• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 7 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 5 days Does Toyota Know Something That We Don’t?
  • 5 days World could get rid of Putin and Russia but nobody is bold enough
  • 17 hours America should go after China but it should be done in a wise way.
  • 7 days China is using Chinese Names of Cities on their Border with Russia.
  • 8 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 8 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 8 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 7 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 8 days Putin and Xi Bet on the Global South
  • 8 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 9 days United States LNG Exports Reach Third Place
  • 9 days Biden's $2 trillion Plan for Insfrastructure and Jobs

Japan Oil Refiners Fear Chinese Rivals Will Squeeze Them Out

Japanese oil refiners are worrying that China’s new fuel standards that are driving higher output will ultimately result in a deadly loss of market share for the Japanese firms.

Bloomberg reports that the Japanese Trade Ministry has called in a task force including around twenty “top oil experts” to find a way out of the situation, which seems to be getting worse by the day.

Japanese refiners were having a rough ride even before oil prices started sliding in 2014, as domestic demand waned. Now their market share abroad, in the larger Asian market, is being threatened by abundant and higher-quality fuels churned out by Chinese refineries. In fact, there is fear that Japanese refiners will be entirely displaced from the Asian fuel market unless the task force comes up with a sensible strategy.

The task of the oil experts is a challenging one. To be able to compete on the regional market, local refiners would need sufficient production capacity. Yet the five biggest refiners in Japan last month announced that they will cut processing capacity by 10 percent – over 350,000 bpd – by the end of March, in response to government regulations concerning the decline in local demand for fuels.

There are 23 refineries in Japan, with a combined processing capacity of 3.92 million bpd. Demand, however, is steadily declining at a rate of 1-2 percent annually, because of an aging population and the growing popularity of hybrid vehicles.

These trends prompted the Trade Ministry to introduce new efficiency regulations for refiners back in 2009, which resulted in the shutdown of five refineries and a capacity reduction of 900,000 bpd.

Related: OPEC Favors Production Cut Extensions As Next Meeting Nears

Foreign markets have become vital for Japanese refiners and until recently, competition from Chinese peers was not a big problem: Chinese fuels had lower quality. But in January of this year, Beijing introduced new rules limiting the amount of sulfur in fuels as part of efforts to tackle pollution. The side effect of these efforts is that Chinese gasoline has become more competitive to the disadvantage of Japanese refiners.

By Irina Slav for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News