Asian industries from petrochemicals to shipping to technology are increasingly at risk of disruption as the US-Iran war disrupts shipments of key raw materials through the Strait of Hormuz, executives are warning.
Speaking exclusively to Nikkei Asia, Keh-Yen Lin, president of Taiwanese oil refining giant Formosa Petrochemical, described the blockage of trade through the strategic waterway as unprecedented.
“There has never been such an incident in the past. The Strait of Hormuz has never faced a real blockade previously,” Lin said. “It’s not only about crude oil. Naphtha, the key feedstock for making many petrochemicals, also largely comes from the Gulf States. We don’t see any viable alternatives to bypass this route.”
Naphtha is the key material for making various petrochemicals such as ethylene, which in turn is used to make a wide range of plastics, synthetic fibers, and electronic materials.
Lin’s warning comes as several of the region’s petrochemical makers have already said they will scale back production and halt new orders due to the disruption caused by the conflict in the Middle East and the resulting chaos in shipping through one of the world’s busiest waterways.
“It’s an industrywide situation for a lot of Asian makers, and not for a single company. … Most players won’t hold lots of inventory,” Lin said, adding that his company will have to reduce production as soon as this month.
“Naphtha inventory is not classified as a strategic material generally, and there is no legally required stockpile. In addition, the overall macroeconomics has been relatively weak for the overall petrochemical industry in recent years, meaning companies tend to keep inventories low, rather than hoard a large volume of such inventories,” Lin said.
The industry veteran said raw materials for the first half of March have been secured but starting from the second half of the month, there could be limited naphtha supplies if the Strait of Hormuz remains blocked.
Formosa Petrochemical and Formosa Plastics, the two largest businesses of Taiwan’s largest industrial conglomerate, Formosa Plastics Group, sent a force majeure notice to their respective clients last week regarding some of their products due to delays in shipments of crude oil and supplies of raw materials.
The move follows similar ones by leading petrochemical suppliers across Asia, such as China’s Wanhua Chemical and Thailand’s Siam Cement Group, which alerted clients about decisions to scale back production due to the disruptions in the Middle East.
Formosa Petrochemical said its declaration, which applies to some of its petrochemical products, was made mainly because several shipments of raw materials were still in transit, and their actual arrival times remained uncertain.
“Due to the shortage of raw materials supply, it is unavoidable that from March 9 all of the production facilities of FPCC’s alkenes business will be forced to run at the minimum capacity,” according to the force majeure notice by Formosa Petrochemical, seen by Nikkei Asia.
Wu Chia-Chau, Nanya Plastics chairman and president of the Formosa Plastics Group, told Nikkei Asia that recent volatility in oil prices is making it difficult to determine pricing for new orders. Nanya Plastics, which is also part of the Formosa Plastics Group, makes a wide range of plastic and electronics materials.
“The price of oil and upstream materials can rise one day and suddenly drop the next. As a result, we have to temporarily suspend quoting price for any new orders, as we don’t know how to define the price,” Wu told Nikkei Asia. “The shipment for our existing orders remained on track.”
“If vessels continue to be unable to pass through the Strait of Hormuz, the market will begin to worry that the strait could face a prolonged closure. Coupled with insufficient domestic storage capacity in Kuwait, Iraq and Qatar, these three countries are expected to start reducing production, which could push oil prices even higher,” a statement from Formosa Petrochemical said.
A manager with a major Taiwanese shipping company told Nikkei Asia that all of the container vessels stuck within the Strait of Hormuz did not dare to break through the blockade for fear of being attacked.
“There were already vessels attacked in the waterway. … Right now, no one dares to tempt their luck. We have suspended taking new orders for this route and plan to raise the overall shipping rate,” said the manager, whose company still has three container ships in the strait.
Taiwan’s tech suppliers and chipmakers say they are closely monitoring the situation, though most have yet to report any material impact from the disruption.
It remains to be seen how the force majeure notices by oil refiners in South Korea, Taiwan, Southeast Asia, and Europe will impact the tech supply chain. Petrochemical products made by the companies like Formosa Plastics and Formosa Petrochemical play a crucial role in all kinds of supply chains, including that of the tech sector. For instance, epoxy resin and solder mask used for making chip substrates and printed circuit boards, photoresists used in semiconductor manufacturing, and tubes and pipes used in building chip plants all rely on petrochemicals, according to sources.
Johnson Deng, co-CEO of Apple and Nvidia supplier Pegatron, said the situation in the Middle East has not yet had a major impact on the tech industry. “However, if the situation continues, we will be worried about the impact on electronics component supplies. … It is unpredictable, we really hope what President Trump said about the war will end soon is real,” Deng told investors on Wednesday.
“It is very critical. We are closely monitoring how the situation would develop,” an executive with a Taiwanese chip substrate supplier told Nikkei Asia. “We can’t underestimate the situation.”
An executive with a Japanese PCB (printed circuit board) maker told Nikkei Asia that as there is a time gap from using raw materials to producing electronics chemicals, there is no immediate impact on the PCB and chip substrate industry. “It will depend on how long the blockade in the Strait of Hormuz would last. … It is easy to start a war, but hard to end it.”
Peter Chen, chairman of Taiwanese electronics maker Qisda, said the outbreak of the Iran war is one of the biggest variables to the tech industry in 2026, as no one knows how long it will last or the scope of its impact.
“People had said the Russia-Ukraine war would end in days but it has been years and [it is still] ongoing. … The tech [sector] will have to prepare [as if the] situation in the Middle East would be a long one, which will drive up the oil costs and sequentially affect people’s daily spending willingness and affect the global demand,” the tech industry veteran told reporters on March 11, adding that the situation is “a big test for tech suppliers’ risk management.”
Kai-Chen Lo, an industry analyst with the Taiwan Institute of Economic Research, said naphtha cracker costs could rise in the short term and the supply of certain petrochemical products could be temporarily affected in light of the force majeure notices sent by Asian petrochemical companies.
Most petrochemical companies that have not yet issued force majeure notices can respond to the naphtha supply issue by adjusting inventories or sourcing alternatives for the short term, she said.
“However, if upstream supply reductions expand or persist, impacts could gradually transmit downstream to industries such as rubber and plastics raw materials and plastic product manufacturers,” the analyst told Nikkei Asia. “We have to closely monitor the logistics situation and the price trends of raw materials to see how the situation unfolds.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.