BY FILIPPO PEDRETTI
Exactly 33 years after Japan scrapped mandatory naphtha stockpiles, the idea is back.
The proposal itself may sound technical. Yet it reflects a broader change taking place across the economy. For decades, policymakers and industry prioritized lean supply chains, low inventories and cheaper imports. The strategy helped strengthen Japan’s industrial competitiveness, but it also assumed that critical raw materials would remain readily available.
The disruption to Middle East naphtha supplies exposed the limits of that belief. As businesses scrambled for alternative cargoes and prices surged to their highest levels in almost two decades, the shock spread beyond refineries. Construction firms failed, petrochemical trade patterns shifted and the government is reconsidering policies that had been abandoned a generation ago.
Since late February, global prices for naphtha and petrochemical products (like paint and thinner) have risen by about 30%. In April, Japan’s total naphtha imports fell 47% year-on-year, driven by a 79% plunge in imports from the Middle East. To compensate, Japan pivoted to the U.S., which soon became its top supplier. American naphtha imports surged 209-fold in April.
The timing made matters worse. Due to scheduled maintenance, domestic naphtha production fell 23% in April. It was still down by close to a fifth year-on-year in May, with the nation’s naphtha crackers operating at a record low rate of 68%.
The government is now looking for a policy fix.