Japan’s Jan base oils/lube demand slips

Japan’s base oils and lube consumption fell to a five-month low in January as a sustained drop in industrial oils demand countered steadier consumption of passenger car motor oils (PCMO).

The diverging demand dynamics extended a trend throughout the second half of last year and mirrored Japan’s weakening industrial production and firmer services activity.

Lube demand in other regional markets like Thailand showed a similar pattern.

The trend is likely to extend into the coming months as manufacturing activity continues to face sustained pressure in the face of slowing global economic growth.

Services activity is likely to get further support from a pick-up in Chinese tourist numbers in the Asia-Pacific region following China’s scrapping of its zero-Covid policy late last year.

Japan’s base oils and lube consumption fell to less than 134,000 kilolitres (118,600t) in January, government data showed.

The volume fell from almost 145,000kl in December to a five-month low.

Consumption fell as slowing manufacturing activity cut industrial oils consumption.

Japan’s automobile production fell in December for the first time in five months.

Slowing auto production was a key factor behind a steep contraction in the country’s industrial production in January.

Consumption of heavy-duty engine oils (HDEO) fell in December for a ninth month. Demand for non-automobile oils fell for the twelfth time in thirteen months.

Japan's PCMO consumption also fell in December. But the 0.3pc drop in demand was small and followed strong growth through the previous four months.

The firmer demand mirrored ongoing growth in Japan’s retail and services sectors, as well as a rebounding number of overseas tourists to Japan.

Those factors were likely to continue to support PCMO demand over the coming months.

The rebound in tourists from Asia during the final months of last year mostly reflected rising numbers from countries like South Korea, Taiwan, Singapore and Thailand.

The number of tourists from China also rose at the end of last year.

Even so, the number was still less than 5pc of the total number of visitors from China in December 2019, before the Covid-19 pandemic began.