Plastic Raw Material Prices Surge Due to Middle East Conflict, Industry Forced into Efficiency

Amid shortages of plastic due to escalating geopolitical tensions in the Middle East, downstream plastic industry players in Indonesia are striving to survive amid pressure from rising production costs due to surging raw material prices.

General Chairman of the Indonesian Biaxially Oriented Films Association (ABOFI), Santoso Samudra, stated that the increase in resin prices, which still largely depend on the global market, has prompted producers to make various adjustments.

“This is done starting from operational efficiency, optimisation of energy use, procurement of raw materials from imports, to innovation in product formulations to remain competitive in the market,” said Santoso in a written statement on Tuesday (21/4/2026).

The closure of strategic routes such as the Strait of Hormuz has become one of the main triggers disrupting the supply chain of petrochemical raw materials, particularly naphtha, which is a crucial component in plastic production.

This situation directly impacts downstream industries in various countries, including Indonesia, which still relies on global supply stability.

These distribution disruptions have driven a significant surge in plastic raw material prices.

In fact, for some types of products, price increases are reported to reach up to twice as much.

This phenomenon triggers cost-push inflation pressure, given that plastic is a direct derivative of petroleum.

When global energy prices rise, plastic production costs are also pushed up, ultimately affecting the prices of finished goods at the consumer level.

The impact is widely felt by business players, especially small and medium enterprises (SMEs) that rely on plastic packaging for product distribution.

Rising raw material costs are squeezing business margins even further, potentially disrupting operational continuity.

Amid the ongoing uncertainty, industry players and the government are faced with the challenge of maintaining supply stability while curbing price increases to avoid further burdening the public.

Executive Director of the Indonesian Flexible Packaging Industry Association (ROTOKEMAS), Ferry Bunarjo, said that although facing these challenges, industry players are not choosing to significantly reduce production capacity.

On the contrary, they continue to maintain operational continuity to ensure the supply chain runs smoothly.