Under the Radar

Japan’s oil demand is staging a strong recovery

For much of the 1970s and 1980s, Japan was a shipowners’ dream.  It was a rapidly growing economy that almost completely relied on imports of raw materials to fuel its expanding industrial base.  Before China took over in the early 2000s, Japan was the key driver of ton-mile demand in Asia.  For many years, it dominated the LNG, iron ore and crude trades in the region.  Japan’s GDP growth has slowed significantly in recent decades due to a maturing economy and an aging population.  The rise of China and India has overshadowed the land of the rising sun.

However, the importance of Japan for the global tanker market is not to be underestimated.  It still generates 8% of global crude oil ton-mile demand and after hitting a rough patch during the pandemic, Japan’s oil demand has staged a strong recovery in recent months.  Since Japan’s imports are largely done on Japanese-controlled tonnage, the increased activity is not immediately apparent in the tanker spot market.  However, if this pickup in oil imports continues, it can be an important driver for overall tanker demand (and rates) in the coming months.