Japan’s Dec lube demand mixed

Japan’s base oils and lubricants consumption held steady in December as firm activity in the services sector countered an increasingly sharp slowdown in industrial activity.

Falling demand for industrial oils and firm consumption of passenger car engine oils (PCMO) reflected that trend.

The dynamic is likely to continue over the coming months, cushioning any slowdown in domestic lubricants consumption.

Japan’s base oils and lube demand of 144,820 kilolitres (128,280t) in December edged down from 155,360kl the previous month, government data showed.

The slowdown was typical for the time of year.

Consumption rose for a fifth month from year-earlier levels, when Covid-19 restrictions continued to impact demand.

The rebound in demand since the second quarter of last year lifted total consumption to 1.75mn kl in 2022. The volume rose by 19pc from 1.47mn kl in 2021 to the highest in more than a decade.

Firm lube demand in recent months increasingly reflected strong consumption of PCMO.

The product is seen as more reflective of the state of the services sector, which continued to grow in the final months of last year.

Japan’s retail sales rose in December for a tenth month. The country’s services purchasing managers’ index (PMI) for January pointed to expansion for a fifth straight month.

The services sector is likely to get further support from an ongoing revival in tourist numbers over the coming months.

The recovery in overseas tourist numbers to Japan during the final months of last year mostly reflected a rise in visitors from South Korea and southeast Asia.

The recovery is set to get a further boost over the coming months following China’s scrapping of its zero-Covid policy and related travel restrictions.

Tourists from China accounted for 3pc of the total number of visitors to Japan from Asia in November. They accounted for more than 35pc of the total in 2019, before the Covid-19 pandemic struck.

Sales of heavy-duty engine oils (HDEO) and industrial oils faced continued pressure. The trend mirrored the slowdown in industrial production in November and December.

The country’s manufacturing PMI pointed to contraction in January for a third straight month, suggesting ongoing pressure for industry-related lubricants.