Energy Project Realization Rates Down

Energy Project Realization Rates Down

Demand for breakbulk transport in global energy markets is expected to trend down in the fourth quarter, according to the latest research from market intelligence firm Industrial Info Resources.

The findings point to a fall in realization rates, measuring the percentage of projects moving into construction in the quarter, with a decline to 32 percent, down from 34 percent in the same period last year.

“Industrial Info's indicator ... shows downward movement in terms of the percentage of realization of projects moving into construction. On a global scale, industry sectors that showed significant positive movement include oil and gas terminals and production, up $65.3 billion … solar energy, up $43.98 billion, and wind energy, up $75.79 billion,” a spokesperson for IIR said.


China, Europe Decline

China is responsible for some of the steepest declines in project executions as, the country’s economy continues to struggle. China’s third-quarter GDP sat at 6.5 percent, its worst pace since the financial crisis.

As a result, project realization rates have fallen to 37.2 percent, with pipeline value this year expected to come in at US$390 billion. This is down compared to 41.1 percent in the fourth-quarter 2017, equivalent to US$22.3 billion.

Northern Europe will also face a shortfall this year with project realization across the U.K., Ireland, Sweden, Finland, Norway and Denmark, dropping by more than US$30 billion this year, largely due to EDF Energy's Hinkley Point Nuclear Power Station project increasing the baseline last year.


North America Breakbulk Grows

The global picture is in contrast to industrial projects in North America, which remains buoyant, lifted by strong growth in September, according to IIR, driving a wave of breakbulk demand for new construction.

The IIR North American Industrial Project Spending Index, reported the value of active projects in the pipeline was up more than 12.3 percent in September compared with the same period the previous year.

“Large gains were seen in the Industrial Manufacturing and Metals & Minerals industries … with eight of the 12 tracked industries showing increases,” a spokesperson for IIR said.

Photo: Construction workers. Credit: Wikimedia