Naphtha Supply Confusion Affecting Industries, Households

Tokyo, April 11 (Jiji Press)–Supply confusion for naphtha, an oil product used to make daily necessities, continues amid tensions in the Middle East, prompting concerns about its widespread impact on Japanese industries and households. Naphtha, along with gasoline, gas oil, and fuel oil, is produced by distilling crude oil. Heating it to more than 800 degrees Celsius decomposes it into basic chemicals that are transformed into raw materials for plastics, chemical fibers, rubber, paints, and adhesives. Japan relies on imports from the Middle East for about 40 pct of its naphtha consumption. Additionally, about 40 pct of domestically produced naphtha is refined from crude oil mainly from the region. As a result, supply concerns grew rapidly when Iran effectively blockaded the Strait of Hormuz, a key shipping route. The government emphasizes that Japan has secured necessary oil supplies, but some parts of the complex supply network have stalled. At a meeting of related ministers on Friday, Prime Minister Sanae Takaichi instructed them to address supply concerns, particularly those regarding paint thinner. Thinner is used for painting automobile parts and waterproofing houses. Manufacturers have started to restrict shipments, while the material has been resold at high prices in some cases. Since mid-March, companies have announced price hikes for naphtha-derived products. Tokyo-based Sanipak Co. will raise the prices of garbage bags and other items by about 30 pct from late May, and has indicated the possibility of additional price reviews. Gunze Ltd., which manufactures food packaging film, and Teijin Ltd., which produces polyester fiber for clothing, have also raised their prices. Kuraray Co. has implemented a 10 pct price increase for its Clarino artificial leather product, which is used for school bags. “Rising costs are outpacing our ability to absorb them through our own efforts,” a company official said. The United States and Iran have agreed to a two-week ceasefire, but uncertainty remains about the normalization of oil supplies. Even if supplies are restored, there are concerns that prices will remain high. Takahide Kiuchi, executive economist at Nomura Research Institute Ltd., estimates that price hikes for naphtha-based products will increase the annual burden on a family of four by between 22,500 yen and 35,100 yen. “Consumer prices are expected to temporarily rise by nearly 1 pct,” Kiuchi said. END [Copyright The Jiji Press, Ltd.]