Naphtha is a key raw material for petrochemical plants, but supply shortages have led to defaults by some petrochemical companies in Asia, with prices soaring to historic highs. However, due to disruptions in shipping through the Strait of Hormuz, the supply of two core raw materials in the Asian petrochemical industry—naphtha and liquefied petroleum gas (LPG)—has sharply decreased, causing petrochemical producers across Asia to halt production.
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Independent analyst Shanaka Ansem Pereira stated that the limited supply has directly impacted the Asian petrochemical system: &#34;Naphtha and liquefied petroleum gas are light components in refining fractions, and their role is crucial in today's world.&#34;
According to Reuters, Indonesia's Chandra Asri company has declared all contracts force majeure; Japan's Maruzen Petrochemical and Mitsui Chemicals have canceled naphtha import tenders scheduled for late April. Before the conflict, Asia imported about 4 million tons (36 million barrels) of naphtha from the Middle East each month.
This supply disruption has pushed the Asian benchmark naphtha crack spread to a four-year high, with a premium of about $173/ton over Brent crude oil; as of April 10, naphtha prices were $918/ton, an increase of 88% year-to-date.
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Some Asian buyers are considering re-sourcing Russian naphtha under extreme circumstances. By early 2026, Russia remains the world's top naphtha exporter, shifting its export focus from Europe to Asia and the Middle East, with India and Taiwan being the main buyers (purchase volumes fluctuate).
From February 2022 to mid-2025, Taiwan became the largest buyer of Russian naphtha, with imports exceeding $4.9 billion, with Formosa Petrochemical being the main purchaser. In 2026, after the U.S. relaxed sanctions on Russian oil products in March, South Korea's LG Chem also significantly increased imports from Russia. About 45% of South Korea's naphtha demand relies on imports, with 70% previously sourced from the Gulf region.
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Market news and data from the London Stock Exchange Group indicate that Russia's Novatek plans to increase naphtha exports from the Ust-Luga complex in March from 360,000 tons in February to about 550,000 tons.
The easing of ice conditions in the Baltic Sea and increased production at Ust-Luga will help Novatek expand its naphtha exports to the Asian market—the supply crisis triggered by the Gulf conflict has already pushed Asian naphtha prices to historic peaks
The Ust-Luga complex has three processing units, each with an annual capacity of 3 million tons, capable of processing stable condensate into light and heavy naphtha, aviation kerosene, fuel oil, and diesel. Traders report that due to severe cold and thick ice leading to a shortage of ice-breaking tankers, the complex processed about 630,000 tons of condensate in February; market sources add that the processing volume has been nearly 28,000 tons per day from March to today, with the total monthly processing volume expected to exceed 850,000 tons.
Despite the impact of sanctions, Russia still holds over one-fifth of the global naphtha market share, with annual exports of approximately 30 to 35 million tons.
Naphtha (industry aliases Tops, FRN, LVN, HVN) is a core raw material for steam cracking units, which can produce propylene, ethylene, butadiene, and other olefins through cracking, serving as the foundation for various plastics and chemical products. Pereira pointed out: &#34;Naphtha is the basic raw material for petrochemical plants, fed into steam cracking units to produce olefins, which are then used for downstream petrochemical products; this is the source of all plastic products.&#34;
Asia is highly dependent on naphtha supplies from the Middle East, with about 60% of imports coming from the Gulf region; naphtha is also used to dilute Venezuela's extra-heavy crude oil, which has an extremely high viscosity and cannot be transported through pipelines normally.
The decline in refinery operating rates in the region further exacerbates the tight supply of raw materials, reducing domestic raw material production. Steam cracking units, similar to refineries, cannot operate at extremely low utilization rates and function in a &#34;full-on or full-off&#34; mode.
As the raw material shortage intensifies, several Asian petrochemical companies have announced force majeure on deliveries.
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Liquefied petroleum gas (LPG), which can serve as an alternative raw material for cracking, is unlikely to alleviate the crisis: the LPG yield during the refining process is only about 1% to 2%, and production will plummet significantly when refinery loads decrease. Pereira stated: &#34;The LPG yield from refining units is only 1% to 2%; if the feed rate is reduced, the yield may drop to only 0.5% to 1%, effectively halving the supply.&#34;
Governments of major consuming countries have intervened to prioritize civilian supply. The governments of India and Indonesia have quickly demanded that the petrochemical industry's use of LPG be maximized for civilian cooking fuel and automotive fuel. Even if crude oil transportation resumes, petrochemical plants may still need to remain offline for an extended period

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The Asian petrochemical industry is facing severe pressure due to supply disruptions in the Middle East, with naphtha and liquefied petroleum gas prices soaring to historic highs. The supply shortage has led to defaults by several companies, with Indonesia's Chandra Asri announcing force majeure and multiple Japanese companies canceling import tenders. Naphtha prices have reached USD 918 per ton, an increase of 88% this year. Some buyers are considering re-sourcing Russian naphtha, with expectations that Russia will become a major supplier by 2026. Market news indicates that Novatek plans to increase its naphtha exports to the Asian market

Asian petrochemicals face supply disruptions from the Middle East, leading to record prices and pressure across the entire chemical industry chain