Continued uncertainty in power generation markets
The market situation remained challenging during the third quarter, as macro-economic uncertainty and slow global growth projections continued to impact investments in new power generation capacity. Nevertheless, economic growth in the emerging markets has supported the demand for new power plants. Furthermore, positive signals can be seen in the USA, as a result of economic growth in certain regions and the dollar strengthening against the euro during the last six months. Wärtsilä’s power plant quotation activity remained at a high level during the third quarter and was focused on natural gas based power generation.
Power Plants market share
During the first half of 2014, global orders for natural gas and liquid fuel power plants (including all prime mover units of over five MW) totalled 23.4 GW (18.8), an increase of 24.4% compared to the corresponding period last year. Wärtsilä's market share was 4.3% (5.8%). In Wärtsilä’s main market, i.e. the market for installations of up to 500 MW, orders totalled 10.6 GW (12.7) and Wärtsilä’s market share was 9.4% (8.6%).
Contracting activity focused on specialised vessel segments
During the period January-September 2014, 1,395 contracts for new vessels were registered (1,341), of which 272 were in the third quarter (396). Newbuilding prices are under pressure due to current market volumes. In the traditional merchant markets, contracting activity was slow and freight rates remained weak. The ordering of gas carriers (LNG and LPG carriers), on the other hand, was robust and LPG freight rates in particular were at a high level. Thus far in 2014, a total of 132 gas carrier contracts have been registered, compared to 116 in the previous year. The demand for offshore vessels is lower than in 2013, with third quarter contracting activity at a similar level to that seen in the previous quarter.
China and South Korea remained the largest shipbuilding countries, capturing respectively 43% and 27% of the contracts confirmed in 2014 in terms of compensated gross tonnage, whereas Japan secured 19%. During the period January-September, 180 orders were placed from other than these top three shipbuilding countries.
Ship Power market shares
Wärtsilä’s share of the medium-speed main engine market was 51% (52% at the end of the previous quarter). The market share in auxiliary engines was 2% (2% at the end of the previous quarter).
Good development in the service markets
Service market activity developed well during the third quarter. Demand in the marine industry was strong, supported by good development in the cruise segment. From a regional perspective, customer interest in service projects boosted marine service activity in Europe and the Americas. The demand for power plant related services was healthy and increased slightly compared to the corresponding period last year. Brazil especially developed favourably, as did the industrial and mining segments globally.