Our operating environment
Demand for our products, services and solutions is driven by the following megatrends:
In the longer term the megatrends support the investment growth of all of Metso's core industries. our good positioning within all of our customer industries provides attractive opportunities for us. In addition, the increasing focus on sustainability generates new types of demand from our customers.
Flow Control in Oil and Gas
In Oil and Gas, the low oil price environment has been putting pressure on customers. Spending discipline and cost cutting continued to be seen during the year, resulting in an increasing number of projects being cancelled or put on hold, as well as rising pricing pressure on equipment suppliers. In non-OPEC countries, particularly the U.S., upstream investment and activity levels were sharply scaled back from the peak. Production levels and mid-/downstream activity remained healthy. Downstream activity was boosted as Oil and Gas downstream players benefited from low feedstock prices, although the advantage started to erode. The trend to move towards higher value adding downstream business can be seen in the traditional crude exporting region of the Middle East, with aggressive refinery capacity build-up.
Flow Control in Pulp and Paper
Pulp and Paper flow control activity level remained healthy with some signs of cooling down. Nevertheless, investments in the pulp market still remain good.
Weak metal prices impacted the mining sector globally, as mining companies were forced to focus on protecting their cash flows, reducing costs and improving operational efficiency. Capital investments from major miners continued to drop. Production volumes remained at good level, yet demand for services softened due to miners cost-saving actions and mining site closures.
In Aggregates, the equipment market was impacted by a slow down in China, APAC and Latin America. Market demand in North America and Europe was relatively better. The industry saw consolidation among key aggregates producers.
In Recycling, low scrap prices mirroring the decline of iron ore prices have weakened the operating environment.