Rare Earth, Fluorine, and Naphtha Supplies Fully Cut Off! Toyota Plummets 98%, Life on the Line—Five Chinese Enterprises Become Japan’s Only Lifeline!

Recently, in a Japanese television commentary segment, an expert analyzed that Japan is currently facing a simultaneous collapse of its strategic supply chains for rare earth elements, fluorine, and naphtha. Financial reports from major enterprises such as Toyota have shown a cliff-like decline. The expert described Japan’s situation as being “squeezed between China and the U.S. like a sandwich.” With oil supplies cut off from the Middle East, rare earth exports halted by China, and tariffs increased by the U.S., Japan’s manufacturing sector is hanging by a thread under this three-pronged assault.

According to customs data cited by Reuters on May 22, since December 2025, China has essentially ceased exports of heavy rare earths—dysprosium, terbium, and yttrium oxide—to Japan, with only minimal sporadic shipments remaining. By May 2026, this supply disruption had lasted nearly half a year, affecting a far broader range than the 2010 incident.

Next, consider the “fluorine crisis.” Japanese semiconductor materials manufacturers such as Shin-Etsu Chemical and JSR dominate half of the global market, but their raw material—hydrogen fluoride—is heavily dependent on fluorite imported from Chinese companies. If export controls tighten, a critical gap will emerge in the etching processes of Japan’s semiconductor supply chain.

Finally, there is the “complete naphtha supply cutoff” and “Toyota’s 98% plunge.” That 98% figure refers to the abrupt collapse of Toyota’s exports to the Middle East. The Middle East accounts for 14% of Japan’s total auto exports, and Toyota annually exports approximately 500,000 to 600,000 vehicles to the region—nearly half of its export business now obstructed.

Due to the near-total blockade of the Strait of Hormuz, Toyota was forced to announce a production cut of about 20,000 units in March, followed by another reduction of 24,000 units in April. Crude oil imports in April dropped by 63.7% year-on-year—the lowest single-month level since 1979.

The key issue lies in aluminum: 70% of aluminum used in Japanese automobiles comes from the Middle East, and Toyota’s reliance on Middle Eastern aluminum exceeds 80%. Production lines for high-margin models like the Land Cruiser have been directly halted. The direct consequence of this “supply cutoff” is that finished vehicles cannot be shipped out, and raw materials cannot be brought in.

The expert noted that currently, five major Chinese petrochemical enterprises—including Sinopec—possess substantial excess capacity in naphtha and fine chemical production. These five companies have become Japan’s “only lifeline” in its economic crisis. Though this statement may sound exaggerated at first glance, when examined from a production standpoint, it actually makes sense.

Original source: toutiao.com/article/1866323543037964/

Disclaimer: This article reflects the personal views of the author.