China Grid Tech power transformer export market Report Interpretation

Overview

This July tracker examines transformer pricing, export flows and the implications of US data-center permitting and bulk-power-system scrutiny for Chinese grid-equipment suppliers. Goldman Sachs sees a still-tight US transformer market and resilient data-center construction, tempered by regulatory uncertainty for grid-connected equipment.

Core views

The tracker indicates that US transformer market conditions remain tight. US power and specialty transformer PPI increased 4% month on month and 7.6% year on year in July, extending a period of high and broadly stable pricing since October 2025. Goldman Sachs now estimates that the US power-transformer demand/local-supply gap will narrow from 72% currently to 63% in 2028E, revised from its prior 57% estimate because its US team raised the global data-center capacity forecast. The gap is therefore expected to persist even as local supply improves. Export data show strong volumes but uneven pricing. China's large-transformer export value rose 41% year on year in July, unchanged from June, while exports to the US increased 132%, slowing from 172% in June. Total July transformer exports were approximately Rmb2.53bn, or USD376mn. US-bound exports were approximately Rmb268mn, or USD40mn, with 48% from the 10-220MVA segment, 26% from 220-330MVA and 26% from above 500MVA. However, China's 220-330MVA transformer export pricing to the US fell 28% year on year in July and 11% on a May-July rolling basis, which the report describes as relative weakness. South Korean large-transformer export pricing to the US remained high, rising 5% year on year and 21% month on month; South Korean large-transformer exports to the US rose 22% year on year after declining 37% in June. GOES, a key transformer input, had flat sequential pricing in June. Goldman Sachs addresses concerns that Texas and Pennsylvania measures could delay data-center construction and power-equipment revenue recognition. Texas ordered verification and audit of data centers in ERCOT's interconnection queue, where data-center requests represent roughly 90% of 474GW of requests. Pennsylvania requires developers to make binding commitments to provide or procure incremental generation capacity at their own cost. The report's view is that the burden should fall mainly on under-capitalized projects rather than high-quality large-scale data centers. It cites data-center construction starts rising 189% year on year on an LTM basis as of July 2026, versus 118% in June, and notes that 90GW of behind-the-meter projects tracked by Cleanview represent more than 25% of planned US capacity. This shift can both meet new requirements and avoid long grid-connection timelines. On the August 26 executive order concerning foreign-produced bulk-power equipment, Goldman Sachs stresses that it is not a blanket ban on Chinese equipment. The US Department of Energy has up to 120 days to issue implementing rules that may specify countries, suppliers or equipment categories and potentially create licensing or pre-qualified-vendor mechanisms. The report believes Sieyuan's grid-interconnection equipment could be affected, whereas equipment serving behind-the-meter data centers may be unaffected. It forecasts US revenue/profit contribution of 6%-7%/10%-11% for Sieyuan in 2026E-30E, expects behind-the-meter orders to form the majority of its US orders, and therefore sees limited overall earnings impact. Nonetheless, the policy restricts the company's ability to benefit directly from a high-margin, fast-growing US market. Goldman Sachs expects Sieyuan's export growth to rely primarily on developing and non-US developed markets and states Buy ratings on Sieyuan, Huaming and Nari Tech.

Analysis framework

Goldman Sachs combines US producer-price data, customs export values and pricing by transformer size, supply-demand estimates, data-center construction and behind-the-meter project data, and a product-level reading of the executive order. It then links the policy scope to the companies' US revenue exposure and the distinction between grid-connected and behind-the-meter orders.

Methodology notes

• Industry AnalysisSupply-demand framework

  US power-transformer demand versus local supply

  The report estimates the local supply gap and uses the persistence of that shortage to explain elevated US transformer pricing.

• Industry AnalysisVolume-price decomposition

  Transformer export value and export pricing by country and capacity range

  The tracker separates export growth from pricing movements to show that strong US-bound export value can coexist with weaker pricing for certain Chinese transformer categories.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Data-center power demand, grid interconnection, behind-the-meter generation and equipment suppliers

  The report assesses how permitting rules and bulk-power restrictions may flow through to transformer demand and supplier revenue depending on equipment use.

Asset mapping & comparison

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

• Siyuan Electric

  US bulk-power scrutiny may affect grid-connected orders, while behind-the-meter data-center orders may be less exposed.

  Strengths

  Goldman Sachs cites market-share gains in developing countries and non-US developed markets, alongside behind-the-meter exposure in the US.

  Weaknesses

  The executive order constrains potential direct participation in the high-margin, fast-growing US market.

  Comparison

  Huaming and Nari Tech are described as having limited US sales exposure.

  Risks

  DOE implementing rules within 120 days could identify affected suppliers, countries or equipment categories.

• Huaming

  Covered Chinese grid-equipment company with limited US sales exposure.

  Strengths

  Goldman Sachs states a Buy rating.

  Comparison

  US sales exposure is described as limited, similar to Nari Tech and lower than the potential exposure discussed for Sieyuan.

• Nari Tech

  Covered Chinese grid-equipment company with limited US sales exposure.

  Strengths

  Goldman Sachs states a Buy rating.

  Comparison

  US sales exposure is described as limited, similar to Huaming and lower than the potential exposure discussed for Sieyuan.

Key data

• US transformer PPI+4% mom; +7.6% yoy in JulyPower and specialty transformer pricing remained high.
• US transformer demand/local-supply gap72% currently; 63% in 2028E2028E estimate revised from 57% previously; shortage is still expected to persist.
• China large-transformer export valueRmb2.53bn / c.USD376mn; +41% yoy in JulyGrowth was unchanged from June.
• China large-transformer exports to the USRmb268mn / c.USD40mn; +132% yoy in JulyGrowth slowed from +172% yoy in June.
• China 220-330MVA transformer export pricing to the US-28% yoy in July; -11% yoy on a May-July rolling basisThe report characterizes this as relative weakness.
• US data-center construction starts+189% yoy on an LTM basis as of July 2026Compared with +118% yoy in June 2026.
• Tracked behind-the-meter projects90GWMore than 25% of planned US capacity, according to Cleanview.
• Siyuan US revenue/profit contribution forecast6%-7% / 10%-11% in 2026E-30EOnly grid-connected revenue is considered potentially affected by the executive order.

Impact & implications

Goldman Sachs argues that persistent transformer scarcity, high US prices and robust data-center starts continue to support grid-equipment demand. Regulatory measures may slow grid interconnections and limit US upside for export-facing suppliers, but the report expects behind-the-meter projects to cushion demand and reduce the direct impact on Sieyuan's earnings.

Risks

• Data-center interconnection approvals may be delayed by Texas and Pennsylvania requirements, particularly for under-capitalized projects.
• DOE implementing rules under the bulk-power executive order could affect specified countries, suppliers or equipment categories.
• Siyuan's potential upside from the US market is constrained even if the report expects limited direct earnings impact.

What to watch

• DOE implementing rules over the next 120 days, including the scope of affected entities, equipment and any licensing or vendor mechanism.
• The pace of data-center construction starts and adoption of behind-the-meter power solutions.
• US transformer PPI, China's export pricing by transformer size, and US-bound export growth.
• Progress in narrowing the US transformer demand/local-supply gap.