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Market development

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Steady development in the service markets

Service market activity during the first quarter of 2018 was in line with the previous year. In the marine markets, continued momentum in the cruise segment compensated for lower service demand from merchant customers and steady activity in offshore. The demand for scrubber retrofit projects improved, as customers prepare themselves for compliance with the approaching global sulphur regulations. In the energy markets, service activity remained on last year’s level.

Power generation markets shifting towards smart and flexible technologies

The demand for Wärtsilä’s energy solutions was solid in the first quarter of 2018. The need for flexible power capacity and smart solutions is growing, as solar and wind become increasingly cost competitive and utilities assess how to integrate such energy sources into their asset base. These trends are particularly noticeable in the USA and Australia. In the emerging markets, countries continue to invest in new power generation capacity to support economic growth and to alleviate power shortages.

Energy Solutions’ market share

The strong demand for Wärtsilä’s energy solutions in 2017 supported market share growth, despite declining global power plant investments in the up to 500 MW market segment. Wärtsilä’s market share increased to 19% (15), while global orders for natural gas and liquid fuel power plants of up to 500 MW decreased by 20% to 20.1 GW for the twelve months ending in December (25.2 at the end of September). Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size.

Solid activity in the marine markets

During the first quarter of 2018, 192 contracts for new vessels were registered (231, including late contracting). Market conditions in the merchant segment have improved along with economic growth and growth in seaborne trade. The contracting of LNG carriers was healthy, thanks to growing demand for LNG in the emerging markets and increasing exports from the USA and Australia. High earnings supported continued activity in the cruise and ferry segment. Cruise customers are showing increased interest in expedition vessels, while ageing fleets are creating replacement demand in the ferry segment. Despite some signs of improving sentiment in offshore production, the investment appetite in the overall offshore industry remains limited. Planned regulatory developments are driving demand for environmental solutions in the newbuild markets.

In terms of compensated gross tonnage, South Korea and China remain the largest shipbuilding nations with 42% and 31% of all confirmed contracts respectively. Japan and Germany accounted for 13% and 6% of the global total.

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