The global power transformer market is currently experiencing a severe supply-demand imbalance: driven by data center expansion and grid modernization, demand is surging in the US and Europe, but domestic manufacturing capacity is limited, extending the delivery cycle for large units to 18-30 months. Against this backdrop, Chinese exporters with more flexible supply chains are presented with a significant development opportunity.
1. US Capacity Expansion Lags Behind Demand Growth
New Project Updates: In Q1 2026, GE Vernova announced a $200 million investment to expand its Haiphong, Vietnam plant; Siemens Energy finalized a $421 million investment in its North Carolina plant.
Impact of Supply-Demand Gap: Based on Siemens Energy's expansion plans, we expect US transformer capacity to grow by only 2%-4% in 2027-2028; while our US team has revised upwards its forecast for new power demand from data centers (see report link), which we estimate will drive transformer demand growth by 9%-12%. This lag in capacity expansion behind demand growth creates more opportunities for non-traditional suppliers such as South Korea, Brazil, Turkey, and China.
2. Price Trends: Continued Rise
China's Export Prices to the US: Data from January-February 2026 shows that the average selling price of Chinese transformers exported to the US increased by 6% year-on-year. The 220-330 MVA category performed strongly, with the three-month rolling average price from December to February increasing by 53% year-on-year (see Figure 3).
US Domestic Prices: In December 2025, the US power transformer producer price index continued to rise slightly, remaining stable so far in 2026. Although the high inflation period of 2022 has passed, prices remain at historically high levels (see Figure 4).
3. Export Momentum: Accelerated Growth
Export Value Surge: In January-February 2026, the year-on-year growth rate of China's transformer exports with a power output greater than 10 MVA rose to 61%, significantly higher than the already strong 51% in 2025 (see Figure 10).
US Market Access: Chinese customs data shows that in January-February 2026, China's power transformer exports to the US increased by 182% year-on-year. Currently, China accounts for about 4% of the US market demand, while the total import dependence of US power transformers is about 72%—we originally expected this proportion to narrow to 57% by 2028, but have now revised it upward to about 60%.
Figure 1: Key Findings – We originally projected the US power transformer supply-demand gap to narrow from 72% to 57% by 2028, but have now revised this upward to approximately 60%; domestic prices rose slightly, while the average year-on-year increase in China's export prices for 220-330 MVA transformers from December to February was 53%.
Transformer Price Trend Analysis
Although the sharp price increase phase of 2022 has passed, prices continue to rise slightly: In January-February 2026, the average selling price of transformers exported from China to the US increased by 6% year-on-year, while it decreased by 29% year-on-year for the whole of 2025 (possibly due to changes in product structure under a low base). The price of 10-220 MVA transformers decreased by 14% year-on-year in January-February, but this figure is significantly affected by product structure – this category covers a wide range, and the export share of low-capacity transformers may have been higher in the past two months. The 220-330 MVA category performed strongly, with the average price surging by 190% year-on-year in January-February, and the three-month rolling average price increasing by 53% year-on-year in December-February. In the US market, the Producer Price Index (PPI, reflecting domestic production prices) for power and specialized transformers had more than doubled by the end of 2025 compared to 2020. Prices rose slightly further in December 2025, and have remained flat month-on-month since the beginning of 2026 (up 6% year-on-year as of February), indicating the end of the steep price increase phase. The price increase of power transformers preceded that of switchgear and turbines, possibly because the increased penetration of renewable energy in 2022-2023 had already triggered grid bottlenecks; currently, switchgear prices are gradually converging with transformer prices. Among the key raw materials for transformers, grain-oriented electrical steel (GOES) saw price increases as early as 2022, but prices have remained relatively stable since 2026; the price of another key raw material, copper, has seen a more significant increase.
Figure 2: The average export price of 10-220 MVA products to the US is significantly affected by fluctuations in product structure, showing relatively unstable performance.
Figure 3: The average export price of 220-330 MVA products to the US shows an upward trend, with a 53% year-on-year increase in the three-month rolling average from December to February.
Figure 4: After a slight increase at the end of 2025, the US transformer producer price index has remained relatively stable month-on-month, and is currently up 6% year-on-year. The steep price increase phase of 2022 has passed.
Figure 5: Compared with switchgear, turbines, and general electrical equipment, the US power transformer producer price index has shown a relatively stable trend.
Global Corporate Capacity Expansion Plans
Tracking global corporate transformer capacity expansion plans reveals that most Western companies' new capacity will be released in 2027-2028 and beyond: Recently (March 10th), GE Vernova announced plans to build a transformer factory in Haiphong, Vietnam, with a total investment of $200 million, primarily serving ultra-high voltage direct current (UHVDC) transmission projects. The company expects the factory to be operational in 2028.
Earlier, in early February, Siemens Energy announced plans to invest $1 billion to expand its gas turbine and grid technology-related factories in several US states, with $421 million allocated to its North Carolina factory to increase large power transformer capacity—which, according to our calculations, will drive a 2%-4% increase in US domestic transformer capacity in 2027-2028.
Another recent development shows that LS Electric's second UHVDC power transformer factory was completed and put into operation in December 2025. Meanwhile, our US team had already raised its forecast for increased power demand from data centers as early as February (see report link for details). Our calculations indicate that this demand will drive transformer demand growth by 9%-12% in 2027-2028.
Capacity expansion lagging behind demand growth creates more market opportunities for non-traditional suppliers such as South Korea, Brazil, Turkey, and China.
China's Transformer Exports: In January and February 2026, China's transformer exports continued their strong growth momentum, with exports to the US showing particularly strong year-to-date (YTD) performance. Among them, exports of Chinese transformers with a power output greater than 10 MVA reached RMB 4.4 billion, representing a year-on-year increase of 61% in January and February, further accelerating the growth rate compared to 52% in 2025 (total export value of RMB 22.5 billion for the year).
In terms of export value composition, the growth rates by region are as follows:
Middle East: 32% year-on-year growth, contributing 34% of export value;
Asia: 151% year-on-year growth, contributing 26% of export value;
Europe: 36% year-on-year growth, contributing 21% of export value;
The Americas: 45% year-on-year growth, contributing 14% of export value;
Africa: 344% year-on-year growth, contributing 6% of export value.
Of particular note is that China's transformer exports to the US increased by 182% year-on-year in January-February 2026, significantly higher than the 48% growth rate in 2025. By capacity, small-capacity transformers (10-220 MVA) accounted for 59% of exports to the US, 220-330 MVA accounted for 20%, and those above 330 MVA accounted for the remaining 20%.
Transformers remain the category with the strongest export growth, while the combined export growth of smart meters and switchgear in January and February was relatively moderate, at 10% and 29% respectively.
