Why Japan’s Naphtha Shortage is Creating Supply Bottlenecks

May 18, 2026 | News On Japan

TOKYO - Complaints are mounting across a wide range of industries over shortages of naphtha-related materials, but the government insists the issue is not a lack of overall supply, describing it instead as a “bottleneck” in distribution and processing. So what exactly is happening behind the scenes?

Naphtha, a key raw material used in countless everyday products, is refined from crude oil alongside gasoline, diesel and heavy oil. It is then broken down into various “basic petrochemicals” depending on weight and composition.

These substances undergo further chemical reactions to become what are known as petrochemical derivatives, which are then processed into plastic products, synthetic rubber, detergents and many other goods. The solvent used in printing ink, which has become a focus of the current shortage, is also one of these derivatives.

As naphtha branches out into increasingly specialized products along the supply chain, shortages have emerged in certain downstream areas. The government refers to this imbalance as a “bottleneck,” but industry experts say the problem lies in the structure of production and distribution itself.

One major factor is profitability. Of the liquids refined from crude oil, gasoline generates far higher returns, with prices now exceeding 200 yen per liter in some areas. Before recent price hikes, naphtha sold for around 65 yen per liter.

Current refining systems are designed to maximize gasoline output, with roughly 30% of crude oil becoming gasoline while only around 10% becomes naphtha. In addition, while the government provides subsidies of roughly 42 yen per liter to help keep gasoline prices around 170 yen, no such subsidies exist for naphtha.

From the perspective of refiners, gasoline production is far more lucrative, leaving little incentive to reduce gasoline output in favor of increasing naphtha production.

Another issue is how inventories are counted. Government stockpile figures do not refer only to liquid naphtha itself.

Chemicals derived from naphtha, such as ethylene and propylene, are processed into polyethylene and polypropylene before being turned into small solid pellets measuring around 3 millimeters in size. These pellets are then used as raw materials for plastics.

Although these pellets are included in official inventory calculations, they cannot be converted back into products such as ink solvents. As a result, even if overall naphtha-related inventories appear sufficient on paper, some industries may still face shortages of the specific forms they actually require.

Tak Noris Sakaguchi, a supply chain consultant at Future Procurement Research Institute, said that in markets for resins, solvents, thinners and adhesives, suppliers are increasingly prioritizing large-volume clients while imposing shipment restrictions and price hikes on smaller customers due to limited inventories.

In some cases, additional shipping charges are being imposed on orders of fewer than three cans, effectively pushing higher costs onto small-scale buyers.

According to estimates by Teikoku Databank, around 90% of manufacturing companies that could face procurement risks tied to naphtha-related products have capital of less than 100 million yen, raising concerns that the burden of supply disruptions will fall disproportionately on small and medium-sized businesses.

List of Products that Use Naphtha

Plastics and food packaging
Plastic bottles and shopping bags
Polyester and nylon clothing
Synthetic carpets and fabrics
Automobile interiors and dashboards
Synthetic rubber for tires
Paints and industrial coatings
PVC pipes and construction materials
Insulation foam and vinyl flooring
Adhesives and sealants
Medical syringes and IV bags
Disposable medical gloves
Computer and smartphone casings
Electrical cable coatings
Detergents and cleaning products
Shampoo and household product containers
Toys and household goods
Agricultural chemicals and fertilizers
Pesticides and greenhouse films
Industrial solvents and chemical feedstocks
Gasoline blending components
Pharmaceutical and consumer product packaging

Source: TBS

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