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April 27, 2018

Volume 7 Issue 3

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Japan’s Base Oil Exports Dropped in 2017

Japan’s base oil export volumes plunged 24 percent last year as production and domestic sales fell and imports continued to increase, according to initial figures released by the country’s Ministry of Economy, Trade and Industry.

Japan exported 720,000 metric tons of base oils last year. Production fell 12 percent to less than 2 million tons, and domestic sales dropped slightly by 1 percent to 1.3 million tons. Imports increased 8 percent to 156,000 tons.

“There was a huge increase in cost of production, and we did not increase the price of lubricants. As a result, the margin for lubricant manufacturers plunged, and we were in a dire situation,” said Muto Eisuke, chairman of Japan Lubricating Oil Society, in an address to members earlier this year.

“The domestic demand for lubricants, with automotive lubricants having a 40 percent market share, will continue its downward trend in the long term. When we look at the figures, domestic demand is expected to fall about 3 percent per year for the next five to six years,” he added.

Analysts say Japanese base oil production and exports were both impacted by a fire that shut a JXTG Holdings plant in Wakayama for most of last year. The plant, which has capacity to make 360,000 tons per year of API Group I base stocks, reopened last month after being closed since January 2017.

This month, Japan Automobile Manufacturers Association released its forecast for domestic demand for passenger cars and commercial vehicles for the fiscal year ending March 31, projecting demand will increase 2.2 percent to 5.19 million units.

For next year, the association forecasts demand for passenger cars and commercial vehicles to drop 0.3 percent to 5.18 million units. “I think this year will be a challenging year of structural slowdown, and not an economic cycle,” said Muto.