Japanese refiners are expected to shut down capacity again as demand in the country is seen to be stagnant. Those refiners faced falling domestic fuel consumption due to the coronavirus pandemic. Meanwhile, in the overseas markets, they face fierce competition from newer refineries in China and South Korea.
On Tuesday, Japan’s second-biggest refiner Idemitsu Kosan reported an annual loss. The company expected fuel sales to decline by 30% in the fiscal year through March 2021. JXTG Holdings, Japan’s biggest refiner, said that it might consider refining consolidation to reflect weakening demand. The producer has already decided to shut refineries in Osaka and Hokkaido.
In 1982, Japan’s refining capacity reached a peak of 5.6 million bpd. However, it has fallen to 3.4 million bpd recently in mostly ageing refineries. The industry ministry estimated that Japan’s refining capacity could decline further to 2.3 million bpd by the end of the 2020s.
