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Market development

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Steady development in the service markets

Service market activity during the first half of 2018 was in line with the corresponding period of the previous year. In the marine service markets, activity in the cruise and ferry segment was at a healthy level and offshore service activity remained stable. Customers in the merchant segment continued to limit their spending to essential repairs and maintenance. The demand for environmental retrofit projects has increased notably, as the entry into force of the global sulphur regulations approaches. The demand for power plant related services continued to be steady.

Power generation markets shifting towards smart and flexible technologies

The continued decline in renewable energy prices has made solar and wind power more affordable in many markets, and utilities are assessing how to integrate such energy sources into their asset base. The USA, Australia and Middle East countries, where market conditions are the most favourable, are leading this transition. The growing share of renewables increases the need for flexible power generation and storage solutions. In addition to flexible capacity, demand remains strong for new baseload capacity to support economic growth and alleviate power shortages in the emerging markets.

Energy Solutions’ market share

For the twelve months period ending in March, the increased demand for Wärtsilä’s energy solutions supported market share growth, despite declining global power plant investments in the <500 MW market segment. Wärtsilä’s market share increased to 21% (19), while global orders for natural gas and liquid fuel power plants of up to 500 MW decreased by 10% to 18.1 GW (20.1). Global orders include all gas turbine and Wärtsilä orders with prime movers over 5 MW in size.

Gradual recovery in marine markets with improved demand for environmental solutions

During the first half of 2018, 472 contracts for new vessels were registered (376). Market conditions in the merchant segment were stable, supported by continued momentum in the global economy. In the gas carrier sector, contracting remained healthy with good prospects. Overcapacity is limiting newbuild investments in the offshore industry, despite signs of improved sentiment in offshore production. Activity in the cruise and ferry markets continued to be at a high level. In recent months, exhaust gas cleaning business volumes have been growing across all market segments, as ship owners are increasingly opting to install scrubbers on newbuilds to comply with the upcoming sulphur cap in 2020.

In terms of compensated gross tonnage, South Korea and China remain the largest shipbuilding nations with 40% and 35% of all confirmed contracts respectively. Japan accounted for 12% and Germany for 4% of the global total.

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