Oil shock impacts Asia’s plastics industry

(China Daily/ANN) -- Soaring oil prices are beginning to ripple through Asia-Pacific’s food processing industry, underscoring how supply disruptions can cascade through industries far beyond the energy sector.
The strain is showing up in downstream markets, specifically in the plastic products sector, which depends on feedstocks derived from oil and gas. For example, the prices of polyethylene, or PE — the most commonly produced plastic used for food packaging, among other applications — are moving north amid the crisis in the Middle East.
PE producers are mulling contract increases of up to 10 US cents per pound for March and another 10 US cents for April, the California-based trade publication PlasticsToday reported on March 18.
As oil prices continue to remain firm, so do the prices of plastics and feedstocks like naphtha, said Joseph Chang, global editor of weekly digital trade publication ICIS Chemical Business.
Oil prices breached the US$100 per barrel mark — reaching as high as US$118 at one point — after the United States and Israel began military attacks against Iran on February 28. On Thursday, Brent crude traded above US$103 per barrel.
“But the real big problem right now is that you cannot get the products out from the Middle East,” Chang told China Daily, alluding to the closure of the Strait of Hormuz.
Chang said that Gulf countries account for roughly 25 percent of chemicals and plastics traded worldwide, with most of that ending up in Asia. He noted that most Asian countries import about 60 percent of their naphtha supply from the Middle East, and the shortage of the feedstock has pushed Asian petrochemical firms to declare force majeure and reduce production.
Several Asian petrochemical companies, including Singapore’s The Polyolefin Co, Thailand’s Rayong Olefins and Indonesia’s PT Chandra Asri Pacific, are either cutting output or shutting down plants due to limited feedstock supply from the Middle East.
With plastic products in short supply, this would spill over into the prices of food packaging and eventually into the prices of processed foods, as manufacturers are likely to pass along the higher cost of inputs to consumers, Chang said.
The Southeast Asia and East Asia regions are crucial to global plastics value chains, as they are among the world’s largest producers and consumers of plastic polymers and products, according to an OECD report.
These two regions comprise the 11 member states of the Association of Southeast Asian Nations, together with China, Japan and South Korea.
Plastic use in these two regions has multiplied nearly ninefold over a 30-year period — from 17 million metric tonnes in 1990 to over 150 million tonnes in 2022. The OECD report noted that a population boom, rapid urbanisation, higher household incomes and a larger industrial base have boosted demand for plastic inputs.

(Latest Update March 30, 2026)