Global "Transformer Shortage"! China's exports surged 61% in two months, with a 182% increase in exports to the US. The US shortage may continue until 2028.

The global power transformer market is facing a severe imbalance between supply and demand, while Chinese manufacturers are using this opportunity to accelerate their push for international market share.

According to the Qifeng Trading Desk, in its latest research report released on March 26, Goldman Sachs said that from January to February 2026, China’s exports of transformers above 10MVA increased by 61% year over year, further accelerating from the 52% growth rate for all of 2025; among them, exports to the U.S. were particularly notable, with a year-over-year surge of 182%.

At the same time, Goldman Sachs raised its forecast for the U.S. transformers supply-and-demand shortfall—previously expecting the gap to narrow from the current 72% to 57% by 2028, it has now been revised up to about 60%, meaning the shortage situation will be more persistent than previously expected.

The root cause of the supply-and-demand imbalance lies in the rapid expansion on the demand side and a significant lag in domestic production capacity. The acceleration of data center construction and joint efforts to modernize power grids have boosted transformer demand in the U.S. and Europe, while delivery lead times for large transformers have been extended to 18 to 30 months.

Goldman Sachs estimates that from 2027 to 2028, U.S. transformer demand will rise by 9% to 12% due to incremental contributions from data centers, but the expansion of domestic capacity will be only about 2% to 4%. As the gap continues to widen, it creates significant opportunities for non-traditional suppliers such as China, South Korea, Brazil, and Turkey.

Severe delays in U.S. local capacity expansion, with the supply-and-demand shortfall continuing to widen

According to a Goldman Sachs report, in Q1 2026, major global transformer manufacturers announced expansion plans one after another, but most of the newly added capacity will not be operational until 2027 to 2028 or even later.

On March 10, GE Vernova announced it would invest $200 million in Haiphong, Vietnam, to build a transformer plant, mainly serving high-voltage direct current (HVDC) transmission projects, with full production expected to begin in 2028. Siemens Energy, meanwhile, announced in February that it would invest a total of $1 billion across multiple U.S. states, including $421 million to expand large power transformer capacity at its North Carolina plant. Based on this, Goldman Sachs estimates that the expansion plan will increase U.S. local transformer capacity by only 2% to 4% in 2027 to 2028.

Meanwhile, Goldman Sachs’ U.S. team also raised its forecast for data center power consumption in February this year. Based on this, it is estimated that U.S. transformer demand in 2027 to 2028 will increase by 9% to 12%. The pace of capacity expansion will fall far behind demand growth, so the supply-and-demand gap will not shrink but instead widen. Goldman Sachs raised its forecast for the share of U.S. transformer imports from 57% previously to about 60%. Of this, China currently accounts for about 4% of U.S. demand, while overall import fulfillment is about 72%.

China’s exports accelerate across the board, with both volume and pricing rising for shipments to the U.S.

Against the backdrop of the global supply-and-demand imbalance, China’s transformer exports are entering an accelerated track. In January to February 2026, China’s exports of high-power transformers (>10MVA) totaled RMB 4.4 billion, up 61% year over year. This further accelerates from the already strong 52% growth rate for all of 2025 (exports for all of 2025 were RMB 22.5 billion).

By export destinations, the Middle East contributed the most (34% share, up 32% year over year), Asia recorded the sharpest growth (26% share, up 151%), Europe accounted for 21% (up 36%), the Americas accounted for 14% (up 45%), and Africa accounted for 6% (up 344%).

Among them, exports to the U.S. were especially prominent. From January to February 2026, China’s transformer exports to the U.S. increased by 182% year over year; compared with the 48% growth rate for all of 2025, the rise has jumped sharply. In terms of product mix, within exports to the U.S., the share of 10–220MVA is about 59%, 220–330MVA about 20%, and above 330MVA about 20%. Even so, China’s share in the U.S. transformer market is still only about 4%, while the U.S. overall reliance on imported transformers is as high as about 72%, leaving substantial room for penetration of Chinese products.

On the pricing front, China’s average export price of transformers to the U.S. is trending upward overall. Goldman Sachs’ report shows that from January to February 2026, China’s average export price of transformers to the U.S. rose 6% year over year. Within this, the high-capacity segment of 220 to 330MVA was particularly strong: the three-month rolling average (from December 2025 to February 2026) increased 53% year over year. The 10 to 220MVA segment’s average price fell 14% year over year due to changes in product mix, with relatively high data volatility.

In addition, on the U.S. domestic market side, the Producer Price Index (PPI) for power and specialty transformer producers has doubled versus the 2020 level. In December 2025 it rose slightly again, and it was flat month over month since the beginning of 2026. Year over year, it is still up by about 6%. Goldman Sachs pointed out that the super-inflation phase in 2022 has passed, but prices remain at historical highs. For key transformer input materials, after the sharp rise in the price of oriented silicon steel (GOES) in 2022, it has been basically flat since 2026; copper prices have continued to climb, creating some pressure on the cost side.

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