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Japan has imported less so far in the current fiscal year, down
21% year-on-year. Imports in the first half of the fiscal year
dropped to 2.34 million b/d. This is the lowest since 1979.
Implications
Trade flows from Saudi Arabia to Japan have been stable since
August, having been close to 1.2 million b/d. Imports of UAE
barrels have been following an upward trend since August.
Meanwhile, both imports and shipments to Kuwait seem to be
increasing this month. Flows between the two countries have been
underperforming earlier this year. Kuwait's exports of natural
resources including oil and gas to Japan have dived by more than
42% since April.
Outlook
The fall in Japanese refinery runs continues with levels fallen
to an average close to 63% in mid-October. Kerosene stocks still
stand close to the highest levels ever recorded since December
2015, with most to be used for heating fuel as the winter
approaches. Demand for jet fuel will most probably remain low as
local airlines will reduce scheduled international flights by
January 2021 compared to the previous year.
...
Japan has been importing significantly less this current fiscal
year, with most recent customs data suggesting imports between
April and September 2020 have dropped 21% year-on-year. Imports in
the first half of the fiscal year dropped to 2.34 million b/d. This
is the lowest since 1979, when the data was first made available,
according to officials of the country's Ministry of Finance. The
COVID-19 pandemic has been shaping Japan's demand for fuel, as
millions continue working from home and international movements are
mostly avoided. Most recent data by IHS Markit Commodities at Sea
suggests this month's imports are increasing since September,
currently standing close to 2.5 million b/d. This could be the
first month in this fiscal year with a year-on-year growth to
report.
Crude oil imports to Japan by Country of origin, in
(b/d)
Trade flows from Saudi Arabia to Japan have been stable since
August, having been close to 1.2 million b/d. Imports of UAE
barrels have been following an upward trend since August, which
isn't expected to last for long, based on most recent shipments.
Cargoes lifted from the Emirates and heading to Japan have halved
so far in October, having remained below 315,000 b/d. Meanwhile,
both imports and shipments to Kuwait seem to be increasing this
month. This is rather interesting, especially as the trade between
the two countries has been underperforming since earlier this year.
This has resulted in Kuwait's trade surplus with Japan having
plunged almost 55% from a year earlier, to just USD 218 million in
September. Kuwait's exports of natural resources including oil and
gas to Japan have dived by more than 42% in the same period.
Moving to Japanese refinery runs, the fall has continued with
levels fallen to an average close to 63% in mid-October, according
to Petroleum Association of Japan data. The country's kerosene
stocks have only marginally declined, down by just 0.6% in the last
week to 18.59 million barrels. However, stocks still stand close to
the highest levels ever recorded since December 2015, when they
were 18.61 million barrels. Kerosene production has increased to
181,000 b/d. The plan is probably to both produce and stock up more
kerosene for heating fuel as the winter approaches. Demand for jet
fuel will most probably remain low as Japan Airlines will reduce
scheduled international flights from November to January by 78-82%
compared to the previous year, while All Nippon Airways has
suspended 86% of scheduled international flights in November.
Crude throughput currently stands close to 2.2 million b/d, with
an operational capacity of 2.7 million b/d, according to the
Petroleum Association of Japan. There are currently 42 tankers
carrying 63.6 million barrels of crude oil to Japan, according to
IHS Markit Commodities at
Sea.
Meanwhile, imports of naphtha have been sharply affected as
well. Japanese naphtha prices have been falling quickly, with the
market having recently entered into a contango, with prompt prices
at a discount to forward values.
Inventories of gasoline and gasoil have increased by 24%
year-on-year to 11.7 million barrels and by 17.3% to 9.9 million
barrels respectively. Total production of oil products fell to 2.1
million b/d in the last couple of weeks, with gasoil and gasoline
output down to 525,000 b/d and by 2.8% to 729,000 b/d respectively.
Exports remain at very low levels.
Japanese exports of refined products by commodity, in
(b/d)
