Japanese Oil Companies Ally Amid Persistent Excess Supply Jun 00

Standard & Poors, June 2000

Abstract
The credit quality of the Japanese oil industry is expected to remain weak over the medium term, despite efforts by companies to improve their operations and profitability. Persistent excess supply, both at refineries and downstream service stations, combined with anemic demand growth, will continue to pressure wholesale and retail prices, making it difficult for oil companies to fully transfer rising crude oil and other feedstock prices to consumers. Although Japanese oil companies are forming strategic alliances to cut costs, such consolidation is not expected to result in a meaningful reduction in production capacity. The Japanese refining market continues to face excess capacity, estimated at as much as 20%. Improvement in the industrywide supply/demand imbalance is likely to be slow, as...

Companies mentioned in this report are: Cosmo Oil Co. Ltd.,TonenGeneral Sekiyu KK,Japan Energy Corp.,Showa Shell Sekiyu KK,Nippon Oil Corp.

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

Cosmo Oil Co. Ltd.,TonenGeneral Sekiyu KK,Japan Energy Corp.,Showa Shell Sekiyu KK,Nippon Oil Corp.

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