The transformer is a device that uses the principle of electromagnetic induction to change the AC voltage. The main components are the primary coil, the secondary coil, and the iron core. The iron core is the main magnetic circuit part in the transformer. It is usually formed by stacking hot-rolled or cold-rolled silicon steel sheets with high silicon content and coated with insulating paint on the surface. The iron core and the coil wound on it form a complete electromagnetic induction system.

Transformers are industries with heavy materials and light industry. For general power transformers, material costs may account for 70%-80% or more of the final cost price of the entire product. The larger the transformer capacity, the higher the proportion of material costs. Among them, electromagnetic wire, silicon steel sheet and transformer oil account for the largest proportion.

In recent years, with the development of China's power business and the reform and construction of power transmission and distribution business, the scale of transformer production and sales has been increasing. In 2009, my country's transformer output was about 1.265 billion KVA, and by 2019 it will increase to about 1.768 billion KVA.

With the continuous growth of China's transformer sales revenue, the domestic transformer iron core industry demand market size has also shown an increasing trend. The transformer iron core industry market size has increased from 76.44 billion yuan in 2012 to 116.3 billion yuan in 2019.

Silicon steel sheet is the main raw material of the transformer. The rise of silicon steel sheet has a great impact on the transformer companies that are in urgent need of purchasing raw materials after receiving orders in large quantities. The rise in silicon steel sheet prices is mainly affected by the acceleration of China's power grid construction and the increase in transformer demand. In recent years, the price fluctuation of China's transformer core has been relatively small, and the mainstream is between 12,000 and 15,000 yuan/ton.

In 2014, China's transformer core industry demanded about 5.791 million tons, and by 2019 China's transformer core industry demand reached 8.444 million tons.