Forecast: Japanese Demand Will Slip

The Petroleum Association of Japan forecast that lubricant demand in Japan will drop by 1.1 percent this year to 1.35 million metric tons, with consumption of automotive and industrial lubes both declining.

Due to a decrease in demand for light-duty vehicles, demand for automotive lubricants will fall 0.3 per cent to 517,000 tons, the association predicted. Demand for industrial lubricants for 2015 is expected to shrink 1.4 per cent to 736,000 tons.

Although the industrial sector as a whole is recovering, there is only a limited influence on demand for industrial oil, partly due to rationalization, the PAJ said in its mid-year report.

For the shipping sector, volume of domestic cargo is expected to fall, leading marine lubricant demand to decrease 1.1 per cent to 80,000 tons for 2015.

The report said total lubricant consumption fell 0.7 percent in 2014. Industrial lubricant consumption decreased 2.3 per cent to 747,000 tons due to a drop in personal consumption after a consumption tax hike. Marine lubricant demand fell 2.2 per cent to 81,000 tons due to a decrease in the number of ships and personal consumption, leading to less domestic cargo transportation for 2014.

Despite the fact that automotive lubricant consumption has fallen for three straight years, an increase in automotive purchases before the consumption tax hike and an increase in diesel engine automotive exports caused an increase in demand for this segment in 2014.