Japan secures naphtha supply beyond year-end

May 1 (Asia Today) -- Japanese Prime Minister Sanae Takaichi said Japan is expected to secure stable supplies of naphtha-based chemical products beyond the end of the year, easing immediate fears of a petrochemical supply shock.

Takaichi told a ministerial meeting on the Middle East situation Wednesday that Japan has expanded naphtha procurement from non-Middle Eastern sources, including the United States, Algeria and Peru. The government is also using crude oil reserves for domestic refining and drawing on downstream inventories.

Naphtha is a key feedstock for basic petrochemical products such as ethylene and propylene. It is used in plastics, synthetic resins, packaging, auto parts, electronics materials and household goods.

Japan's response amounts to more than emergency imports. Government data show Japan sourced about 40% of its naphtha from the Middle East in 2024, produced about 40% domestically and imported about 20% from other regions.

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Takaichi said supply concentration and distribution bottlenecks remain a concern. Some companies have placed larger-than-usual orders to guard against shortages, creating pressure at certain stages of the supply chain.

The supply strain has already affected Japan's manufacturing indicators. Industrial output in March fell 0.5% from the previous month, with lower production of petroleum and chemical products contributing to the decline.

Japan has operated a task force since early April to monitor supplies of key materials, including naphtha, petrochemical products, fuel oil and goods tied to healthcare, logistics and agriculture.

The issue also carries implications for South Korea, whose petrochemical industry depends heavily on naphtha and is closely linked to refining, autos, electronics and packaging.

Japan's move to diversify procurement, manage inventories and control supply information offers a possible model for South Korean policymakers and companies as Middle East tensions continue to pressure energy and industrial supply chains.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260501010000005