Asia’s plastic costs surge as Hormuz crisis squeezes naphtha supply

Across Asia's bustling street markets and food stalls, the cost of plastic bags, containers, and cups has climbed sharply — a downstream consequence of the Middle East war that choked off naphtha supplies through the Strait of Hormuz for nearly four months.

Vendors Feel the Squeeze

At Taipei's Songjiang market, chicken vendor Li Yu-ping told the Philippine Star in late June that the price of plastic bags had jumped nearly 60 percent since the war between the United States, Israel, and Iran erupted on February 28. Across Southeast Asia, plastic goods prices have risen 50 to 60 percent due to surging polymer costs driven by the conflict. In Thailand, resin prices jumped 60 to 90 percent, severely affecting production costs for consumer goods and packaging, according to Sanan Angubolkul, chairman of Srithai Superware.facebook+2

The disruption traces back to naphtha — a petroleum-derived liquid essential for producing ethylene, the building block of most plastics. Middle Eastern suppliers provide roughly 54 percent of all naphtha imported by Asia's petrochemical sector, and the closure of the Strait of Hormuz severed that lifeline almost overnight. In the first two weeks of the war alone, naphtha prices surged nearly 74 percent.icis+1

Production Cutbacks Ripple Through the Supply Chain

Major petrochemical firms in South Korea and Japan scaled back production as naphtha inventories dwindled. Japan halved the operating rates at six of its 12 naphtha cracking complexes, while Taiwan's Formosa Petrochemical issued force majeure notices in March after its No. 1 cracker had already been shut indefinitely and its remaining two units dropped to around 70 percent utilization. The South Korean government imposed restrictions on naphtha exports to preserve domestic supply.reuters+4

Polymer prices overall have climbed 41 to 42 percent since the conflict began, according to industry tracker PolymerUpdate.polymerupdate+1

Cautious Recovery After U.S.-Iran Deal

The U.S. and Iran signed a memorandum of understanding on June 20 to reopen the strait toll-free for 60 days. Shipping traffic has partially recovered — 125 transits were recorded between June 15 and 21, the highest weekly total since the war began — but volumes remain at roughly half of pre-war levels. An Iranian drone attack on a Singapore-flagged cargo ship on June 24 renewed uncertainty over the passage.wsj+3

Naphtha in Northeast Asia stood at about $1.14 per kilogram in late June, up only modestly month-over-month, while the benchmark fell to $682 per ton on June 26. Yet manufacturers processing feedstock purchased at peak prices say relief for consumers remains weeks away. Analysts expect plastic and packaging prices to stay elevated through at least the third quarter of 2026.linkedin+3