Power generation market sentiment improving
Power generation markets closely follow macroeconomic development, both locally and globally. While slow global growth projections continue to impact investments in new power generation capacity, economic growth in the emerging markets supported the demand for new power plants. Furthermore, electricity consumption has started to grow in certain regions in the USA, which is generating demand for gas fuelled power plants. The strong US dollar supported the competitiveness of euro-based suppliers. Wärtsilä’s quotation activity was on a high level during the first quarter of 2015 and remained focused on multi-fuel and natural gas based power plants.
Power Plants market share
During 2014, global orders for natural gas and liquid fuel power plants of up to 500 MW totalled 23.4 GW, a decrease of 27% compared to 2013 (32.1). Wärtsilä’s market share grew to 11% (8%). Global orders include all prime mover units of over five MW.
Weaker activity in the marine markets
During the first quarter of 2015, 222 contracts for new vessels were registered. This represents a decline in contracting activity of approximately 58% compared to the 523 contracts reported in the corresponding period for 2014. The low market volumes continue to put pressure on newbuilding prices. In the conventional merchant segment, activity in the dry bulk markets subsided, while increased earnings supported the contracting of crude oil tankers. Interest in gas carrier contracting (LNG and LPG) continues, although first quarter volumes were lower than in the very active 2014. A total of 23 (43) gas carriers were contracted during the first quarter. Demand for offshore vessels remained subdued as uncertainties around oil price recovery drove oil company spending cuts. First quarter offshore contracting favoured support vessels.
The top three shipbuilding countries continued to control contracting activity in terms of compensated gross tonnage. South Korea’s share of confirmed contracts increased to 38%, mainly due to the large volume of orders for containerships, tankers and LNG carriers placed with South Korean yards. China secured 29% of the confirmed contracts, whereas Japan’s share was 26%.
Ship Power market shares
Wärtsilä’s share of the medium-speed main engine market was 56% (52% at the end of the previous quarter). The market share in auxiliary engines was 4% (3% at the end of the previous quarter).
Good activity in the service markets
The service market developed well during the first quarter of 2015. Power plant service demand was buoyant globally due mainly to the active operation of installations, with particularly favourable development in Brazil. Increased demand in the merchant and navy segments contributed to a good level of activity in the marine markets. Although merchant customers continue to focus on optimising maintenance expenditure, the decline in oil prices and the resulting lower fuel costs have positively impacted service volumes. From a regional perspective, marine service activities developed especially well in the USA, Canada and Norway.