The ongoing war in Iran has closed the Strait of Hormuz, which is a key chokepoint for 20% of the world’s oil and gas shipments. This has cut off supplies of naphtha, which is necessary for making plastics. Polyethylene (PE) and polypropylene (PP), two important polymers used in bags, bottles, and rigid packaging, have seen prices rise by more than 20% in some areas and by 30% to 45% in others. Food, drink, and consumer goods makers all over the world are having trouble getting enough supplies because exports from the Middle East have stopped.
In India, MSMEs in Punjab and Gujarat are shutting down because of 50% gas cuts and fixed-price contracts that don’t let costs pass through. If disruptions continue, the cost of packaging bottled water around the world could go up by 45%. This would push brands toward more expensive US options instead of more environmentally friendly ones. This feedstock shock has the biggest effect on everyday things like shopping bags and trash bags.
Industry leaders say that supply chains are likely to break down all over the place because 75% of consumer goods depend on plastics. Fertilizer and other petrochemicals also rise, making inflation worse than just fuel. People are calling for the government to step in and stabilize the flow of raw materials because they are afraid the crisis will last a long time.
