TOKYO - A growing shortage of products derived from naphtha is beginning to affect everyday industries, as instability surrounding supply routes linked to tensions involving Iran raises concerns across Japan’s economy.
The Strait of Hormuz, a critical chokepoint for global oil shipments, remains effectively constrained amid ongoing negotiations between the United States and Iran, placing pressure on supplies of naphtha, a petroleum product essential for manufacturing plastics and other materials widely used in daily life.
At a logistics industry exhibition recently held in Osaka through April, around 420 companies showcased products aimed at improving productivity, including lightweight pallets made from expanded polystyrene. These pallets, significantly lighter than conventional ones, offer cost advantages for air transport. However, the material used in such products is derived from naphtha, highlighting the sector’s exposure to upstream supply risks.
While some companies report that they are still able to procure raw materials, rising costs tied to energy inputs and feedstocks are already becoming a burden. Naphtha, produced from crude oil, is used to create a wide range of petrochemical products, and Japan has historically relied on the Middle East for roughly 40% of its supply. The current geopolitical situation has raised concerns about supply stability.
The impact is also being felt in packaging operations. Stretch films used to secure cargo on pallets—also derived from naphtha—have seen price increases, with some products rising from under 10,000 yen per roll to well above that level, with further increases expected. Companies are attempting to offset costs by using machinery to stretch film more efficiently, but concerns remain over stable supply.
Industry observers describe the petrochemical supply chain as a river, with naphtha at its source. When naphtha is cracked at high temperatures, it produces base chemicals such as ethylene and toluene, which then flow downstream into a wide array of intermediate and end-use products, including plastics and fibers. Disruptions at the upstream level are now beginning to ripple through the system.
Data gathered by the program indicates that at least six out of ten domestic naphtha cracking plants are either reducing output or adjusting operations due to supply constraints. While the government maintains that overall supply is sufficient, citing stockpiles and alternative imports, the effects are unevenly distributed across industries.
On the ground, shortages are becoming acute. Yokoyama Naoki, who runs a painting business in Tokyo, says that thinner—used to dilute paint and clean tools—has become increasingly difficult to obtain. Prices have surged by as much as 75%, and in some cases, products are no longer available at all. "If we run out, we can’t work," Yokoyama said, noting that even large home improvement stores are out of stock.
A paint manufacturer in Fukuoka Prefecture reports similar challenges, with some raw materials expected to run out as early as next month. Paint products, many of which rely on naphtha-derived solvents, are used in a wide range of applications, from construction to automotive and appliances. The company says it has received daily notices of price hikes from suppliers, with increases ranging from 30% to over 50%.
According to a survey conducted by an industry association in the Kanto region, approximately 70% of respondents reported being unable to secure necessary raw materials in April. Some solvents have already been unavailable since early March, placing manufacturers in what they describe as an extremely severe situation.
The government attributes some of the disruption to bottlenecks in distribution rather than a complete breakdown in supply, noting that while upstream production has declined, overall supply volumes have been maintained by reducing exports. However, manufacturers and wholesalers dispute this characterization, saying that they are simply unable to procure the quantities they need.
Thinner manufacturers report that raw material deliveries have dropped to roughly half of normal levels, and in some cases have stopped entirely since late March. Companies have been relying on existing inventories to maintain shipments, but some are now considering temporary shutdowns as supplies run dry.
To mitigate the situation, the government has announced plans to release an additional 20 days’ worth of national oil reserves in early May and to increase imports from regions outside the Middle East. It also claims that, in total, supply equivalent to four months of domestic demand has been secured, with the possibility of extending inventories of intermediate products to over six months.
However, experts caution that aggregate supply figures do not guarantee availability of specific products. Because petrochemical production yields a fixed mix of outputs, it is difficult to increase supply of individual chemicals in isolation. The complexity of the supply chain means that shortages can emerge in specific segments even when overall supply appears sufficient.
With approximately 20% of global oil flows affected by disruptions in the Strait of Hormuz, sourcing alternative supplies remains a significant challenge. While imports from North America, Africa, and other regions are being explored, experts warn that replacing lost volumes is not straightforward given tight global supply-demand conditions.
Even if access through the Strait is restored, damage to infrastructure and production facilities in the Middle East could delay a full recovery for several months. As a result, calls are growing for more efficient energy use and reduced reliance on petrochemical products.
The voices emerging from affected businesses underscore the severity of the situation. While the government maintains that supply is secure at a macro level, conditions on the ground suggest a more complex and uneven reality, with shortages and price increases already disrupting operations across multiple sectors.
Source: TBS
