The earthquake and tsunami that hit Japan in March this year has had a mixed impact on lubes supply according to recent reports.
According to reports, the base oil market has so far been relatively unaffected by the disaster, with the Negishi refinery re-opened after a short closure at the end of March. Several other base oil refineries have been largely unaffected, although industry specialists, Klein, has identified shortages of three types of base oil from the country’s output. Some refineries outside the earthquake area have increased crude oil processing capacity to boost supplies.
The impact on the domestic market for finished lubes products is less encouraging. With transport and industry in the North East of Japan paralysed after the earthquake and Tsunami, domestic oil demand has been significantly reduced.
The large numbers of vehicles off the road combined with a drop in auto manufacturing as well as other industrial output and affected lubes demand across all marketing and distribution sectors. Analysts are predicting the impact of the disaster on the lubes market is set to last for at least a further two quarters.