The war in the Middle East Gulf has placed 57%, 1.33mbd, of Asia’s naphtha imports under a potential threat, according to maritime data firm Vortexa.
Northeast Asia is the most vulnerable to MEG naphtha supply disruptions, with close to 60% (1.03mbd) of the region’s naphtha imports originating from the MEG in 2025.
Southeast Asia follows suit as 16% (280kbd) of naphtha imports originated from MEG last year.
Since the escalation on 28 February and up to 5 March, only two naphtha-laden tankers passed through the Strait of Hormuz.
Some import-dependent ethylene crackers in Asia have started to reduce operating rates in response to supply concerns, on top of already-challenging margins. Most recently, South Korean YNCC declared a force majeure at cracker No1 (915KTPA) and No2 (900KTPA), reducing operating rates from 93% and 73% to 66%, respectively.
This followed Indonesia's Chandra Asri cracker (900KTPA) that declared force majeure just two days earlier. Vortexa reckons more steam crackers and PDH plants could reduce operating rates across Asia if supply concerns from MEG exacerbate further.
The ongoing war will likely exacerbate supply risks for Asia’s naphtha market, keeping the E-W spread wide ($58.75/t on 5 March), while replacement barrels from the Atlantic Basin could struggle to cover the supply shortfall from MEG.
This implies that Asian steam crackers will come under increasing strain to maintain operating rates at pre-conflict levels. The unavailability of Russian naphtha to some crackers (Japan, South Korea) could exacerbate the supply risk further.
Meanwhile, prompt Asia pro-naps still provide a strong signal for naphtha as favourable feedstock for steam crackers (-$10.50/t on 5 March), after coming close to a switching threshold (-$41.50/t) on 25 February.
Asia crackers declare force majeure over naphtha crunch
