Period of quiet pickup in LPG demand, circa 2003

Period of quiet pickup in LPG demand, circa 2003

Around 2003, Japan's energy market was gradually shifting toward recovery despite the economic downturn, and was at a turning point when the international fossil fuel supply structure began to change. The future of domestic demand was directly related to the structure of the industry. According to a survey by the Agency for Natural Resources and Energy, LPG demand was expected to decline by 0.9% in fiscal 2003, while a gradual increase was projected from 2004 due to a recovery in demand for household use and petrochemical feedstocks.

In ethylene production in particular, diversification of feedstock was required to break away from dependence on naphtha, and LPG use advanced. As a result, demand for LPG for petrochemical applications was expected to grow at an average annual rate of more than 4 percent, and a structure was formed to compensate for the shrinking demand for city gas. The stable supply of LPG from the Middle East at the time was also a factor that encouraged the conversion to the new feedstock.

In addition, the Iraq War in 2003 destabilized the crude oil market and heightened interest in energy security, which also strengthened the importance of LPG demand forecasts. The modest average annual growth rate of 0.4 percent from 2002 to 2005 indicates the nature of energy as an energy source that continues to grow steadily rather than rapidly, and the LPG market was positioned as a stable energy source that continues to quietly expand.