A de facto blockade of the Strait of Hormuz has triggered a thinners shortage in Japan. Naphtha imports from the Middle East have ground to a standstill. Consequently this thinners shortage now affects car manufacturers and painting contractors nationwide. Thinners are indispensable for making paints and coating materials. They also clean car parts and dilute paints for repair work.
Ikeuchi, a Tokyo company with 31 auto body shops, received an alarming notice in March. A supplier warned that thinner supplies may become unstable. Ikeuchi reports that thinner supplies dropped by about 80 percent. Meanwhile costs rose by 40 to 50 percent. Therefore this thinners shortage forced Ikeuchi to postpone opening three new shops in April. The head of Ikeuchi’s technology department described the situation as critical. He said the company may become unable to do business if conditions persist.
Nippon Fruehalf, a manufacturer of truck cargo boxes, announced partial production cuts on April 20. Cargo boxes require more paint than passenger cars. They also need logos and company names painted on their surfaces. Consequently this thinners shortage hits cargo box production especially hard. Nihon Michelin Tire will raise summer tire prices by 3 to 5 percent starting in June. Raw material price hikes from supply constraints drove that decision.
Denso Corp. Executive Vice President Yasushi Matsui expressed deep concern at an April 28 briefing. He said the company cannot predict the next several months. Denso forecasts a 45 billion yen drop in operating profit for the fiscal year ending March 2027. The company cites naphtha supply concerns and Middle East uncertainty as key factors. Japan relies on the Middle East for 40 percent of its domestic naphtha consumption. Finance Ministry data shows volatile oil imports from the Middle East fell 36.9 percent in March compared to last year.
Prime Minister Sanae Takaichi held a minister-level meeting on April 30. She explained that Japan will secure alternative supply sources from the United States and Peru. Petchem makers currently supply sufficient quantities of their products. However this thinners shortage has driven many companies to stockpile naphtha-derived products. Takayuki Honma of Sumitomo Corporation Global Research warned that excessive stockpiling could disrupt supply-demand balance further. The thinners shortage may thus persist even after shipping routes reopen. Auto repair shops and factories now scramble for limited supplies. The situation remains highly unpredictable for the coming months.
