Idemitsu sees Japan's oil products demand down 20% April-June
“Overall demand for oil products in Japan is now seen dropping about 20% in April-June, bigger than our earlier estimate of about a 14% decline, with jet fuel demand plunging more than 50%,” Takashi Tsukioka, chairman of Idemitsu, told a news conference.
Global fuel demand is set to drop by as much as 15% to 20% in the April-June quarter after the coronavirus pandemic, which has killed more than 143,700 people, halted most air travel and prompted national lockdowns across the globe to keep people at home.
Idemitsu estimates gasoline demand will fall by about 20% in Japan and diesel demand will dip 10% for the quarter, Tsukioka said.
To reflect slumping demand, Japanese refiners are cutting run rates, said Tsukioka, who is also the president of the Petroleum Association of Japan (PAJ).
“For Japanese refiners, 70% is the minimum run rate to keep stable operation. So if a refiner needs to cut a utilisation rate to below 75%, it may need to shut the facility,” he said.
But given large amounts of maintenance planned this quarter, Japanese refiners could cope with weaker demand by just lowering run rates, he said.
Asked whether Japanese refiners would reduce crude purchases going forward, Tsukioka said they were likely to take full contractual volumes for April and May, while cutting spot purchases.
“But it’s possible that Japanese refiners would not take full contractual volume from June loading as they are running out of storage capacity,” he said.
“Each refiner will send a nomination to oil producers next month for June loading to reflect its sales and storage capacity,” he said.
Tsukioka also said global oil producers would probably be forced to decrease output on top of the reduction agreed to on Sunday by the Organization of the Petroleum Exporting Countries and its allies, as the fall in global oil demand is greater than their output cut.