Diversifcation Promises Limited Growth Opportunities

摘要

We maintain our bearish outlook on the Japanese refning sector as falling domestic demand and an increasingly competitive global refned fuels market continues to limit growth opportunities. We have previously highlighted that as the Japanese downstream segment struggles to compete internationally, it will force refners to look for more proftable opportunities abroad, in particular in the emerging economies, in order to remain competitive (see 'Refners Race For Remaining Opportunities', July 8 2014). While we con- tinue to expect Japanese refners to actively seek out new investment opportunities abroad, another avenue which these refners could explore is investing in the domestic power sector, notably in coal and gas-fred power plants.