Naphtha Supply Crunch Hits Japanese Companies Amid Global Industrial Strain

David Chen, a Chinese national living in Japan, recently learned about global industrial supply chains through an unexpected source: a bag of potato chips. Popular Japanese snack brand Calbee replaced its signature colourful packaging with monochrome designs due to a naphtha supply crunch.

Naphtha is a flammable liquid processed from crude oil and serves as a foundational input in polyester fibres, packaging, and industrial solvents. The squeeze has prompted Japanese media to coin the term 'naphtha bankruptcies', reflecting mounting anxiety among companies over securing vital oil-derived inputs.

A June survey by Tokyo Shoko Research found that about 80% of more than 7,000 responding firms had difficulty procuring oil-derived products. This localised squeeze in Japan is part of a wider strain on global supply.

According to Goldman Sachs analysts led by Yulia Zhestkova Grigsby, global refinery outages stood at 60% above seasonal norms as of late August. The tight conditions are attributed to two main pressures: mounting geopolitical conflict and fuel export controls from China, which has the world's largest oil-refining capacity.