Either prices are going up or supply is being cut off! The blockade at the Strait of Hormuz has disrupted the cost of living for Asians.

From beer, potato chips and instant noodles to toys, cosmetics, the conflict in Iran is seriously impacting the global supply chain, plastic and crude oil supply, disrupting the daily lives of businesses and people in Asia, driving up prices of various goods, and the whole of Asia is facing this crisis. For many, the crisis is imminent. Choi Gun-soo runs a 57-year-old plastic film factory in South Korea, producing plastic films mainly for agricultural use and TV manufacturing. He stated that some raw material suppliers have raised prices by fifty percent, and many suppliers have stopped supplying altogether. "Due to the shortage of some raw materials, we can only gradually shut down production lines. The next one or two weeks will be a crucial window." He mentioned that the factory had survived many oil price shocks and impacts from the COVID-19 pandemic in the past, but the effects of the current conflict are unprecedented. The company's production capacity has now reduced to 20% to 30% of the normal level. "This is the most serious blow we have faced, the whole company is in panic." The core problem of the supply chain disruption lies in the Strait of Hormuz. This narrow waterway adjacent to the southern coast of Iran carries about one-fifth of the global oil and liquefied natural gas transportation tasks. Compared to other regions globally, Asia has a higher dependence on oil, gas, fuel, and fertilizers from the Middle East, making it the most vulnerable area for supply chain disruptions. Currently, the most scarce are oil derivatives such as naphtha. This raw material is mainly produced in the Gulf region and is the core material for refineries in Asia to produce plastics and other petrochemical products, almost all industrial products rely on it. Currently, prices of basic industrial materials such as plastics and rubber have continuously hit historical records. The well-known South Korean instant noodle manufacturer Samyang Food stated that if the conflict continues, packaging materials will face shortages, and costs will rise significantly. Instant noodles are mostly sold in packaging forms that heavily depend on PET the most widely used plastic globally, also the core material for packaging various products such as food and personal care. Its competitor, the South Korean Nongshim Group, mentioned that their packaging material inventory is only enough to sustain for two to three months, and the company is prepared for the conflict to last long term. The conflict began on February 28 with the US strikes on Iran. Yeonu, a supplier of packaging containers for well-known Korean cosmetics brands such as L'Oral and The Pacific, revealed that they are currently scrambling to procure plastic resins to ensure the production of skincare and cosmetics bottles, and the company mentioned that the supply prospect after June is still uncertain. An anonymous executive from a company stated: "The problem is not the price. If the supply chain itself breaks, without packaging containers, the products cannot be sold." "We are hoarding raw materials, but other than that, there are no other effective solutions, we can only hope that the situation will improve by May." This conflict has already caused a global fuel shortage, affecting various industries from airlines, supermarkets to used car dealers, all dealing with rising costs, weak demand, supply chain disruptions, among other difficulties. The Japanese department store operator Takashimaya mentioned that if the crisis continues, price hikes and supply concerns may spread to categories such as clothing and household appliances. The impact of the crisis is evident: this month, the Japanese company Yamayoshi Seika announced the suspension of production of the popular Wasabeef wasabi-flavored potato chips due to a shortage of heavy oil for frying, directly leading to panic buying among fans. With the rising cost of raw materials, the industrial chain is under pressure. China's synthetic rubber production accounts for nearly half of the global total, and the shortage of naphtha needed to produce synthetic rubber is spreading along the industrial chain, forcing tire, glove manufacturers and others to consider price hikes or switching to natural rubber. Xinhua Jing, an analyst at SCI, mentioned that due to the conflict, Chinese synthetic rubber production in April is expected to decline by about a third. The tire manufacturer Michelin stated that its supply chain team has been "fully mobilized" and is coordinating to adjust delivery plans and fulfill contracts as much as possible. In India, the prices of plastic bottles and caps have surged, pushing up the prices of bottled water; international beer companies operating in the country have also warned that due to a shortage of natural gas, beer prices may rise and supply interruptions may occur. In the southern Chinese manufacturing hub of Dongguan, high oil prices and supply chain disruptions are also felt. Liu Chaonan, responsible for a toy company supplying to American retailers such as Walmart, mentioned that the soaring prices of raw materials have made it unbearable for the company. "The situation in Iran has a huge impact on our toy industry," said the business owner with over 150 employees. "For upcoming new product quotations, we will likely have to adjust the prices." The increase in international oil prices directly translates to the retail end, with global gasoline, diesel, aviation fuel, civil gas, and operating costs for industrial and commercial production all rising. Supply concerns have sparked a hoarding frenzy among the public. Dominic Desmarais, Chief Solutions Officer of Liya Solutions, which connects various suppliers in China for furniture, titanium products, and others mentioned that all petroleum products prices are rising. "We purchased a large amount of expandable polystyrene from Taiwan, and the price has increased by 35%, but customers are still placing direct orders for about 500 tons, no longer negotiating prices, just hoping to get the goods." Ordinary consumers have begun to panic buy, daily items such as garbage bags are being snatched up in frenzy. Several supermarkets in South Korea have faced a shortage of garbage bags and have implemented purchase limits. 24-year-old South Korean student Ryu June-ho bought garbage bags and instant noodles this week. "Worried about the price increase of garbage bags, I bought ten packs of 20-liter, and also stocked up on instant noodles...the cost of plastic packaging is a significant portion of the product pricing."