The Hormuz Strait crisis escalates, Mitsui Chemicals cuts ethylene production.

According to a March 10 report by Nikkei News, due to the escalating tensions in the Middle East and increased shipping risks in the Strait of Hormuz, Mitsui Chemicals has officially reduced the operating rate of its ethylene facilities in Japan, initiating production cuts.

Mitsui Chemicals stated that the production reduction is primarily due to an anticipated significant decline in naphtha imports. Japan relies on imports for approximately 60% of its naphtha supply, with nearly 70% of that coming from the Middle East, most of which must be transported through the Strait of Hormuz. Currently, regional shipping disruptions and soaring insurance costs have created a noticeable gap in naphtha supply.

Ethylene, known as the "mother of chemicals," is a core raw material for downstream products such as plastics, resins, and synthetic fibers. Japanese petrochemical companies have naphtha inventories that can only sustain about 20 days of production, indicating weak supply resilience. In addition to Mitsui Chemicals, other Japanese chemical giants like Mitsubishi Chemical and Idemitsu Kosan have also reduced operating rates or warned of potential production halts, fueling expectations of a continued contraction in industry supply.

This production cut is expected to further tighten ethylene supply in the Asian market, potentially driving up prices for ethylene and its downstream derivatives, thereby increasing cost pressures across the global chemical industry chain.