The Japanese domestic market's continued decline has resulted in more partnerships between the country's leading distributors, writes Reina Maeda
Consolidation in Japan's LPG industry is continuing as a result of declining domestic demand following importer and distributor Astomos' deal to acquire upstream firm Japex's LPG subsidiary late last month.
Astomos reached an agreement to take over Japex Energy for around $700,000 on 29 May. Japex holds 90pc of the LPG distribution arm, with the remaining 10pc held by cement producer Mitsubishi UBE Cement. Astomos will purchase the first 33.4pc on 25 June and the remaining 56.6pc on 25 December. Japex Energy has five branches across Japan and sells around 140,000 t/yr of LPG. Japex says it sold its domestic LPG business as part of a shake-up of its portfolio as it must contribute to a carbon-neutral society.
The announcement came after fellow Japanese LPG distributor Itochu Enex revealed in its fiscal year 2025-27 business plan that it intends to spend some of its $350mn allocated capital expenditure on acquiring new businesses, including investments that it says will restructure its LPG divisions. Itochu Enex did not provide any specific areas of investment it would target, but Japan's domestic LPG sector is made up of around 16,000 retailers, most of which are faced with falling residential sales. The industry is also under pressure to decarbonise under the government's energy transition goals.
Itochu Enex last year set up a new subsidiary called Itochu Enex Homelife to consolidate its regional distribution businesses in Hokkaido, Tohoku, West Japan and Shikoku owing to declining demand linked to a falling rural population — something expected to continue, the company said at the time. The long-term contraction of Japan's domestic market has prompted more partnerships between Japan's leading distributors as well as rationalisation of existing operations in recent years.
Astomos also announced late last month that it would join forces with Toho Gas to sell LPG in the Chukyo area in order to reduce storage costs and streamline operations. And LPG distributor Nicigas in March revealed it had acquired local LPG retailer Kadokura, which supplies around 3,000 customers in the Chiba and Ibaraki prefectures in the Kanto region, for an undisclosed sum. "It has become necessary to use storage tanks more efficiently, and thanks to digitalisation, there is no longer a need for as many staff," Astomos says.
Itochu Enex's LPG sales fell by 1.4pc on the year to 416,000t in 2024-25 ending in March. Nicigas' sales over the same period dropped by 1.7pc to 288,000t, while Iwatani sold 1.5mn t, edging only 0.4pc lower, putting this down to higher temperatures weighing on household use. Toho was the only distributor to increase deliveries in 2024-25. The company's sales firmed by 1.9pc to 474,000t, which it attributed to a growing customer base. But the firm reported slower city gas sales because of higher temperatures, dropping by 0.6pc to 3.35bn m³. Temperatures in Toho Gas' sales area averaged 17.7°C in 2024-25 compared with 17.4°C a year earlier, the firm says.
