Japan's reliance on Chinese petrochemicals has surged as Middle East turmoil disrupts naphtha supply, with imports of high-density polyethylene jumping 170% year-on-year in March. This shift, driven by the near-closure of the Strait of Hormuz, is reshaping supply chains for key industrial chemicals, impacting buyers of plastics, coatings, and synthetic rubber globally.
Supply-chain impact
Japan's naphtha supply, over 80% of which comes from the Middle East, has been severely constrained by the Strait of Hormuz disruption. This has forced Japanese manufacturers to turn to China for basic chemicals like ethylene, propylene, and butadiene, which are derived from naphtha. Many production facilities have had to operate at minimum levels to maintain supply chains. In March, Japan's imports of Chinese high-density polyethylene surged about 170% year-on-year, according to Japanese trade data and Chinese customs figures. Polystyrene imports rose 76% year-on-year, while overall imports of major plastic raw materials from China increased 27%.
What buyers should watch
Japan resumed imports of butadiene from China in March after a complete halt since 2021, bringing in 1.97 million kg. Butadiene, essential for tire production, is particularly hard to source from alternative suppliers. Mixed xylene, a key component in paint thinners, was exported from China to Japan for the first time in six and a half years. Smaller Japanese firms often struggle to secure xylene due to Chinese customs scrutiny over its dual-use classification. However, larger companies working with government-linked intermediaries have started purchasing from China. Paint thinner production, which requires precise chemical blends, has been disrupted, with companies like Nippon Paint adjusting shipments.
China sourcing context
China benefits from a more diversified crude oil supply chain and extensive coal-to-chemicals capacity, leveraging abundant domestic coal reserves. China Shenhua Energy reported a 10% increase in polyethylene sales in March year-on-year. Sinopec's coal-to-chemicals operations are running at full speed, with major renovation plans postponed, according to Vice Chairman Zhao Dong. Chinese government export restrictions on certain fuels and oil products do not cover these chemicals, allowing companies to actively export. A Japanese trading company source noted growing interest in Chinese imports to compensate for Middle East supply uncertainty.
Long-term concerns
While the current shift appears driven by emergency needs, a long-term transition could significantly impact Japan's chemical industry. A senior executive at a major chemical firm warned that Chinese companies are trying to insert themselves into intermediate raw material supply chains. As domestic demand shrinks, Japanese chemical firms are consolidating production, but rising Chinese imports may accelerate downsizing. A similar pattern occurred in steel, where Chinese overcapacity led to a flood of cheap exports, forcing Japanese firms like Nippon Steel and JFE Holdings into painful restructuring.
Source: Read the original report | Published: April 30, 2026