Continued uncertainty in power generation markets
The power generation market remained challenging during the second quarter, as macroeconomic uncertainty and geopolitical developments continued to cause delays in customer decision making. Despite these developments, economic growth in the emerging markets continues to create demand for new power generation capacity. Wärtsilä’s power plant quotation activity improved notably during the second quarter and remained focused on natural gas based generation.
Power Plants market share
During 2013, global orders for natural gas and liquid fuel based power generation (including all prime mover units of over five MW) totalled 73.2 GW, a decrease of 3% compared to 2012 (75.4). Wärtsilä's share represents 3.3% of the market (4.2%). The global market size includes exceptional orders from Algeria, which amounted to 11 GW.
Marine markets active especially within the gas carrier segment
During the first half of 2014, 973 contracts for new vessels were registered, of which 342 came in the second quarter. Overall market volumes were on a higher level than in the previous year, when 749 contracts were reported for the first half. Contracting activity has, however, slowed towards the summer. The ordering of gas carriers (LNG and LPG carriers) was robust with a total of 84 contracts registered during the first half of 2014, compared to 49 in the previous year. Contracting for offshore units remained stable. Newbuilding prices continued to rise, although at a more restrained pace since the slowdown in contracting is putting pressure on prices. Freight rates in the traditional merchant markets weakened during the second quarter, in particular within the tanker and bulker segments. However, freight rates in the LPG carrier segment remained at a strong level.
China and South Korea continued to be the largest shipbuilding countries, capturing respectively 45% and 27% of the contracts confirmed in 2014 in terms of compensated gross tonnage, whereas Japan secured 17%. During the first half of 2014, 124 orders were placed outside these top three shipbuilding countries.
Ship Power market shares
Wärtsilä’s share of the medium-speed main engine market was 52% (51% at the end of the previous quarter). The market share in low-speed engines was 11%, while in the auxiliary engine market Wärtsilä’s share was 2% (9% and 3% respectively at the end of the previous quarter).
Stable development in the service markets
Service market activity during the second quarter was stable compared to the corresponding period in the previous year. The offshore segment developed well, which partly compensated for slightly slower activity in the merchant markets. From a geographical perspective, marine service demand was particularly good in China and South Europe. Power plant service markets were active thanks to good energy production performance in the Middle East, Africa and Southern Europe, particularly France.