Japan, S Korea petrochemical industry slows output on Iran war

FE Team | Published: March 18, 2026 23:52:27

TOKYO, Mar 18 (AFP): The Middle East war is forcing petrochemical giants in two key Asian economies to cut production as the conflict rattles supplies of a crucial oil-derived component used to make a range of plastic goods.
The scarcity of naphtha-a liquid distilled from petroleum that is essential for making ethylene, a key ingredient in everything from plastic grocery bags to food packaging-risks a knock-on effect across many industries.
The petrochemical sector in Japan and South Korea, an important part of both countries' economies, depends on the Middle East for their naphtha supplies-with 74 per cent of Japan's imports coming from the region. But supplies are drying up, with a vital shipping lane for oil from the Middle East, the Strait of Hormuz, virtually paralysed.
The price of naphtha shipped into Asia has soared 60 per cent since the war began.
"We estimate that naphtha inventories currently stand at around 20 days" in Japan, the world's fourth-biggest economy, analysts at Nomura warned last week.
"And if the Strait of Hormuz remains closed for two to three weeks, this could have a major impact" on naphtha production, they said.
That impact is already creeping in.
Last week, Japanese giant Mitsubishi Chemical started cutting production capacity of its steam cracker, a facility that converts naphtha into ethylene and propylene.