The global power transformer market is experiencing a severe supply-demand imbalance, creating an opportunity for Chinese manufacturers to rapidly expand their international market share. According to a Goldman Sachs research report dated March 26, China's exports of transformers rated above 10MVA surged 61% year-on-year in the first two months of 2026, accelerating from the full-year 2025 growth rate of 52%. Exports to the United States saw a particularly dramatic increase, skyrocketing 182% year-on-year.
Concurrently, Goldman Sachs has revised its forecast for the US transformer supply-demand gap upwards. Previously expecting the deficit to narrow from the current 72% to 57% by 2028, the bank now predicts the gap will remain at approximately 60%, indicating a more prolonged shortage than initially anticipated.
The root of the imbalance lies in rapidly expanding demand and severely lagging domestic production capacity. Accelerated data center construction and grid modernization efforts are driving up transformer demand in the US and Europe, while lead times for large transformers have extended to 18-30 months.
Goldman Sachs estimates that US transformer demand will increase by 9% to 12% between 2027 and 2028, primarily due to contributions from new data centers. However, domestic capacity expansion is projected at only 2% to 4%, leading to a widening gap and creating significant opportunities for non-traditional suppliers like China, South Korea, Brazil, and Turkey.
Domestic expansion efforts in the US are progressing slowly. Major global transformer manufacturers announced capacity expansion plans in the first quarter of 2026, but most new production lines are not expected to become operational until 2027-2028 or later. For instance, GE Vernova announced a $200 million investment on March 10 to build a transformer plant in Haiphong, Vietnam, primarily for high-voltage direct current projects, with production slated to begin in 2028. Siemens Energy announced in February a total investment of $1 billion across several US states, including $421 million for its North Carolina factory to expand large power transformer capacity. Goldman Sachs estimates these expansions will increase US domestic transformer capacity by only 2% to 4% during the 2027-2028 period.
Meanwhile, Goldman Sachs' US team raised its data center power consumption forecast in February 2026. Based on this revision, US transformer demand is projected to grow 9% to 12% in 2027-2028. With capacity expansion lagging far behind demand growth, the supply gap is widening. The bank has raised its forecast for US reliance on transformer imports from 57% to approximately 60%. China currently supplies about 4% of US demand, with imports overall meeting about 72% of the need.
Amid the global imbalance, China's transformer exports are accelerating. In January-February 2026, China's exports of large-power transformers (>10MVA) reached 4.4 billion yuan, a 61% year-on-year increase, building on the strong 52% growth seen for the full year 2025. By destination, the Middle East was the largest market, accounting for 34% of exports with 32% growth. Asia saw the fastest growth, comprising 26% of exports with a 151% increase. Europe accounted for 21% with 36% growth, the Americas for 14% with 45% growth, and Africa for 6% with a remarkable 344% surge.
Exports to the US were particularly strong, surging 182% year-on-year in the first two months of 2026, a significant jump from the 48% growth rate for full-year 2025. By product category, transformers rated 10-220MVA constituted about 59% of exports to the US, while 220-330MVA units accounted for roughly 20%, and those above 330MVA also represented about 20%. Despite this growth, China's current market share in the US remains around 4%, indicating substantial room for increased penetration given the US's overall import dependency of approximately 72%.
Pricing for Chinese transformers exported to the US showed an overall upward trend. The average selling price for these exports rose 6% year-on-year in January-February 2026. High-capacity units in the 220-330MVA range were particularly notable, with their three-month rolling average price for December 2025-February 2026 surging 53% year-on-year. Prices for the 10-220MVA segment decreased 14% year-on-year, primarily due to product mix changes, showing significant data volatility.
In the US domestic market, the Producer Price Index for power and specialty transformers has doubled since 2020. It saw a slight increase in December 2025 and remained stable on a month-to-month basis in 2026, but was still up approximately 6% year-on-year. Goldman Sachs noted that the super-inflation phase of 2022 has passed, but prices remain at historically high levels. For key raw materials, grain-oriented electrical steel prices have stabilized in 2026 after a significant rise in 2022, while copper prices continue to climb, exerting cost pressure.
Comments