Challenging environment in the power generation markets
Power generation markets closely follow macroeconomic development, both locally and globally. Despite expectations of growth, continued economic stagnation has dampened investments in new power generation capacity in the industrialised countries. Growth in the emerging markets, although slower than projected, remained supportive of power plant investments. Wärtsilä’s quotation activity was good during the second quarter and remained focused on multi-fuel and natural gas based power plants.
Energy Solutions market share
During the first quarter of 2015, global orders for natural gas and liquid fuel power plants of up to 500 MW totalled 4.7 GW (6.5), a decrease of 28% compared to the corresponding period in 2014. In a challenging market environment, Wärtsilä’s market share increased to 15% (6). Global orders include all gas turbine and Wärtsilä orders of over 5 MW.
Contracting volumes remain low
During the first half of 2015, 458 contracts for new vessels were registered. This represents a decline of approximately 53% compared to the 973 contracts reported in the corresponding period for 2014. Newbuilding prices softened further during the second quarter, as a result of the low contracting volumes. Contracting activity was particularly weak in the dry bulk and offshore segments. Oil prices recovered somewhat during the second quarter, yet the offshore markets remain challenging and oil companies continue to focus on cutting costs. Current oil price levels and improved earnings supported crude tanker contracting. Gas carrier contracting (LNG and LPG) declined compared to the very active 2014, with a total of 36 (84) gas carriers ordered during the first half of 2015. The ordering of cruise and ferry vessels was active.
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 42%, mainly due to the orders placed for containerships, tankers, and LNG carriers at South Korean yards. China secured 23% of the confirmed contracts, whereas Japan’s share was 20%.
Marine Solutions market shares
Wärtsilä’s share of the medium-speed main engine market was 59% (56% at the end of the previous quarter). The market share in auxiliary engines was 5% (4% at the end of the previous quarter).
Good activity in the Services markets
Service market activity continued to develop well throughout the second quarter. In the marine markets, low fuel costs have had a positive impact on customers’ operating costs and the demand for service projects continued. Service activity was strongest in the merchant segment and, from a regional perspective, in Northern Europe. Power plant service markets improved somewhat, with especially good development in Africa.