TOKYO - The operating rate of plants in Japan producing ethylene, used widely to make detergents, pharmaceuticals and paints, hit a record low in April amid the disruption of supplies of its oil-derived feedstock naphtha due to the Middle East conflict, an industry group said.
The utilization rate sank to 67.3 percent, the lowest since comparable data became available in 1996 and below the previous low of 68.8 percent in March, the Japan Petrochemical Industry Association said earlier in May.
The rates were down from 75.7 percent in February, just before tensions in the Middle East escalated and disrupted the shipping of oil and petroleum products, including naphtha, amid the effective closure of the Strait of Hormuz, the industry body said. The United States and Israel launched attacks on Iran on Feb. 28.
Difficulty in securing naphtha from the Middle East has resulted in higher procurement costs, as major chemical makers have moved to source it domestically and from regions other than the Middle East, such as the United States and Africa.
The inflated costs are driving up retail prices for consumer products.
"Companies moved to acquire naphtha with an air of panic in March, but from mid-April onward they have been making procurements more calmly while watching prices," Koshiro Kudo, chairman of the association and president of Asahi Kasei Corp., told a press conference.
Kudo said he expects the operating rate will increase to around 70 percent in May and June.
The association said around 1.35 million kiloliters of naphtha is expected to be sourced from regions other than the Middle East in May, triple the monthly average of 450,000 kl in 2024.
"We have been able to procure naphtha from around the world by paying premiums," said Manabu Chikumoto, vice chairman of the association and president of Mitsubishi Chemical Group Corp.
Japan has 12 plants that thermally crack naphtha to produce chemicals such as ethylene and propylene. The country had depended on the Middle East for around 80 percent of its naphtha supply.
In April, production of ethylene increased 3.6 percent from the previous month to 283,500 tons after a plant that had been undergoing regular maintenance was brought back online. However, compared to a year earlier, the volume was still 37.1 percent lower, the body said.
