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Themis Qi

Eunice Xu

South Korea has become a focal point of Asia’s petrochemical crisis, a frontline economy suddenly forced to navigate the fallout from the Middle East turmoil while scrambling for alternatives. Its semiconductor and industrial sectors, already heavily dependent on imported naphtha, are now exposed to geopolitical shocks that are rippling across the region.
South Korea relies on imports for about 45 per cent of its naphtha demand. About 77 per cent of those come from the Middle East.
On Monday, South Korea’s Ministry of Trade, Industry and Resource confirmed the import of 27,000 tonnes of Russian naphtha, the country’s first such purchase since the outbreak of the US-Israel war with Iran in late February.
The move, reported by Yonhap News Agency, was enabled by a temporary US sanctions waiver allowing Russian cargoes already in transit to complete sales and offloading between March 12 and April 11.
Analysts said the waiver had intensified global competition for limited Russian supply, underscoring South Korea’s precarious position.

Naphtha is a vital petrochemical feedstock used in semiconductor manufacturing to produce essential high-purity chemicals, solvents and plastics required for chip fabrication. Its derivatives – olefins and aromatics – are further processed into photoresists, cleaners and insulating materials used on wafers.
The supply crisis is not confined to South Korea. Taiwan, once Russia’s largest overseas buyer of naphtha, pledged six months ago to cut reliance on Moscow after criticism from non-governmental organisations about its business ties amid the war in Ukraine. By February, Taiwan had reduced imports from Russia to zero and shifted purchases to the Middle East, only to find its semiconductor sector hit by more geopolitical instability.
China, Japan and Southeast Asia also face risks. China produced a record 81 million tonnes of naphtha last year, but the world’s second-largest economy still imported 16.8 million tonnes – 38 per cent more than a year earlier, official data showed.
Russia accounted for 21.8 per cent of China’s imports of naphtha, with a total volume of 350,000 tonnes in June 2025, according to mainland media.
Across Asia, economies with massive naphtha cracking capacity but negligible domestic surplus – including South Korea and China – were vulnerable to supply shocks, analysts said. They warned that the Iran war threatened to tighten supplies of other key chemicals such as helium over the medium term, and could push major manufacturers like Taiwan Semiconductor Manufacturing Company towards alternative – and potentially sanctioned – supply routes.
According to research agency Mordor Intelligence, the Asia-Pacific region, including South Korea, mainland China and Taiwan, accounted for 44 per cent of global naphtha demand last year. The Middle East supplied 54 per cent of shipments to Asia, led by the United Arab Emirates with 23 per cent, Independent Commodity Intelligence Services (ICIS) data showed.
Russia ranked second with 12 per cent, but ICIS said Moscow was unlikely to scale up output in the short term.
According to data from energy intelligence provider Vortexa, Russian naphtha cargoes in transit were estimated to be at 3.57 million tonnes in March. Only a small fraction of roughly 6 to 7 per cent was heading to China, global fuel data and insights provider Opis said.
Spot prices have surged. In China, naphtha prices soared 24 per cent as of March 30 to 8,733 yuan (US$1,264) per tonne from around 7,029 yuan before the closure of the Strait of Hormuz, according to a commodity data platform SunSirs.
“Over the mid to longer term, a prolonged disruption could increase costs and extend lead times for parts of the materials ecosystem,” said Rolf Bulk, head of semiconductor and infrastructure at tech research and advisory firm The Futurum Group.
Asia’s petrochemical reliance, according to ICIS, rested atop a feedstock system that was dangerously concentrated. “A single geopolitical shock can reverberate across an entire industrial continent,” ICIS said in note on March 11.
China, Japan, South Korea and Southeast Asia have enormous naphtha crackers – but negligible domestic naphtha surplus. When imports stopped, rate cuts followed almost immediately, said John Richardson, senior consultant at ICIS.


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South Korea’s return to Russian naphtha – vital for semiconductor manufacturing – highlights Asia’s fragile supply chain amid Iran conflict


South Korea’s return to Russian naphtha – vital for semiconductor manufacturing – highlights Asia’s fragile supply chain amid Iran conflict.


Asia’s chip industry faces naphtha squeeze – and South Korea feels it the most

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}South Korea’s return to Russian naphtha – vital for semiconductor manufacturing – highlights Asia’s fragile supply chain amid Iran conflict

South Korea’s return to Russian naphtha – vital for semiconductor manufacturing – highlights Asia’s fragile supply chain amid Iran conflict