Competition in the power generation markets is increasing
Macroeconomic uncertainty continued to affect the demand for new power generation capacity in the third quarter. There are a good number of prospects in the market, but investment decisions are being made slowly and many are being postponed. Excess capacity resulting from low demand in the marine industry is causing engine manufacturers specialising in that sector to enter the power plant markets, thus resulting in increased competition and price pressure. From a geographical perspective, the signals are mixed. Emerging market growth continues to create projects, while in the industrialised world, sustainable economic growth is needed in order to recover power plant investments. Wärtsilä’s quotation activity developed well during the third quarter and remained focused on multi-fuel and natural gas based power plants.
Energy Solutions market share
During the first half of 2015, global orders for natural gas and liquid fuel power plants of up to 500 MW totalled 12.6 GW (10.6), an increase of 19% from a low basis in the corresponding period of 2014. Wärtsilä’s market share remained stable at 10% (10). Global orders include all gas turbine and Wärtsilä orders of over 5 MW.
Contracting volumes remain low
During the period January-September 2015, 930 contracts for new vessels were registered (1,395), of which 319 came in the third quarter (272). The low demand for new vessels continued to put pressure on newbuilding prices. Contracting activity in the conventional merchant markets was slow, with orders for tankers and container vessels being the most prominent. Gas carrier contracting remained below the strong volumes seen in 2014, with a total of 61 LNG and LPG carrier contracts registered year to date (132). Depressed oil prices continued to limit demand in the offshore markets. Contracting in the cruise & ferry segment remained on a good level, with 21 vessels ordered thus far this year (25).
The top three shipbuilding countries continued to control contracting activity in terms of compensated gross tonnage. South Korea and China secured 35% and 26% respectively of all confirmed contracts. Japan’s share of the confirmed contracts improved to 26%, thanks to increased domestic ordering activity.
Marine Solutions market shares
Wärtsilä’s share of the medium-speed main engine market was 63% (59% at the end of the previous quarter). The market share in auxiliary engines increased to 9% (5% at the end of the previous quarter), thanks to the increasing use of the Wärtsilä 34DF engines for auxiliary applications in the LNG carrier segment.
Service market activity developing well
Service market activity remained strong during the third quarter, with demand improving from the previous year’s good levels. Activity in both end markets favoured investments in maintenance service. In the marine markets, performance was strongest in the merchant segment. Demand from merchant customers developed particularly well in South Europe. Power plant service demand was stable, with good development in Asia.