China power transformer and grid equipment export market: China transformer exports fell in August, but US demand and pricing signals still point to persistent supply tightness

Overview

This tracker examines August power-transformer export volumes and pricing across China, the US and South Korea. Goldman Sachs concludes that the headline decline in China’s total exports does not yet indicate easing transformer tightness, given resilient US-bound shipments, elevated pricing and a still-substantial US supply shortfall.

Core views

China’s large (>10MVA) transformer export value was about Rmb1.744bn (about USD260mn) in August, down 22% year on year after growing 41% in July. Goldman Sachs notes that lighter overseas summer seasonality may partly explain the weak month, but views the result as relatively soft versus South Korea, whose large-transformer exports rose 72% year on year after 34% growth in July. China’s regional results were uneven: Africa grew 311% year on year and the Americas 108%, while Europe, the Middle East and Asia declined 35%, 42% and 48%, respectively. US-bound exports were materially stronger than the aggregate result. China exported about Rmb179mn (about USD27mn) of transformers to the US in August, up 542% year on year but down 33% month on month, compared with 132% year-on-year growth in July. The exports were entirely from the 10–220MVA segment. Goldman Sachs interprets this resilience, even after policy restrictions, as evidence that US demand remains supportive. South Korea’s large-transformer exports to the US also grew 56% year on year, while its non-US large-transformer exports grew 96%; US-bound exports of medium transformers, high-voltage switchgear/GIS and low-voltage switchgear increased 35%, 213% and 149%, respectively. Pricing data are the report’s main evidence that transformer shortages have not eased. US power and specialty transformer PPI held at 7.6% year on year in August. South Korean large-transformer export pricing to the US remained elevated, up 6% year on year and 7% month on month. China’s 10–220MVA transformer export pricing to the US rose 112% year on year and 27% month on month; its June–August rolling average was up 53% year on year. The report also notes slight July price increases for grain-oriented electrical steel and copper, two key transformer inputs. It contrasts these conditions with no US exports in the 220–330MVA range during August, where the three-month rolling price was down 2% year on year. Goldman Sachs estimates that the US power-transformer demand/local-supply gap will decline from 72% currently to 61% by 2028E, a slower narrowing than its 57% estimate at the beginning of the year. The institution cites Hitachi Energy’s September 15 commitment to build a USD1.5bn Mississippi transformer factory, alongside projects in Pennsylvania, Virginia and Tennessee, as additional capacity investment. Even so, the projected 61% gap and persistently high pricing lead the report to conclude that the supply shortage remains meaningful. For equity implications, Goldman Sachs retains Huaming as a Buy-rated idea on global transformer demand and potential market-share gains. It highlights Sieyuan Electric for export opportunities spanning more grid-equipment categories and more diversified global regions than US transformer exports alone. NARI Technology is positioned as a beneficiary of domestic UHV construction, with growing export potential in secondary equipment, dispatch software and energy storage systems.

Analysis framework

The report tracks customs export values and prices by destination and transformer voltage range, compares China with South Korea, and checks pricing against US producer-price data and raw-material trends. It then relates these data points to an estimate of the US demand-versus-local-supply gap and draws implications for selected China grid-equipment stocks.

Methodology notes

• Industry AnalysisSupply-demand framework

  US power-transformer demand/local-supply gap analysis

  The report estimates the portion of US transformer demand not met by local supply, using the projected decline from 72% currently to 61% in 2028E to assess whether shortages are easing.

• Industry AnalysisVolume-price decomposition

  Export value and pricing tracking by destination and voltage range

  The report separates export-value growth from pricing changes, including China’s US-bound 10–220MVA exports and South Korean large-transformer exports, to interpret demand and supply-tightness signals.

Asset mapping & comparison

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

• Huaming

  Buy-rated idea positioned to benefit from global transformer demand and market-share gains.

  Strengths

  Exposure to global transformer demand and market-share-gain potential.

• Siyuan Electric

  Buy-rated idea linked to export opportunities across grid-equipment categories and diversified global regions.

  Strengths

  Export potential beyond US transformer shipments.

• NARI Technology

  Buy-rated idea positioned as a beneficiary of domestic UHV construction and growing exports.

  Strengths

  Potential exposure to secondary equipment, dispatch software and energy storage systems.

Key data

• China large-transformer export valuec.Rmb1,744mn / c.USD260mn; -22% yoy in AugVersus +41% yoy in July.
• China transformer exports to the USc.Rmb179mn / c.USD27mn; +542% yoy, -33% mom in AugVersus +132% yoy in July; 100% from the 10–220MVA segment.
• US transformer demand/local-supply gap72% currently; 61% in 2028EThe 2028E estimate compares with 57% forecast at the beginning of the year.
• US power and specialty transformer PPI+7.6% yoy in AugMaintained at this rate in August.
• China 10–220MVA export pricing to the US+112% yoy / +27% mom in AugJune–August three-month rolling average was +53% yoy.
• South Korea large-transformer export valueUSD176mn; +72% yoy in AugVersus +34% yoy in July; US exports were USD98mn, up 56% yoy.

Impact & implications

The report views the August drop in China’s total transformer exports as a weak but potentially seasonal data point rather than proof that shortages are easing. Persistent price strength, a slower-than-previously-expected narrowing of the US supply gap and resilient US-bound shipments support its positive stock implications for Huaming, Sieyuan Electric and NARI Technology.