Potential problems with the supply of naphtha, a petroleum product and key component in the petrochemical industry, are negatively affecting the activities of Japanese companies, despite Prime Minister Sanae Takaichi's assurances of guaranteed four-month supplies, leading business newspaper Nikkei reports.
In early April, the head of the Japanese government commented on media reports that Japan could face an oil shortage. She stressed that two months of oil had already been purchased and that the country could provide for another two using its own production capacity.
However, a number of Japanese companies are facing the consequences of a potential shortage of raw materials. For example, Toto, the leader in the Japanese plumbing market, announced that it would not accept new orders for prefabricated bathrooms, a standard feature of the Japanese housing market. The company later resumed taking orders, explaining that the government had “contacted raw material producers with whom some companies were unable to negotiate.”
Another market participant, Lixil, saw a sharp increase in orders for prefabricated bathrooms after Toto announced a halt to orders. As a result, Lixil is unable to set deadlines for new orders. Equipment deliveries, in turn, can directly affect housing construction schedules.
Paint and coatings manufacturer Kansai Paint imposed restrictions on solvent supplies in early April. Several plants of Mitsubishi Chemical Group and Mitsui Chemicals began reducing ethylene production as early as March. Lion has postponed the launch of a new laundry detergent, and Kobayashi Pharmaceutical has begun to limit supplies of air fresheners and oral care products.
The shortage of naphtha is also pushing up prices, as the cost of supplies from regions outside the Middle East is “double,” according to Koshiro Kudo, president of Asahi Kasei Chemicals. The price of domestically produced naphtha is also expected to rise, as prices have been based on import prices for the past few months. As a result, prices are already rising for a wide range of products; Sekisui Chemical, for example, is raising pipe prices by more than 30%.
In recent years, 40% of Japan’s naphtha needs have been met by imports from the Middle East. Another 40% is covered by domestic crude oil production. Japan relies on Middle Eastern oil supplies for more than 90%.