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Japan's exports rise despite firmer domestic demand, pointing to structural shifts in blenders' requirements
Higher Japanese exports, alongside rising Chinese shipments, add supply to an already well-supplied Asia market
Domestic demand extends rise for third month, underscoring signs of firmer economic activity
Japan’s base oils exports rose to a seven-month high in December, even as domestic consumption extended its rise for a third month – pointing to ongoing structural shifts in the country’s base oils requirements.
Total base oils exports rose to 29,150 kilolitres (26,000 tonnes) in December, climbing by 11% year on year and for a second straight month, Ministry of Economy, Trade and Industry data showed.
Exports had previously fallen for five straight months to October before rising in November.
Domestic demand also extended its recovery, climbing by 5% to 147,000 kilolitres, underscoring signs of firmer economic activity in Japan towards the end of the year.
The simultaneous rise in base oils exports and domestic consumption – against a backdrop of steady output – suggests that Japan’s blenders are increasingly relying on premium-grade base oils from overseas suppliers to meet their growing requirements.
Key Highlights
· Total base oils output held steady at 170,000 kilolitres in December, staying in a narrow range for a third month.
· Exports accounted for 17% of total output, the highest share in seven months despite firmer domestic demand.
· Full-year output extended its long-term slide, dipping below 2 million kilolitres for the first time in more than a decade.
· Full-year domestic consumption fell to 1.63 million kilolitres, down 9% year on year to a four-year low.
· Full-year base oils exports rose to 384,000 kilolitres, rising for the first time in three years despite weaker output and softer domestic demand.
Market Repercussions
Japan’s base oils exports remained historically low in 2025 following the closure of several Group I plants in recent years.
Even so, the recent uptick in overseas shipments, despite low output and firmer demand, points to a continued structural decline in Japan’s Group I base oils consumption.
The increase in exports, alongside rising shipments from emerging exporters like China, added incremental volumes to an already well-supplied Asia base oils market, that is set to get a further boost as several new base oils units start to come online.
