1. Lube Report Asia
Japanese Blenders Follow OEMs
BY LAM LYE CHING • AUGUST 26, 2014
Major Japanese lubricant companies, Idemitsu Kosan Co. and JX Nippon & Energy Corp., are following Japanese
automobile manufacturers’ expansions in Thailand and Vietnam by investing in blending plants in those countries.
Early this year, both companies opened blending plants in the Dinh Vu Industrial Zone in Haiphong, Vietnam, mainly to
supply Japanese original equipment manufacturers that have factories nearby.
JX Nippon, aiming for 10 percent of the Vietnamese lubricant market, has capacity of 40,000 kiloliters per year, while
Idemitsu Kosan’s plant has a capacity of 35,000 kl/y. In addition, Idemitsu Kosan told Lube Report Asia recently that it will
expand its blending plant in Thailand to meet an increase in demand from OEMs in the country.
“Idemitsu Kosan and JX Nippon are the principal suppliers to the Japanese OEMs for both the initial and service fills,” SBA
Consulting LLC's managing direcor Stephen B. Ames told Lube Report Asia . “Both have expanded their overseas supply
presence in concert with the new Japanese automobile engine and assembly plants. Thailand and Vietnam are no
exception.”
Both companies have targeted emerging lubricant markets in Asia as their core expansion projects for the medium term.
Idemitsu Kosan has nine overseas blending plants, including eight in Asia and one in the United States. The company aims
to increase its overseas lubricants sales, in order to expand overall sales of lubricants from 970,000 kiloliters in 2012 to 1.3

2. million kiloliters in 2015. For 2013, the company reported sales of 1 million kiloliters, an increase of 9 percent compared to
the previous year.
JX Nippon has similar plans. “We want to expand into Asian lubricants markets such as Indonesia and Vietnam by producing
and marketing lubricants,” the company said last year when discussing its medium-term plan. JX Nippon has a total of nine
overseas plants, with eight in Asia and one in the U.S. Its first overseas plant was set up in China in 1994. Its current annual
overseas lubricant sales volume is about 500,000 kiloliters, the company said in a press release last month. With
investments in emerging markets, it is targeting volume of around 900,000 kiloliters in 2020.
“They have been content to piggyback their expansions on the supply of lubricants to the Japanese OEMs,” Ames continued.
“In respect of Vietnam, the transportation sector is overwhelmingly dominated by Japanese motorbikes, not passenger cars,
and by the Japanese commercial truck sector. Thus there is a large base for them to slide into.”
In March, Honda Vietnam produced of 15 million motorcycles. According to data released in April by the Japan External
Trade Organization, Toyota was the leading brand in Thailand, with a 33.5 percent market share. Honda, the second leading
brand in the country with a market share of 16 percent, recorded a sales increase of 24.5 percent in 2013 compared to the
previous year.
In addition to establishing footholds for future expansion into nearby markets like Laos and Cambodia, these overseas plants
have advantageous cost structures.
“Both Vietnam and Thailand would, from a production cost standpoint, have an advantage over Japan from lower wages and
other fixed costs… and offer logistic cost savings by blending/supplying locally rather than from Japan,” said Ames, adding

3. that both companies import their API Group II and Group III base oils from Korea, Singapore, Malaysia and Taiwan for their
operations in Thailand.
“Thailand and Vietnam…[are] young, growing populations, with rising ownership rates of motorcycles and motor vehicles,
and there are cost advantages to producing lubricants there relative to Japan and most other countries in the region
(including China),” agreed Jason Carnovale, an industry analyst at Freedonia Group, in an interview with Lube Report Asia.
The other push factor, Carnovale explained, is that “Japan is a very mature market for lubricants, and demand cannot be
expected to grow much, if at all, in the near future.”
Although most Japanese OEMs are already in Vietnam and Thailand to give Japanese lubricant suppliers an added
advantage, “most of the major international lubricant marketers have been present in both Vietnam and Thailand for the past
20 odd years,” according to Ames. "BP (Castrol) holds the largest market share in Vietnam at about 25 percent. Shell,
ExxonMobil and Chevron are also large suppliers. In Thailand, the same four companies have market shares in the double
digits.”
“The lubricant markets in these countries are served by a combination of national oil companies (Petrolimex in Vietnam and
PTT in Thailand) and international suppliers,” Carnovale added. “Shell, Total, Pertamina (Indonesia’s national oil company),
ExxonMobil, Petronas, and others are already active in these countries, and the markets are highly competitive.