Japans economy grew fairly steadily for the past four years, and many hope it will stay on that track under Prime Minister Shinzo Abes economic policies, dubbed Abenomics. Even so, the countrys leading lubricant suppliers are looking to overseas markets for growth opportunities.
Japan is one of the worlds five largest lubricant markets, with demand of 1.7 million metric tons in 2012, according to Kline & Co. consultants. Theoretically the domestic economy should offer some opportunity for growth, since gross domestic product grew in 10 out of 15 quarters from the start of 2010 through the third quarter of 2013, according to government statistics. But not everything is rosy. Japans yen has lost significant value, declining 25 percent against the U.S. dollar during the past year.
That makes it more expensive for Japanese businesses and consumers to buy foreign goods, but it also lowers the cost of Japanese goods sold abroad. It makes sense, then, that Japanese lubricant suppliers would try to increase sales abroad.
Idemitsu Kosan is the second biggest player in the Japanese market, with a 22 percent share of domestic lubricant sales in 2012, according to Kline. Idemitsu is based in Tokyo, and its lubricant business is part of the companys functional materials directorate, which also controls chemicals and agri-bio products. This directorate accounted for approximately 10 percent of Idemitsus operating income in 2009.
Under a new strategic plan, however, the directorate aims to generate 25 percent of the companys operating income by 2015. This forecast further indicates that nearly 85 percent of the new operating income will come from an increase in lubricant sales volumes. Idemitsu forecasts much of this growth will come from its overseas footprint in Asia with plants in China, Taiwan, Thailand, Malaysia and Vietnam.
JX Nippon Oil & Energy, the leader in Japans lube market, is also working to bolster overseas sales. In March 2013, JX released a report listing four principal corporate strategies. One will be establishing a presence in overseas markets. We will seek to grow our presence in overseas markets by expanding our manufacturing and sales systems for basic chemicals and lubricants, which will include partnerships with overseas companies, primarily in Asia where robust growth is expected.
JX Nippon Oil has 32 percent of Japans lubricant market, according to Kline. After second place Idemitsu Kosan, the next-biggest suppliers are ExxonMobil, with 16 percent of the market, Showa Shell, with 9 percent, and Cosmo Oil, with 8 percent.
A host of smaller companies fill specific niches. Japan Sun Oil Co., for example, a subsidiary of Sunoco, made a place for itself with high-end automotive lubes and refrigeration oils.