Japan to boost intermediate chemical imports amid tighter naphtha supply
Japan plans to increase import of intermediate chemical products, such as plastics, as it faces tighter naphtha supplies due to the ongoing U.S.-Israeli war with Iran, a senior official at the industry ministry said on Monday.
About 40% of domestic naphtha consumption is met by domestic production, with another 40% sourced from the Middle East and 20% from other regions, but the war in the Middle East has made imports from that region difficult.
Japan has secured at least four months' worth of domestic demand of naphtha or naphtha-derived products, Narumi Hosokawa, deputy director-general for immediate crisis management at the Ministry of Economy, Trade and Industry, told reporters.
That include two months' worth to be produced by domestic refiners using already procured imported naphtha, and two months' worth of inventories of intermediate chemicals such as polyethylene, he said.
Hosokawa said last week that efforts to secure alternative naphtha supplies are being stepped up. While the usual monthly procurement volume from sources outside the Middle East is 450,000 kiloliters (kl), the volume for April is expected to double to 900,000 kl.
Higher procurement from sources outside the Middle East could extend inventory coverage to more than six months, Hosokawa said, adding that Japan also plans to increase import of intermediate chemicals.
Cut off from Middle East naphtha due to the Iran war, Asian producers of plastics and packaging face surging premiums that are already hitting output at petrochemical plants.
Separately, to address fuel shortages at some domestic critical facilities such as healthcare institutions and public transport, the government has requested oil wholesalers to assess priorities and sell fuel directly to them.
In response to urgent appeals from other customers unable to secure sufficient petroleum products from their usual fuel suppliers, the government has requested major oil wholesalers to sell fuel at volumes equivalent to those in the same month of the previous year.
Asked about a second round of release from the country's strategic fuel stockpiles, Hosokawa said that if the current situation does not change, crude supply could eventually run short and the government would likely make a decision (on additional releases) at an appropriate time.
From March 16, Japan began releasing oil from private-sector reserves by lowering the stockpiling obligation imposed on wholesalers from the previous 70 days' worth to 55 days' worth for one month.
Comments