in the US market—remains strong.

Core views

The core view is that the US power transformer supply shortage remains unresolved, leaving room for Chinese suppliers to enter the market. Goldman Sachs estimates that the US power transformer demand versus local supply gap will narrow from the current 72% to 57% by 2028E, but shortages will still persist; global transformer lead times are about 128 weeks, while Sieyuan Electric can deliver in about 6-9 months and expand capacity in about one year, demonstrating the flexibility of the Chinese supply chain. NARI Technology benefits from domestic grid capex and the export potential of converter valves and secondary equipment; Huaming, meanwhile, offers more defensive exposure to the global grid upgrade cycle through its 18x 12-month forward P/E, a valuation that has corrected more than peers and is therefore more attractive, as well as rising overseas share in on-load tap changers.

Analysis framework

The report uses a combination of export data tracking, price indicator comparison, and supply-demand gap estimation: on one hand, it tracks China customs transformer export value, regional contributions, and voltage-class mix; on the other hand, it uses US PPI and tender documents to estimate US domestic transformer price trends, and cross-validates them against changes in China export ASPs and key raw material prices such as GOES.

Methodology notes

• export_trackingPower Transformer Export Tracker

  China transformer export value and regional breakdown

  Tracks yoy and mom changes in export value for >10MVA transformers, destination-region contributions, and especially the growth rate and voltage-class mix of exports to the US.

• supply_demand_analysisUS power transformer demand/local supply gap estimate

  US demand versus local supply gap

  Estimates the gap using demand and local supply, and provides the path from the current 72% to 57% by 2028E to assess the market opportunity for non-traditional suppliers.

• pricing_analysisPPI and export ASP comparison

  Comparison of US PPI and China export ASP

  China customs export prices are based on FOB; US domestic prices are estimated using tender documents and then mapped to transformer PPI, but that PPI covers the full power range rather than only 220-330MVA.

• equity_research_frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs’ disclosed GS Factor Profile compares stocks’ characteristics versus the market and industry peers across growth, financial returns, valuation multiples, and composite indicators.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sieyuan Electric

  Buy key idea; transformer supply-chain beneficiary

  Strengths

  Lead time of about 6-9 months, significantly shorter than the global lead time of about 128 weeks; about one year for capacity expansion; supported by China’s flexible supply chain.

  Weaknesses

  The report does not provide detailed company-level earnings forecasts, and is mainly based on industry supply-demand and export logic.

  Comparison

  Relative to global suppliers, delivery and capacity expansion are faster; relative to high-beta AI infrastructure names, the grid equipment thesis is more driven by actual supply-demand gaps.

  Risks

  US trade policy, export ASP volatility, faster-than-expected narrowing of the demand gap, and fluctuations in raw materials and exchange rates.

• NARI Technology

  Buy key idea; domestic grid capex and export potential beneficiary

  Strengths

  Benefits from domestic grid capex and has export potential in converter valves and secondary equipment.

  Weaknesses

  The export data provided in the report mainly focus on transformers, with limited quantification of contribution from NARI’s specific product lines.

  Comparison

  Relative to pure export-chain names, NARI has two drivers at the same time: domestic grid capex and overseas equipment exports.

  Risks

  Domestic grid investment pace, overseas order execution, product export certification, and changes in the competitive landscape.

• Huaming

  Buy; upgraded to Buy; defensive global grid upgrade exposure

  Strengths

  Valuation of about 18x 12-month forward P/E, with a more pronounced correction than peers; on-load tap changers operate in a duopoly market and have room to gain overseas share; can benefit from aging infrastructure, renewable integration, and global grid upgrades.

  Weaknesses

  Its direct sensitivity to AI capex may be weaker than that of high-beta AI infrastructure names.

  Comparison

  The report views Huaming as a more defensive way to participate in the multi-year global grid upgrade cycle when there are concerns about AI capex visibility and high-beta AI infrastructure valuations.

  Risks

  Slower-than-expected overseas share gains, slower-than-expected valuation recovery, delays in global grid investment, and intensifying competition.

• China power transformer exporters

  Beneficiaries of persistent US supply shortage

  Strengths

  Exports to the US in June were +172% yoy and +52% mom; the US domestic supply-demand gap is still expected to be 57% by 2028E.

  Weaknesses

  China export ASPs are highly volatile, and the three-month rolling average price for 220-330MVA is -8% yoy.

  Comparison

  US domestic price PPI remains high, while Chinese suppliers may penetrate non-traditional supply gaps through delivery capability and supply chain flexibility.

  Risks

  Tariffs and trade restrictions, US local capacity expansion, ASP volatility caused by product mix, and customer certification cycles.

Key data

• China >10MVA total transformer exports+47% yoy in JuneMay yoy growth was +72%.
• China transformer exports to the US+172% yoy; +52% mom in JuneExports to the US accelerated significantly in June.
• US power transformer demand/local supply gap72% currently; 57% by 2028EGoldman Sachs expects the gap to narrow but remain in place.
• Global transformer lead timearound 128 weeksThis compares with Sieyuan Electric’s lead time of about 6-9 months.
• Sieyuan Electric lead timearound 6-9 months, or 24-36 weeksThe report says its capacity expansion takes about one year, supported by China’s flexible supply chain.
• US power and specialty transformer PPI+3.9% yoy in JuneIt has remained high and stable since October 2025.
• China exports to the US: ASP for 10-220MVA transformersJune ASP at 5x yoy; 3-month rolling average at 2x yoyThe report notes that prices in this range are highly volatile, making trends difficult to observe.
• China exports to the US: ASP for 220-330MVA transformersJune ASP +3% yoy; April-June 3-month rolling average -8% yoyThe report believes this may be affected by product mix changes.
• Regional contribution: Middle East+141% yoy; 24% contributionOne of the main regions driving China’s total transformer export growth in June.
• Regional contribution: Americas+108% yoy; 38% contributionThe largest contributor to total exports.
• Regional contribution: Africa+20% yoy; 6% contributionMaintained yoy growth.
• Regional contribution: Europe+28% yoy; 21% contributionA relatively high contributor to total exports.
• Regional contribution: Asia-38% yoy; 12% contributionThe only major region with a yoy decline.
• Voltage-class mix of exports to the US97% from 10-220MVA; 3% from 220-330MVAJune exports to the US mainly came from the 10-220MVA segment.
• China electronic meter exports+1% yoy in JuneMay was -11%.
• China high-voltage circuit breaker exports-7% yoy in JuneMay was -16%.
• Huaming valuation18x 12-month forward P/EGoldman Sachs says its valuation is attractive and that it has corrected more significantly than peers.

Impact & implications

The investment implication is that global grid upgrades, renewable integration, aging infrastructure replacement, and insufficient US domestic supply will continue to support external demand opportunities for Chinese power equipment suppliers. Amid concerns over valuation in high-beta AI infrastructure chains and the visibility of AI capex, Goldman Sachs views Huaming as a more defensive way to gain exposure to grid upgrades; Sieyuan Electric benefits from short lead times and rapid capacity expansion capability; NARI Technology benefits from domestic grid capex and overseas business potential.

Risks

• The US power transformer demand versus local supply gap may narrow faster than expected, reducing opportunities for non-traditional suppliers.
• China’s transformer export ASPs to the US are highly volatile, which may affect judgments on revenue quality and margins.
• US trade policy, tariffs, compliance requirements, or local procurement requirements may constrain exports by Chinese suppliers.
• Changes in prices of key raw materials such as GOES may affect transformer profitability.
• Concerns about AI capex visibility and valuations of high-beta AI infrastructure may affect sentiment toward related grid equipment sectors.
• There are execution risks around overseas market share gains, delivery capability, and capacity expansion progress.

What to watch

• Whether the yoy growth rate of China’s total >10MVA transformer exports remains high in coming months.
• Whether the yoy and mom growth rates of China’s transformer exports to the US continue.
• Whether export ASPs for the 10-220MVA and 220-330MVA segments stabilize, and how product mix changes affect average prices.
• Whether US power and specialty transformer PPI continues to remain high.
• The progress of US domestic transformer capacity expansion and changes in lead times.
• Whether the contribution of regions such as the Middle East, Americas, and Europe to China’s transformer export growth remains sustainable.
• Whether exports of adjacent grid equipment such as electronic meters and high-voltage circuit breakers improve.
• Changes in overseas orders, capacity expansion, and valuations for Sieyuan Electric, NARI Technology, and Huaming.