Naphtha shortage threatens Asia’s chemical sectors and global chipmaking

The disruption to Middle East crude flows is rippling through the upstream petrochemical sector and downstream supply chains, especially in Asia.

Naphtha, a light oil derived from crude refining, is key to making the “petrochemical intermediates” deployed to manufacture plastics, rubbers, solvents and resins – which, in turn, are used across industries ranging from packaging to construction, cars and semiconductors.

Prices have surged in South Korea – home to one of the world’s most naphtha-intensive clusters. LG Chem, the nation’s largest chemical company, has shut down one of its facilities.

Meanwhile, Japan dominates the supply of photoresist – the naphtha-derived substance used to print chips; suppliers like JSR Corporation are telling customers such as Samsung and SK Hynix that they are having trouble sourcing raw materials.