China's power transformer exports accelerated YoY in May, with the supply-demand gap supporting opportunities for Chinese suppliers

Overview

This report is Goldman Sachs' monthly data tracking of China's power transformer exports, focusing on updated export value, regional contribution, U.S. market pricing, and the supply-demand gap through May 2026. The report believes that the U.S. domestic power transformer supply-demand gap is unlikely to be fully eliminated even by 2028E, and elevated global delivery lead times provide room for non-traditional suppliers, including Chinese companies, to enter the market.

Core views

The core views include: first, China's exports of transformers above 10MVA rose 72% YoY in May, improving significantly from April; second, exports to the U.S. rose 114x YoY off a low base and 26% MoM, indicating that U.S. demand remains strong; third, U.S. transformer PPI has remained stable at a high level since October 2025, rising 3.9% YoY in May; fourth, export prices in the 220-330MVA segment in China are under short-term pressure but remain within the normal range; fifth, among Chinese grid technology names, Goldman Sachs favors Sieyuan Electric and NARI Technology, while Huaming remains Neutral.

Analysis framework

The report adopts a combined approach of export tracking and supply-demand gap analysis, comparing China's transformer export value, regional contribution, voltage-class mix of exports to the U.S., U.S. PPI trends, raw material GOES prices, as well as global transformer delivery lead times and China's supply chain delivery capabilities.

Methodology notes

• Export data trackingPower Transformer Export Tracker

  Track monthly China's power transformer export value, regional contribution, and export structure to the U.S.

  The report uses May export data and compares it with April and the same period last year to observe changes in overall exports of transformers above 10MVA, exports to the U.S., regional contributions, and voltage-class structure.

• Supply-demand analysisUS demand-local supply gap

  The U.S. power transformer demand-local supply gap.

  Goldman Sachs estimates that the U.S. power transformer supply-demand gap will narrow from 72% currently to 57% by 2028E, but shortages are still expected to persist because capacity expansion usually takes 2 to 3 years.

• Equity rating frameworkGS Factor Profile

  Goldman Sachs equity factor profile.

  This framework compares stocks' attributes versus the market and industry peers across dimensions such as growth, financial returns, valuation multiples, and composite indicators.

Asset mapping & comparison

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

• Sieyuan Electric

  Beneficiary; Goldman Sachs maintains Buy

  Strengths

  Can deliver transformers in about 6 to 9 months, significantly shorter than the global delivery lead time of about 128 weeks; capacity expansion cycle is about one year; has announced a phase-two transformer plant, supporting annual output value of up to about Rmb9-10bn.

  Weaknesses

  Relies on overseas order conversion, capacity ramp-up, and the pricing environment.

  Comparison

  Compared with the 2-3 year expansion cycle of global suppliers, China's agile supply chain gives it a delivery advantage.

  Risks

  Overseas demand volatility, trade policy, price declines, and execution risks in capacity expansion.

• NARI Technology

  Beneficiary; Goldman Sachs maintains Buy

  Strengths

  Has exposure to domestic grid capital expenditure and export potential in converter valves and secondary equipment.

  Weaknesses

  The report does not provide specific data on orders or export growth.

  Comparison

  Compared with a pure transformer export story, NARI Technology is driven more by domestic grid investment and export potential in high-end grid equipment.

  Risks

  Changes in the pace of domestic grid investment, export certification, and overseas project execution risks.

• Huaming

  Related name; Goldman Sachs maintains Neutral

  Strengths

  The stock price has retreated 48% from its peak, and expectations have somewhat normalized.

  Weaknesses

  In the absence of a shortage of on-load tap changers, overseas market share gains are expected to be more steady-state rather than accelerating.

  Comparison

  Compared with Sieyuan Electric and NARI Technology, the report has a lower preference for Huaming.

  Risks

  Overseas market share gains falling short of expectations and limited valuation recovery.

• China's power transformer export chain

  Industry theme

  Strengths

  Export value accelerated significantly YoY in May, exports to the U.S. were strong, and the U.S. domestic supply gap persists.

  Weaknesses

  Export prices in some voltage segments declined in the short term, and exports of other grid equipment were relatively weak.

  Comparison

  Africa, the Middle East, and the Americas were important contributors to export growth in May, while Europe declined YoY.

  Risks

  Price volatility, raw material costs, trade frictions, overseas localization capacity expansion, and risks from a high order base.

Key data

• Growth rate of China's exports of transformers above 10MVA in May+72% yoyApril was +27% yoy.
• Growth rate of China's transformer exports to the U.S. in May114x yoy; +26% momApril was +95% yoy, and May's growth was affected by a low base.
• U.S. power transformer supply-demand gap72% currently; 57% by 2028EGoldman Sachs expects the gap to narrow but shortages to remain.
• Global transformer delivery lead timeabout 128 weeksChina's Sieyuan Electric can deliver in about 6 to 9 months, or 24 to 36 weeks.
• U.S. transformer PPI+3.9% yoyIt has remained stable at a high level since October 2025.
• China's 220-330MVA transformer export price3-month rolling average price from March to May fell 29% yoyStill broadly within the normal price range since 2024.
• Regional contribution of China's transformer exports in MayAfrica 18%, Middle East 23%, Americas 21%, Asia 23%, Europe 15%The corresponding YoY growth rates were Africa +252%, Middle East +152%, Americas +113%, Asia +35%, and Europe -12%.
• Voltage-class mix of China's exports to the U.S. in May10-220MVA accounted for 52%, 220-330MVA accounted for 19%, 400-500MVA accounted for 29%Reflecting that exports to the U.S. cover multiple voltage segments.
• Other grid equipment exports in MayElectronic meters -11% yoy; circuit breakers above 72.5kV -16% yoyBoth were weaker than April's performance.

Impact & implications

The shortage of power transformers in the U.S., elevated delivery lead times, and China's faster supply chain delivery and capacity expansion capabilities may increase export opportunities for Chinese grid equipment companies. Sieyuan Electric benefits from transformer capacity expansion and shorter delivery lead times; NARI Technology benefits from domestic grid capital expenditure and the export potential of converter valves and secondary equipment; Huaming remains Neutral because expectations for overseas share gains are becoming more steady-state rather than accelerating.

Risks

• U.S. domestic transformer capacity expansion is faster than expected, compressing opportunities for non-traditional suppliers.
• China's export prices continue to decline, affecting profitability and order quality.
• Trade policy, tariffs, or geopolitical restrictions affect Chinese grid equipment exports to the U.S.
• Global grid equipment demand or capital expenditure slows.
• Raw material GOES price volatility affects costs and margins.
• Overseas certification, delivery, after-sales, and project execution risks.

What to watch

• Whether China's exports of transformers above 10MVA continue to post high growth in the following months.
• The sustainability of exports to the U.S. after the low base effect and the MoM trend.
• Whether export prices in the 220-330MVA segment continue to stay below the normal range.
• Whether U.S. transformer PPI and global delivery lead times continue to remain elevated.
• The progress of U.S. domestic transformer capacity expansion projects, especially the pace of new plant commissioning.
• The rollout of capacity at Sieyuan Electric's phase-two transformer plant and order conversion.
• Progress in export orders for NARI Technology's converter valves and secondary equipment.