How Does The Middle East Conflict Impact The Global Packaging Supply Chain?

How does the Middle East conflict impact the global packaging supply chain?

Geopolitical conflicts in the Middle East have already caused massive upheaval in the global packaging supply chain.

The global packaging industry is currently experiencing one of the most volatile phases in history. Geopolitical turmoil in the Middle East has gone beyond the scope of regional impact, evolving into systemic shocks that disrupt entire global supply chains.

The core of this crisis lies in the Strait of Hormuz. This shipping chokepoint, only 33 kilometers wide, is the "main lifeline" of global plastic raw material supply.

A key global shipping chokepoint

If global polyethylene (PE) trade is likened to a circulatory system, the Strait of Hormuz is the most critical control valve. Saudi Arabia, the UAE, Qatar, and other countries are the producers of daily films, packaging bottles, and label substrates with the lowest cost and largest production capacity. According to ICIS analysis, about 84% of the Middle East's polyethylene capacity is exported by sea via this narrow shipping lane.

S&P Global Energy data shows that exports of polyethylene and polypropylene from the Middle East account for about a quarter of the world's total.

In decades of experience, the industry has never seen double-digit price increases across various raw materials simultaneously.

Currently, the shipping route is blocked, completely disrupting the petrochemical supply system and labeling supply chain. Ships are congested and queued, and freight rates have skyrocketed; Globally, methanol is a key raw material for resins and coatings, with one-third of its trade volume threatened. Global supply tightening has pushed petrochemical raw material prices to historic highs, directly impacting costs across all categories-from food packaging to durable labels.

Middle East and Africa markets

In the Middle East and Africa (MEA) market, leading packaging and processing companies such as Skanem Africa and Kimoha are facing severe cost surges.

For Skanem Africa, BOPP film procurement has hit a logistics bottleneck. Managing Director Sachen Gudka stated: "Currently, transporting raw materials from the Middle East to the outside is extremely challenging. To this end, the company has begun implementing a procurement diversification strategy. "Companies are exploring alternative supply channels in India, China, and other countries, even as they face longer lead times and pressure on working capital.

Kimoha CEO Ramakrishna Karanth stated that due to a war premium exceeding $3,000 per container, the company's raw material costs have risen by as much as 25%~35%. He warned that even if a ceasefire is reached soon, damage to energy infrastructure could keep oil prices high for several years.

Cost pressures are rapidly transmitting along the industrial chain. Gudka explains: Pressure ultimately passes on to end consumers - manufacturers pass price increases on to brands, and brands then pass costs on to consumers.

A wave of raw material price increases

Ink and coating manufacturers have collectively sounded the alarm. Several companies, including Fleint Group, recently announced immediate price increases due to fragile supply chains and frequent force majeure notices from upstream suppliers.

Doug Aldred, Chief Commercial Officer of Flint Group, stated in the announcement: "Recent developments in the Middle East have severely affected the costs and supply of many key raw materials and services, and unfortunately, this pressure is difficult to ease in the short term. "

Heiner Klokkers, President and CEO of Flint Group Europe, India, Africa, and the Middle East, added: "After multiple major disruptions in recent years, the supply chain is already very fragile. We are working closely with all suppliers to ease the pressure of rising costs. "

Hubergroup was also forced to adjust prices. Its CEO Premal Desai stated that although the company has alleviated some supply disruptions through strategic inventory management, the current round of cost pressures is significant and persistent, making price adjustments inevitable.

Wacker Group announced that starting June 1, 2026, or as agreed by customer contracts, it will raise the prices of resins, emulsions, and redispersible polymer powders produced at its European and American factories, with a maximum increase of 15%.

Companies attributed this price adjustment mainly to the Middle East conflict causing imbalances in the commodity market, driving up raw material and logistics costs; Its global polymer business has been particularly affected by rising costs in energy, raw materials, and logistics.

European and American markets

The European Printing Ink Association (EuPIA) stated that after chemical raw material vessels were rerouted via the Cape of Good Hope route, the transport cycle was extended by 10~14 days. Brent crude broke through $100 per barrel, and the costs of raw materials such as petrochemical derivatives, solvents, binders, and resins rose simultaneously.

Even if the conflict ends immediately and the fighting is fully ceasefired, the industry will still have to endure at least two years of subsequent shocks.

The U.S. market has also suffered severe shocks. At a recent TLMI executive meeting, several processing plants reported that polyester and polypropylene raw material prices have risen by 10%~12%.

Brian Beam, President of Liberty Marking Systems, observed a concentrated stockpiling wave in the industry: companies are stocking up in large quantities before price hikes take effect. Polyester, polypropylene, and paper raw materials generally saw increases of 10%~12%, with durable packaging materials seeing even higher increases.

AWA President and CEO Corey Reardon pointed out that the industry is undergoing unprecedented changes: in decades of experience, it has never seen double-digit gains across all categories simultaneously. In previous years, gains mostly hovered between 5%~7%, but this round of gains is truly rare. He emphasized that companies find it difficult to absorb such a steep price increase in the long term, especially small and medium-sized enterprises, which must quickly pass costs down to maintain operations.

Kevin Kelly, CEO of U.S. flexible packaging company Emerald Packaging, predicted in an interview that if the blockade of the Strait of Hormuz lasts another week, a new round of raw material price increases may occur in June. Since the outbreak of the conflict, the price of plastic raw materials has risen by a cumulative 115%, eventually passing on to retail retail prices in supermarkets.

Kelly believes that the industry's difficulties are not just rising costs, but have evolved into a supply crisis. Tariffs already bring operational pressure, and the conflict will lead to shortages of plastic raw materials over the next 8~10 weeks. It is expected that starting this summer, the consumer goods supply chain will be fully affected.

Asian market

Reuters reported that disruptions in Middle Eastern supply chains have triggered a shockwave of plastic raw materials in Asia, forcing the region to accelerate its transition to sustainable packaging. With raw material prices hitting a four-year high and supply disruptions in the Strait of Hormuz, green and environmentally friendly transformation has become a pressing necessity for enterprises' survival.

Asian ink production heavily depends on Middle Eastern naphtha supply, highlighting supply chain vulnerabilities. Many chemical plants in South Korea saw their operating rates decline, with giants like Mitsubishi Chemical adjusting raw material prices by as much as 30%.

Japan is also facing severe shortages of basic packaging materials such as fresh food trays and food packaging bags, mainly due to disruptions in naphtha supply caused by conflicts in the Middle East. Japan's naphtha imports rely on Middle Eastern sources for 40%.

Industry companies rushed to stock up before the price hikes took effect, with polyester, polypropylene, and paper raw materials generally seeing increases of 10%~12%.

Under pressure from the supply chain, Japanese snack company Calbee confirmed that its 14 products, including chips, seafood snacks, and cereal cereals, will temporarily switch to black-and-white minimalist packaging.

This adjustment will be implemented starting the week of May 25, ensuring stable supply of products under raw material scarcity conditions without compromising product quality. Meanwhile, the price gap between virgin plastics and eco-friendly alternative materials continues to narrow, presenting development opportunities for sustainable packaging manufacturers.

The road to industry recovery is long and arduous

The economic ripple effects brought about by this round of geopolitical conflict are only just beginning to emerge. Economist Alex Chausovsky pointed out that the year-on-year increase in the U.S. Consumer Price Index in March surged from 2.4% to 3.3%, marking only the beginning of crisis transmission. Twenty percent of U.S. aluminum imports pass through the Strait of Hormuz, and this potential risk has yet to be fully priced in the market.

Alex Chausovsky warns: Even if the conflict subsides immediately, the industry will still have to endure at least two years of continuous impact. Combined with changes in tariff policies, upward inflationary pressure may continue into 2027.

He offered a straightforward suggestion to the industry: this round of double-digit raw material price increases is by no means a one-time event; cost increases have deep fundamental support, and future price adjustments may become the norm. Even when companies are in difficult circumstances, they must proactively think of response strategies and plan ahead.

Conclusion

Despite the severe short-term industry situation, the crisis is also accelerating structural transformation in the global packaging sector.

Kimoha leverages Saudi Arabia's local presence to secure the Red Sea shipping channel, while Skanem Africa is developing diversified procurement channels. The industry has demonstrated strong adaptive adjustment capabilities. Ramakrishna Karanth frankly admitted: During the industry's downturn, strong support from the government and regulatory authorities helped companies maintain operational resilience.

Looking globally, for the packaging industry to smoothly weather volatile cycles and achieve steady recovery, it relies on full industry chain collaboration and efficient information sharing, and continuously optimizes supply chain layout to adapt to the ever-changing global market environment.