Restructuring in the oil and petrochemical industries, contraction of the domestic market and restrained capital investment

「雇用・所得環境の改善や各種政策の効果により、景気の緩やかな回復を支えることが期待されるものの、金融資本市場の変動の影響や中東情勢の影響に引き続き注視が必要な状況が続いております。」

「Domestic demand for petroleum products is expected to continue declining, affected by changes in the energy structure resulting from the spread of electric vehicles and the shift to low-carbon fuels, among other factors.」

「Domestic demand for petroleum products is expected to continue declining, affected by changes in the energy structure resulting from the spread of electric vehicles and the shift to low-carbon fuels, among other factors.」

「Demand has not yet recovered, due to a structural decline in demand for petroleum products and deteriorating market conditions for petrochemical products resulting from weaker domestic demand in China.」

「Meanwhile, amid the effects of continued global monetary tightening and concerns over the outlook for the Chinese economy, concerns remain over the risk that a downturn in overseas economies could weigh on the domestic economy, as well as the risks of rising prices, conditions in the Middle East, and volatility in financial and capital markets.」

「Meanwhile, amid the effects of continued global monetary tightening and concerns over the outlook for the Chinese economy, concerns remain over the risk that a downturn in overseas economies could weigh on the domestic economy, as well as the risks of rising prices and volatility in financial and capital markets.」

「Meanwhile, amid continued global monetary tightening, concerns remain over the risk that a downturn in overseas economies could weigh on the domestic economy, as well as the effects of rising prices, supply-side constraints, volatility in financial and capital markets, and the risk of further spread of infection in China.」

「In the oil industry, refinery capacity reductions and utilization adjustments have been undertaken due to a structural decline in demand, primarily resulting from improved vehicle fuel efficiency. In addition, product demand remains weak due to the impact of COVID-19.」

「Although restrictions on economic activity have gradually eased, personal consumption remains weak, and the risk of an economic downturn due to supply-side constraints, rising raw-material prices and other factors requires close attention.」

「In the oil industry, refinery capacity reductions and utilization adjustments were undertaken, while product demand declined due in part to the impact of COVID-19. In the petrochemical and general chemical industries, there were signs of a recovery in demand in some areas, but overall product demand remained weak due to the impact of COVID-19.」

「In the oil industry, refinery capacity reductions and utilization adjustments were undertaken in response to declining domestic demand driven by structural factors such as improved fuel efficiency. In the petrochemical industry, utilization rates at domestic ethylene production facilities remained high, but concerns arose over a rapid decline in product demand due to the spread of COVID-19 in the fourth quarter.」

「Regarding the business environment surrounding the group, domestic demand in the oil industry continued to trend downward due to structural factors, including improved fuel efficiency and fuel switching, while refinery utilization rates remained high following reductions in refinery capacity. In the petrochemical industry, utilization rates at ethylene production facilities remained high, and conditions were firm, supported by domestic personal consumption and construction demand. In the nonferrous metals industry, although economic sentiment indicators deteriorated, investment continued amid expectations for a recovery in demand related to IT products such as semiconductors and smartphones.」

「Although ethylene plants continued to operate at high rates in the petrochemical industry, conditions remained in an adjustment phase due to declining domestic shipments of synthetic resins, US-China trade friction and the slowdown in the Chinese economy. The nonferrous metals industry was also on a slowing trend due to falling copper prices and demand adjustments for products used in electronic materials.」

「Regarding the business environment surrounding the group, domestic oil demand is expected to continue declining due to changes in the energy structure, the declining birthrate and progress in energy conservation. On the supply side, however, supply-demand balance has improved as integration and restructuring in the oil industry have reached a lull and production facilities have been optimized. In the petrochemical industry, demand has weakened against the backdrop of a slowdown in the Chinese economy, but domestic demand for petrochemicals has remained firm and ethylene plants have continued to operate at full capacity.」

「Regarding the business environment surrounding the company, supply-demand conditions in the oil industry tightened and profitability improved due to higher crude oil prices, the response to the Act on Sophisticated Methods of Energy Supply Structures, and the optimization of production facilities through industry management integrations and restructuring. However, as domestic demand for petroleum products is expected to continue declining structurally, strengthening international competitiveness and reinforcing facilities remain challenges.」

「Regarding the business environment surrounding the company, the long-standing management integrations and restructuring in the oil industry moved toward resolution, and the large-scale restructuring that had continued for several years reached its final stage. In the domestic market, where demand for petroleum products is declining, supply-demand conditions improved and the business environment turned favorable following reductions in supply capacity. However, gasoline prices have remained high for an extended period, raising concerns about declining gasoline consumption.」

「Regarding the business environment surrounding the group, the oil industry was moving toward the final stage of management integrations and restructuring. In the domestic market, where demand for petroleum products is declining, supply-demand conditions for petroleum products have improved as a result of the supply-capacity reductions implemented to date. Going forward, new developments are also expected, including further structural reform of the business and expansion into Asia, where growth is substantial.」

「Regarding the business environment surrounding the group, performance in the oil industry is improving due to factors including improved sales margins on petroleum products and valuation effects from fluctuations in crude oil prices. In addition, the Ministry of Economy, Trade and Industry’s initiative to establish super-certified plants, allowing continuous plant operation for up to 8 years, is taking concrete shape, and the first super-certified plant has been established. In the petrochemical industry, demand for petrochemical products remained firm, high operating rates at ethylene plants and other facilities continued, and growth in commodity and high-performance chemicals also continued.」

「Regarding the business environment surrounding the group, the oil industry has become substantially consolidated into 3 groups amid management integrations and restructuring. Moves to suspend or retire production facilities for petroleum products and other products are also taking concrete shape as production and supply systems are rebuilt to realize integration benefits. Meanwhile, strong demand for petrochemical products has supported continued high operating rates at ethylene plants and other facilities, and the petrochemical industry has maintained solid performance.」

「Regarding the business environment surrounding the group, a new oil-marketing company structure was established through management integrations and restructuring in the oil industry, while the trend toward further consolidation remained unchanged. Specific plans to consolidate or close refineries and other facilities are expected to be considered in order to realize integration benefits. Meanwhile, demand for petrochemical products remained strong, operations continued at high rates, particularly at ethylene plants, and the petrochemical industry maintained its solid performance.」

「In the oil industry, the response to the Second Act on Sophisticated Methods of Energy Supply Structures, aimed at reducing domestic demand for petroleum products and eliminating excess supply, was completed. At the same time, the domestic oil industry became substantially consolidated amid a wave of management integrations and restructurings aimed at strengthening management foundations, pursuing structural reform and enhancing international competitiveness.」

「In the oil and petrochemical industries, maintenance investment and new capital investment continue to be managed selectively as part of efforts to rationalize, improve efficiency and reduce costs in order to build a stronger management base ahead of the restructuring and integration of the oil industry.」

「Regarding the business environment surrounding the group, the oil and petrochemical industries are selectively managing maintenance investment and new capital investment as the oil industry restructures to strengthen its competitiveness amid declining demand for petroleum products.」

「In the oil and petrochemical industries, maintenance spending and capital investment continue to be managed selectively amid the restructuring of the oil industry, while the current fiscal year ending March 2017 is a peak period for scheduled maintenance and repair work.」

「As a result of measures taken in response to the Second Act on Sophisticated Methods of Energy Supply Structures, which encouraged companies to address the shrinking domestic market and excess capacity, a succession of management integrations and restructurings among oil companies was announced, leading to substantial consolidation in Japan’s oil industry. With domestic demand for petroleum products declining, the business environment is expected to remain difficult as maintenance spending and capital investment are restrained as part of efforts to address excess capacity in domestic production facilities.」