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🇸🇬 Singapore /Economy & Trade

Plastics Shortages to Keep Food Prices High After War Disruptions

From The Straits Times · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Disruptions in the Strait of Hormuz have caused severe shortages of plastics, leading to increased packaging costs for food products.
  • Companies are beginning to pass these higher costs onto consumers, contributing to already high global food prices.
  • The shortage impacts various Asian countries, forcing businesses to seek alternatives and absorb or pass on price increases.

Asian consumers are likely to face elevated grocery bills for an extended period due to costly packaging resulting from the Iran war's disruption of plastic supplies. The conflict has created significant shortages of plastics essential for packaging food products, driving up costs that companies are now starting to transfer to consumers.

Global food prices are already near a three-year high, and these additional packaging expenses risk further burdening households already grappling with increased fuel costs. The core issue stems from the near-complete closure of the Strait of Hormuz, a critical energy chokepoint. This has choked off energy flows, particularly those destined for Asia, including naphtha, a key byproduct of oil refining and the fundamental building block for plastics.

All three of our plastic bottle suppliers are dependent on producers of HDPE resin, which source their naphtha from the Middle East.

— Mohd Khairul Mat HassanMohd Khairul Mat Hassan, CFO of Malaysia's Farm Fresh, explained the supply chain vulnerability affecting plastic bottle production.

While efforts are underway to secure a lasting peace agreement, restoring pre-conflict supply levels is expected to take considerable time. In Vietnam, Minh Phu Seafood, the country's largest exporter, has experienced a roughly 50 percent increase in plastic packaging costs since the war began. Although the company is currently absorbing these expenses, it plans to raise prices for consumers eventually.

Malaysia's Farm Fresh dairy company has already increased prices for some products in June, the first hike since 2023. The company's chief financial officer noted these packaging disruptions were unprecedented in their 17-year history, forcing them to use smaller paper cartons while searching for alternatives. "All three of our plastic bottle suppliers are dependent on producers of HDPE resin, which source their naphtha from the Middle East," he explained, adding that consumer preference for plastic bottles also exacerbates the problem due to their convenience and perceived better taste profile.

A lot of people still like the plastic bottle – it’s easy to hold, it’s sturdier, and for a lot of consumers, the taste profile is better.

— Mohd Khairul Mat HassanMohd Khairul Mat Hassan of Farm Fresh highlighted consumer preference for plastic packaging as a factor in the ongoing challenges.
DistantNews Editorial

Originally published by The Straits Times in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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