How the Mideast conflict is disrupting packaging

The global packaging industry is currently facing one of its most volatile periods in history. Geopolitical instability in the Middle East has moved beyond a regional concern, evolving into a systemic shock that is rattling supply chains worldwide.

At the heart of this crisis lies the Strait of Hormuz, a 33km-wide chokepoint that serves as the ‘main artery’ for the world’s plastic production.

A global chokepoint 

If the global polyethylene (PE) trade is a circulatory system, the Strait of Hormuz is its most critical valve. Countries ]like Saudi Arabia, the UAE, and Qatar are the world’s lowest-cost, highest-volume producers of the raw materials used for everyday films, bottles and labels. According to an analysis by Independent Commodity Intelligence Services (ICIS), approximately 84 percent of Middle Eastern PE capacity relies on this narrow passage for waterborne exports.

The region accounts for roughly a quarter of global polyethylene and polypropylene exports, according to S&P Global Energy data.

I've been in the industry for many, many decades, and I've never seen double-digit price increases being executed at the same time ever in my history.

The current blockade has thrown this system–and the label supply chain–into disarray. Ships are queuing, freight rates have spiked, and a third of the world’s seaborne methanol trade, a key feedstock for resins and coatings, is under threat. The result is a global tightening of supply that is driving petrochemical prices to record highs, directly impacting the cost of everything from food packaging to durable labels.

Middle East and Africa

In the Middle East and Africa (MEA), leading converters like Skanem Africa and Kimoha are navigating a landscape of surging costs.

For Skanem Africa, procuring BOPP films has become a logistical puzzle. ‘Getting supplies out of the Middle East now is difficult. To mitigate this, Skanem Africa has begun diversifying its sourcing strategy,’ says Sachen Gudka, managing director. The company is exploring alternative routes from India and China, even as they face longer lead times and strained working capital.

Kimoha CEO Ramakrishna Karanth reports a staggering 25 to 35 percent impact on raw material costs, driven by a war premium of over 3,000 USD per container. He warns that even with a recent truce, damage to energy infrastructure could keep crude prices elevated for years.

The financial pressure is quickly moving down the value chain. ‘This is impacting consumers because converters will pass on price increases to brand owners, who will then pass on price increases to consumers,’ Gudka explains.

Raw material price hikes

The ink and coating manufacturers are sounding the alarm. Flint Group and many others recently announced immediate price increases, citing a fragile supply chain and force majeure notices from suppliers.

‘Recent events in the Middle East are having a significant impact on the cost and availability of many essential materials and services, and regrettably, we do not expect these pressures to ease quickly,’ says Doug Aldred, chief commercial officer of Flint Group, in a press release. 

Heiner Klokkers, president and CEO for Europe, India, Africa, and the Middle East, Flint Group, adds: ‘Following a number of significant disruptions over recent years, supply chains are fragile. Nevertheless, we are working closely with all our suppliers to mitigate rising costs.’

Hubergroup has also been forced into adjustments. CEO Premal Desai explains that while the company has worked to mitigate disruptions through strategic inventory management, ‘the scale and persistence of the current cost pressures make price adjustments unavoidable.’

Wacker Group has also increased prices up to 15 percent for resins, dispersions and dispersible polymer powders produced at its European and US sites, effective June 1, 2026 or as customer contracts allow.

The company cites rising raw material and logistics costs driven by commodity market distortions resulting from the Middle East conflict as the primary cause. Wacker's global polymers business is described as particularly affected by the resulting increases in energy, raw material and logistics costs.

Europe and the US

In Europe, the European Printing Ink Association (EuPIA) reports that rerouting via the Cape of Good Hope has extended transit times for chemical feedstocks by 10 to 14 days. With Brent crude trading above 100 USD per barrel, the cost of petrochemical derivatives, solvents, binders and resins is rising.

Even if the war were to end today, all hostilities stopped today, we still have at least two years’ worth of impact to be felt from that.

The impact is equally severe in the US. At a recent TLMI leadership meeting, converters reported paying 10 to 12 percent more for polyester and polypropylene. Brian Beam, president of Liberty Marking Systems, observed a rush to secure stock: ‘Everyone is trying to buy up as much material as they can right now before the increases go into effect. We're getting hit with 10 to 12 percent on polyester, polypropylene and papers, depending on who it's coming from. With a lot of our materials being of the durable variety, we're getting hit with a bigger increase.’

Corey Reardon, president and CEO of AWA, notes that the industry is facing a unique moment in history. ‘I've been in the industry for many, many decades, and I've never seen double-digit price increases being executed at the same time ever in my history. I've seen five, six, seven percent historically, but never at this level,’ he says. Reardon emphasizes that companies cannot absorb these double-digit hikes for long: ‘Larger spikes must be passed through quickly to ensure business survival, especially for smaller firms.’

In a CNN interview, Kevin Kelly, CEO of Emerald Packaging US-based flexible packaging converter, notes that if the Strait of Hormuz remains blocked for another week, further price hikes in June are inevitable. He highlights that plastic prices have gone up 115 percent since the war began, a burden that will eventually impact grocery and retail prices.

Kelly notes that the situation is more than just rising costs, it is leading to a supply crisis. He explains that while tariffs are a burden, the war is creating shortages in plastics materials starting in the next 8-10 weeks. He predicts these disruptions will hit consumer goods soon, starting this summer.

Asia

Reuters reports that the Middle East disruptions have triggered a ‘plastic shock’ across Asia, forcing a rapid transition to sustainable packaging. With raw material prices at four-year highs and supplies from the Strait of Hormuz choked, going green has become a vital survival strategy.

Asia’s reliance on Middle Eastern naphtha, oil needed for printing inks, has left its supply chain exposed. South Korean factories are running at 10 to 20 percent capacity, and giants like Mitsubishi Chemical have hiked prices by 30 percent.  

Japan is also facing a critical shortage of basic grocery essentials, such as trays and bags, as the ongoing Middle East conflict disrupts the supply of naphtha. According to Reuters, the country relies on the Middle East for 40 percent of its naphtha imports.

Everyone is trying to buy up as much material as they can right now before the increases go into effect. We're getting hit with 10 to 12 percent on polyester, polypropylene and papers.

In response to these supply chain pressures, a Japanese snack food company, Calbee, confirmed it will temporarily transition to black-and-white packaging for 14 products, including potato chips, Kappa Ebisen and Frugra granola.

Starting the week of May 25, this shift aims to maintain a stable product supply without compromising quality, even as the war continues to affect raw material availability. At the same time, as the price gap between virgin plastic and eco-alternatives vanishes, sustainable manufacturers are booming.

Long road to recovery

The economic repercussions are just beginning. Economist Alex Chausovsky points out that the March consumer price index increase–when it spiked from 2.4 to 3.3 percent year over year–is only the first layer of the crisis. He notes that 20 percent of the US aluminum imports come through the Strait of Hormuz, a factor not yet fully baked into the system.

‘Even if the war were to end today, all hostilities stopped today, we still have at least two years’ worth of impact to be felt from that,’ Chausovsky warns. He anticipates upward pressure on inflation stretching into 2027, driven by both the war and shifting tariffs.

His advice to the industry is blunt: The double-digit shocks were not a one-time event. ‘There are real cost factors behind that, and that is likely not the last price increase that you're going to see. So as difficult as it is, ask yourself, “What can I actually do in response?”’

Conclusion

While the immediate outlook is challenging, the crisis is accelerating necessary shifts in the global packaging sector.

From Kimoha, leveraging its presence in the Kingdom of Saudi Arabia to secure Red Sea routes, to Skanem Africa’s regional diversification, the industry is proving its adaptability.

‘Strong support from the administration and Government authorities throughout the difficult times has enabled us to remain resilient,’ Karanth concludes. 

However, for the global industry, the path forward will require collaboration, rapid communication and adapting the supply chain to evolving market circumstances. 

-Selah Zighelboim contributed to this article