China's power transformer exports sustained strong growth in June, with exports to the US up 172% YoY

Overview

This report is Goldman Sachs' monthly data tracker for power transformer exports, focusing on China's transformer exports, US transformer prices, and supply-demand gaps through June. The core conclusion is that although China's transformer export growth slowed from May, total export value still rose 47% YoY in June; exports to the US were particularly strong, increasing 172% YoY and 52% MoM. The report combines these data with the US local transformer supply-demand gap, global delivery times, elevated and stable US PPI, and China's supply-chain delivery advantages to support a positive view on Chinese grid equipment stocks.

Core views

The report believes that insufficient local supply of power transformers in the US remains the medium-term theme. Goldman Sachs expects the US demand and local supply gap to narrow from the current 72% to 57% in 2028E, but the shortage will not disappear, leaving room for non-traditional suppliers such as China to enter and expand. Global transformer delivery times are approximately 128 weeks, while capacity expansion typically takes 2-3 years; by contrast, Sieyuan can deliver transformers in approximately 6-9 months and expand capacity within approximately one year, demonstrating the agility of China's supply chain. NARI Technology's investment thesis is driven by domestic grid capital expenditures and the export potential of converter valves and secondary equipment. Huaming is viewed as a more defensive exposure to the global grid upgrade cycle, benefiting from aging infrastructure, renewable energy integration, and rising overseas market share in on-load tap changers.

Analysis framework

The report cross-validates customs export data, US PPI, regional export contributions, export structures by voltage rating, GOES raw material prices, and supply-demand gap forecasts. Rather than relying on a single-company financial model, the analysis uses monthly industry data to assess the export cycle of China's grid equipment, local US supply-demand pressure, and potential benefit pathways for relevant listed companies.

Methodology notes

• Industry data trackingPower Transformer Export Tracker

  Track the value, destinations, and voltage-rating structure of China's power transformer exports monthly

  The report centers on June export data, comparing total exports, exports to the US, different MVA ranges, and regional contributions, while benchmarking against the prior month's YoY growth and MoM changes to assess export momentum and structural shifts.

• Price comparisonUS transformer PPI vs China export ASP

  Use US PPI and China's export average selling prices to assess pricing pressure and product-mix changes

  The report notes that China's customs export prices are on an FOB basis, while US local prices are estimated from tender documents and apply the PPI for transformers across the full power range, rather than specifically corresponding to 220-300MVA products; China's export ASP is volatile and needs to be interpreted in conjunction with product mix.

• Supply-demand gap analysisUS power transformer demand/local supply gap

  Estimate how the gap between US demand and local supply will narrow over time

  The report expects the US power transformer demand and local supply gap to decline from 72% currently to 57% in 2028E, while the market remains undersupplied, supporting continued participation by non-traditional suppliers in the US market.

• Company factor frameworkGS Factor Profile

  Goldman Sachs uses growth, financial returns, valuation multiples, and composite percentiles to assess stock characteristics

  The disclosure section explains that the GS Factor Profile forms percentile comparisons using forward sales, EBITDA, EPS, ROE, ROCE, CROCI, P/E, P/B, EV/EBITDA, and other metrics, primarily serving as a background framework for stock investment analysis.

Asset mapping & comparison

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

• Sieyuan

  Core favored idea, rated Buy

  Strengths

  The report emphasizes that its transformer delivery cycle is approximately 6-9 months and its expansion cycle approximately one year, significantly shorter than the global delivery time of approximately 128 weeks and the typical capacity expansion cycle of 2-3 years, benefiting from the agility of China's supply chain.

  Weaknesses

  The report does not identify specific company-level weaknesses in the summary content.

  Comparison

  Compared with the longer delivery cycles of global suppliers, Sieyuan's delivery and capacity expansion speed is more competitive.

  Risks

  A narrowing US local supply gap, export price volatility, trade or regulatory restrictions, and lower-than-expected global grid capital expenditures.

• NARI Technology

  Core favored idea, rated Buy

  Strengths

  It benefits from domestic grid capital expenditures and has export potential in converter valves and secondary equipment.

  Weaknesses

  The report does not provide detailed company-level disadvantages.

  Comparison

  Compared with a pure export thesis, NARI Technology has two drivers: domestic grid investment and overseas equipment potential.

  Risks

  Changes in the pace of domestic grid capital expenditures, weaker-than-expected conversion of overseas orders, and intensifying competition in equipment exports.

• Huaming

  Core favored idea, rated Buy; the report states that it was previously upgraded to Buy

  Strengths

  Its valuation is attractive, with 18x 12-month forward P/E mentioned; it has opportunities to increase overseas market share in the global on-load tap changer duopoly and can serve as a defensive exposure to the global grid upgrade cycle.

  Weaknesses

  Its share price had previously experienced a more pronounced pullback than peers, reflecting market sentiment or valuation pressure.

  Comparison

  Compared with high-beta AI infrastructure stocks, Huaming is viewed by the report as a more defensive way to benefit from global grid upgrades.

  Risks

  Debates over AI capital expenditure visibility, slower-than-expected overseas market-share gains, a slowdown in the global grid upgrade cycle, and further valuation compression.

Key data

• Total export value of China's transformers above 10MVAJune 2026: +47% YoYMay's YoY growth was +72%; growth remained strong in June but slowed from May.
• China's transformer export value to the USJune 2026: +172% YoY, +52% MoMThe report emphasizes this as the most notable regional export performance in June.
• Voltage-rating structure of exports to the US10-220MVA: 97%; 220-330MVA: 3%This indicates that exports to the US are mainly concentrated in the 10-220MVA range.
• US power transformer demand/local supply gap72% currently, expected to be 57% in 2028EThe gap is expected to narrow, but the shortage will persist.
• Global transformer delivery timeApproximately 128 weeksThe report states that capacity expansion typically takes 2-3 years and that delivery times remain elevated.
• Sieyuan delivery and capacity expansion cycleApproximately 6-9 months for delivery, approximately one year for expansionThe report attributes this to the support of China's agile supply chain.
• US power and specialty transformer PPIJune 2026: +3.9% YoYIt has remained elevated and stable since October 2025.
• China's 220-330MVA transformer export prices to the US+3% YoY in June; three-month rolling average from April to June: -8% YoYPrice volatility may be related to changes in product mix.
• China's 10-220MVA transformer export ASP to the USApproximately 5x YoY in June; approximately 2x on a three-month rolling average over the past three monthsThe report notes that the price range in this category is wide, making the trend difficult to observe.
• Exports of other power equipmentElectronic meters: +1% YoY in June; circuit breakers >72.5kV: -7% YoY in JuneElectronic meters improved from -11% in May, while circuit breakers improved from -16% in May but remained in negative growth.

Impact & implications

The investment implication of this report is that global grid upgrades and the US transformer shortage continue to offer medium-term opportunities for China's power equipment exports. Even if the visibility of AI data-center capital expenditures and valuations of high-beta AI infrastructure are questioned by the market, aging grids, renewable energy integration, and overseas supply gaps can continue to support more defensive exposure to the equipment supply chain. The strong export data particularly reinforces the possibility of Chinese suppliers participating in the US market and increasing their global market share.

Risks

• The US power transformer demand and local supply gap is expected to narrow by 2028E, potentially reducing marginal demand for imports and non-traditional suppliers.
• China's export ASP is highly volatile, particularly in the broad 10-220MVA range, which may obscure the underlying pricing trend.
• The three-month rolling average export price of 220-330MVA products declined 8% YoY from April to June, indicating uncertainty in product mix or pricing.
• Declining prices of key raw materials such as GOES may affect assessments of pricing and profit transmission across the industry chain.
• Market concerns over AI capital expenditure visibility and high-beta AI infrastructure valuations may affect sentiment toward related grid equipment valuations.
• Trade policies, regulatory restrictions, and local-supply requirements in the US, Europe, or other regions may affect exports of Chinese equipment.

What to watch

• Whether the YoY growth rate of China's total exports of transformers above 10MVA remains elevated in subsequent months.
• Whether the YoY and MoM growth rates of China's transformer exports to the US continue, particularly whether the 10-220MVA range remains dominant.
• Whether the US power and specialty transformer PPI remains elevated and stable or experiences a significant decline.
• Whether the pace at which the US power transformer demand and local supply gap narrows from 72% toward 57% is faster than expected.
• Whether global transformer delivery times remain around 128 weeks and whether capacity expansion cycles shorten.
• The impact of changes in GOES prices on transformer costs and quotations.
• Changes in the contributions of the Middle East, Americas, Europe, Africa, Asia, and other regions to China's transformer exports.
• Overseas orders, delivery capabilities, capacity expansion progress, and valuation changes for Sieyuan, NARI Technology, and Huaming.