Kansai Paint's recent announcement that its thinner shipments are rising signals a potential turning point for Japan's petrochemical supply chain, which has been under severe strain.
The core of the problem began in March 2026, when a conflict escalation in the Middle East disrupted traffic through the Strait of Hormuz, a critical chokepoint for oil and gas. For Japan, which previously relied on the Middle East for about 70% of its naphtha, the impact was immediate. Naphtha is a crucial feedstock for the chemical industry, especially for producing solvents like paint thinner. By April, Japan's naphtha imports had plummeted by 47% year-on-year, creating a severe shortage.
This supply shock forced companies into crisis mode. First, major paint makers, including Kansai Paint and Nippon Paint, had to ration their products and implement significant price hikes to cope with soaring raw material costs. The weak yen, trading near 160 to the dollar, further amplified the cost of imported materials, putting immense pressure on the industry. At one point, a survey revealed that only about 2.7% of firms could procure thinner as usual, highlighting the depth of the crisis.
However, the situation is now beginning to improve thanks to a two-pronged response. The first part was corporate action. Companies scrambled to find alternative naphtha suppliers outside the Middle East to backfill the shortfall. The second, and perhaps more crucial, part was government intervention. In early June, the Prime Minister announced that Japan's overall naphtha availability had recovered to about 85% of pre-crisis levels. More importantly, the government set up direct distribution channels to supply key intermediate chemicals, like toluene and xylene, directly to paint and thinner manufacturers where the bottlenecks were most acute.
This combination of private-sector agility and public-sector support explains today's positive news from Kansai Paint. By securing alternative feedstock and benefiting from direct government supply channels, the company has managed to restore its raw material procurement to pre-crisis levels and increase shipments. While prices are likely to remain high due to lingering costs, the physical availability of these essential products is finally stabilizing.
- Naphtha: A flammable liquid hydrocarbon mixture distilled from petroleum, used as a primary raw material (feedstock) for producing plastics, solvents, and other chemicals.
- Thinner: A volatile solvent used to dilute or thin oil-based paints and cleaning tools. Its production is highly dependent on naphtha-derived chemicals.
- Strait of Hormuz: A narrow waterway connecting the Persian Gulf with the Gulf of Oman and the open ocean. It is one of the world's most important strategic chokepoints for oil and naphtha shipments.