Tensions involving Iran are disrupting markets, prompting Japanese chemical companies to brace for potential interruptions in the import of crucial petroleum-derived products. A spokesperson for Mitsubishi Chemical Group stated on Monday that the company has reduced the operating rate of its ethylene production facility in Ibaraki Prefecture since Friday. This measure is intended to prevent a shutdown of the unit should a shortage of naphtha supplies from the Middle East occur. The spokesperson declined to specify the extent of the production cut or its expected duration. Other companies have also taken action. A spokesperson for the parent company, Sumitomo Chemical, confirmed on Monday that its Singapore-based subsidiary, Sumitomo Chemical Asia, has declared force majeure on shipments of methyl methacrylate (MMA) due to the Middle East conflict. This petrochemical product is used in resins, coatings, and acrylic plastics. Concurrently, a spokesperson for the Japanese refiner Idemitsu Kosan indicated that if the Strait of Hormuz remains effectively closed, the company may be compelled to halt ethylene production at its plants in Yamaguchi and Chiba prefectures. Many ethylene producers across Asia—ethylene being a fundamental raw material for everyday items like plastic bottles, polyester, and coatings—are heavily reliant on naphtha supplies from the Middle East. The ongoing conflict and the effective closure of the Strait of Hormuz have severely impacted the transport of this raw material, affecting approximately one-third of global naphtha exports. Market instability is particularly pronounced for import-dependent nations like Japan. Data from the Japan Petrochemical Industry Association shows that in 2024, imports accounted for about 60% of Japan's naphtha supply, with nearly 70% of that imported volume originating from the Middle East. Shuichi Nakahara, a senior analyst at Tokai Tokyo Intelligence Laboratory, commented that finding alternative supplies to replace those from the Middle East is "not realistic," suggesting that other companies may also be forced to lower operating rates at their ethylene facilities. He pointed out that naphtha shares similar properties with gasoline, which will likely lead to market debates over whether to blend it with additives for use as gasoline or allocate it as a feedstock for petrochemical production. He stated that the Japanese government "will have to make a priority decision, determining who bears the loss—there is no scenario where all parties are satisfied," adding that "this will become a political decision." The Mitsubishi Chemical spokesperson mentioned that a joint venture plant in Okayama Prefecture, operated with Asahi Kasei, will decide on any further measures based on the supply outlook. Currently, this facility continues to consume existing inventory and has not yet reduced production.
Comments