In May, China's power transformer export growth rebounded to 72% yoy, while the US demand gap continues to support opportunities for Chinese suppliers

Overview

This report is Goldman Sachs' monthly tracking of power transformer export data within China's grid equipment sector, with a focus on updating export value, pricing, and regional mix through May 2026. The core conclusion is that China's transformer export growth rebounded notably in May, while the US local supply gap remains large. Although some export prices have fluctuated, tight industry supply-demand conditions and long delivery cycles continue to create potential opportunities for Chinese suppliers.

Core views

The report believes that the gap between US power transformer demand and local supply remains the key investment theme for the sector. Although US local manufacturers have announced capacity expansion plans, including Virginia Transformer building a new plant in Alabama, capacity expansion typically takes 2 to 3 years, while the global transformer delivery cycle remains around 128 weeks. By contrast, Sieyuan Electric can deliver transformers in about 6 to 9 months and expand capacity in around one year, benefiting from China's flexible supply chain. NARI Technology benefits from domestic grid capex as well as export potential in converter valves and secondary equipment. Expectations for Huaming's overseas market share gains have normalized, so a neutral view is maintained.

Analysis framework

The report combines China customs export data, US PPI, company data, expert estimates, and calculations of grid demand-supply gaps to track changes in region, capacity segment, pricing, and yoy growth of China's power transformer exports, and maps these data changes to investment views on Chinese grid equipment companies.

Methodology notes

• Industry supply-demand analysisEstimation of the gap between US power transformer demand and local supply

  Demand gap

  By comparing US power transformer demand with local supply capacity, the current gap is estimated at 72%, narrowing to 57% by 2028E, but still insufficient to fully eliminate shortages.

• Export data trackingChina customs export value and price tracking

  YoY export value and price ranges

  China customs export data is used to track export value, regional contribution, and capacity-band price changes for transformers above 10MVA; the report notes that the rolling average price for the 220-330MVA segment from March to May fell 29% yoy, but still remained broadly within the normal range since 2024.

• Stock screening frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs Factor Profile compares individual stocks' positions versus the market and peers across growth, financial returns, valuation multiples, and composite indicators, providing investment context.

Asset mapping & comparison

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

• Sieyuan Electric

  One of the report's key recommended names, rated Buy with a target price of Rmb187.00.

  Strengths

  Delivery cycle of about 6 to 9 months, capacity expansion in about one year; flexible Chinese supply chain; phase-three transformer plant has been announced, supporting up to about Rmb9-10bn annual output value.

  Weaknesses

  Dependent on overseas demand, export pricing, and execution of capacity expansion.

  Comparison

  Compared with the global delivery cycle of around 128 weeks, Sieyuan Electric delivers faster.

  Risks

  US local capacity expansion exceeds expectations, trade policy changes, declining export prices, or weaker-than-expected order conversion.

• NARI Technology

  One of the report's key recommended names, rated Buy with a target price of Rmb22.95.

  Strengths

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

  Weaknesses

  The report does not provide the same degree of direct quantified sensitivity as for transformer exports.

  Comparison

  Compared with pure transformer suppliers, NARI Technology has greater exposure to grid automation, converter valves, and secondary equipment.

  Risks

  Changes in the pace of domestic grid investment, weaker-than-expected export order conversion, and slower-than-expected overseas market penetration.

• Huaming

  A covered name, rated Neutral with a target price of Rmb20.40.

  Strengths

  The share price has already fallen 48% from its peak, and market expectations for overseas market share gains have become more normalized.

  Weaknesses

  Without a shortage backdrop for on-load tap changers, overseas market share gains are more likely to be steady rather than accelerating.

  Comparison

  Compared with Sieyuan Electric and NARI Technology, Goldman Sachs has lower preference for Huaming.

  Risks

  Overseas market share growth below expectations and insufficient supply-demand tightness to support valuation recovery.

• China power transformer export chain

  At the industry level, supported by grid equipment demand from the US and other regions.

  Strengths

  May export growth rebounded to 72% yoy, while exports to the US rose significantly off a low base.

  Weaknesses

  Some capacity bands experienced price fluctuations, with the rolling average price for the 220-330MVA segment from March to May down 29% yoy.

  Comparison

  US local prices remain stably high, while China's export prices vary by capacity band.

  Risks

  Intensifying price competition, raw material price volatility, narrowing US local supply gap, and trade and regulatory restrictions.

Key data

• YoY growth in China's May export value of transformers above 10MVA72% yoyApril was 27% yoy, with a clear rebound in May.
• May growth in export value of transformers to the US114x yoy; +26% momThe sharp yoy increase was mainly driven by a low base; April was 95% yoy.
• Gap between US power transformer demand and local supply72% currently; 57% by 2028EThe report estimates the gap will narrow but still persist.
• US transformer PPI3.9% yoy in MayIt has remained stable at a high level since October 2025.
• China-to-US export price for 220-330MVA-29% yoyThe rolling average price from March to May declined yoy, but still remained broadly within the normal range since 2024.
• Regional contribution and growth of China's transformer exports in MayAfrica +252% yoy, Middle East +152% yoy, Americas +113% yoy, Asia +35% yoy, Europe -12% yoyCorresponding export contributions were about 18%, 23%, 21%, 23%, and 15%, respectively.
• Capacity mix of May exports to the US10-220MVA 52%; 220-330MVA 19%; 400-500MVA 29%This shows that exports to the US cover multiple capacity bands.
• Global transformer delivery cyclearound 128 weeksCapacity expansion usually takes 2 to 3 years.
• Sieyuan Electric delivery and capacity expansion capability6-9 months delivery; around one year capacity expansionEquivalent to roughly 24 to 36 weeks for delivery, better than the global average delivery cycle.
• Other grid equipment exports in Mayelectronic meter -11% yoy; circuit breaker >72.5kV -16% yoyElectronic meters were roughly flat in April, while high-voltage circuit breakers were 77% yoy in April.

Impact & implications

For investment, the report reinforces the export opportunities for Chinese grid equipment companies amid overseas power infrastructure shortages, especially transformer companies with rapid delivery and capacity expansion capabilities. At the same time, price fluctuations and divergence in exports across product categories suggest that investors should not look only at total export growth, and should continue monitoring capacity-band pricing, regional demand, raw material costs, and order fulfillment capability.

Risks

• US local transformer capacity expansion is faster than expected, causing the supply-demand gap to narrow more quickly than the report estimates.
• China's export prices continue to decline, weakening export revenue and profit margins.
• Trade policy, tariffs, regulation, or geopolitical factors affect China's exports of grid equipment to the US.
• Delays in delivery of global grid equipment orders, postponement of customer projects, or slowing capex pace.
• Raw material price fluctuations, such as grain-oriented electrical steel, affect transformer costs and profitability.
• Single-month export data may be affected by low bases, project delivery timing, and customs statistical methodology, and may not represent the long-term trend.

What to watch

• Whether the yoy growth in China's export value of transformers above 10MVA can continue in subsequent months.
• Mom growth in exports to the US and changes in capacity-band mix, especially in the 10-220MVA, 220-330MVA, and 400-500MVA segments.
• Whether US transformer PPI remains elevated, as well as price trends for related equipment such as switchgear and turbines.
• The progress of US local transformer capacity expansion projects coming online, including new capacity from manufacturers such as Virginia Transformer.
• The capacity ramp-up and order conversion of Sieyuan Electric's phase-three transformer plant.
• Actual order progress for NARI Technology in exports of converter valves and secondary equipment.
• Whether export prices in the 220-330MVA segment stabilize within the normal range or weaken further.