Japanese oil demand fell y/y in June by a steep 0.22 mb/d (5.9%) to 3.527 mb/d, the lowest since May 2011 following the Fukushima disaster, with the weakness in fuel oil, crude burn and LPG demand weighing. In line with the Japanese utility data for June, crude burn was lower y/y by 41 thousand b/d at 0.197 mb/d, the first time that crude burn has dropped below 0.2 mb/d since July 2012 while demand for fuel oil was sharply lower by 0.134 mb/d to 0.303 mb/d. LPG demand continued to decline as well, falling below 0.4 mb/d for the first time since October 2010, a 32 month low, down y/y by 56 thousand b/d at 0.387 mb/d. The weakness in all three parts of the barrel are directly linked to Japanese utilities burning more coal due to the restart and new commissioning of coal plants. Indeed, Tokyo Electric Power Co bought less LPG this year, as its 1 GW coal-fired unit at its Hitachinaka plant and the 600 MW coal-fired unit at its Hirono started up. Other parts of the barrel were supported, nonetheless. with gasoline demand higher y/y by 13 thousand b/d at 0.94 mb/d, and naphtha demand up y/y by 18 thousand b/d at 0.7 mb/d. Gasoil demand, meanwhile, was broadly flat y/y.
Japanese refinery runs recovered slightly m/m in June to 3.156, higher y/y by 0.11 mb/d as voluntary run cuts eased. Nonetheless, unplanned outages (for instance at Nishihara refinery) and delays in returning from maintenance (Sakai and Showa Yokkaichi refineries) kept a lid on runs, with the y/y increase largely a function of a low base from heavy maintenance last year. Crude imports fell m/m by 0.1 mb/d to 3.277 mb/d, with imports from Iran down by 0.11 mb/d at 0.129 mb/d. Thus, crude inventories fell m/m by 1.9 mb, while product stocks were unchanged, with total inventories lower by 7.7 mb relative to seasonal averages.