Jakarta (VNA) – Indonesia is seeking alternative sources of naphtha from Africa, India, and the US amid disruptions to supplies from the Middle East due to escalating geopolitical tensions and shipping issues through the Strait of Hormuz.
Naphtha, a petroleum byproduct, is a crucial input for the production of ethylene and propylene, two key components of plastics. Currently, about 70% of Indonesia's naphtha supply comes from the Middle East, while limited domestic refining capacity makes the petrochemical industry heavily dependent on imports.
According to Fajar Budiono, secretary general of the Indonesian Olefin, Aromatic and Plastic Industry Association (Inaplas), disruptions to shipping through the Strait of Hormuz have severely impacted supplies from the Middle East. The pressure has spread to downstream industries, directly affecting profitability, especially for small businesses. The Indonesian Food & Beverage Industry Association (Gapmmi) also noted a 50–60% increase in packaging costs due to rising raw material prices.
Faced with this situation, businesses are being forced to seek alternative sources of supply from Africa, Central Asia, and the US, although this will significantly extend shipping times. Goods from the Middle East take only 10–15 days to reach Indonesia, while shipments from alternative regions can take at least 50 days.
In addition, Indonesian businesses are promoting solutions such as increasing the use of recycled materials, redesigning packaging to reduce plastic usage, and diversifying input materials beyond naphtha, including condensate, liquefied petroleum gas (LPG), and propane. Inaplas has also urged the government to consider reducing import taxes on LPG to make this raw material more competitive.
The Indonesian textile industry is also experiencing a ripple effect. According to Redma Gita Wirawasta, chairwoman of the Indonesian Fibre and Filament Yarn Producers Association (APSyFI), polyester prices have increased by approximately 40%, while rayon prices have risen by 15% due to higher acetic acid and transportation costs. Although the supply of raw materials such as PX, PTA, and MEG remains secure until the end of April, the increased costs may force downstream industries to further reduce production./.
VNA
