Plastics shortage puts Asia hospitals, food supply at risk

The Iran war is triggering a plastics shortage across Asia that is quickly spiraling into a material crisis affecting healthcare, food production and consumer goods, as regional leaders prepare to address the conflict's economic fallout at the ASEAN Summit in the Philippines this week. Asia imports approximately 70 percent of its naphtha, a critical petrochemical feedstock used to produce polymers like polyethylene and PET, from the Middle East. These materials form the basis of everyday products ranging from food packaging and plastic bags to medical consumables like syringes and IV bags, all of which have surged in price since the Strait of Hormuz became a flashpoint in the Iran conflict. South Korea's health regulators have already initiated a nationwide probe into companies suspected of hoarding syringes and other medical supplies made from oil-derived chemicals, while Taiwan has seen plastic goods prices jump as much as 40 percent. Hospitals across the region are preemptively ordering extra stock, creating artificial bottlenecks, according to the Korea Medical Devices Association. The shortage is particularly acute in countries with strained healthcare systems like India, Indonesia and the Philippines, where Li Dong, a supply chain expert at Singapore's Nanyang Technological University, warns that what begins as a petrochemical shortage could become a public health risk. In the food industry, the disruption threatens to increase spoilage and raise logistics costs as packaging becomes scarcer and more expensive, with Malaysian dairy brand Farm Fresh already citing PET resin shortages as the reason consumers cannot find its milk products on shelves. Manufacturers of recycled plastics and alternatives like bamboo and bagasse-based packaging are seeing unexpected demand as firms seek substitutes, with recycled plastic prices jumping from $400 per ton before the crisis to $1,600 per ton today. The narrowing price gap between virgin and recycled plastics is reshaping investment logic across Asia, making the business case for recycled materials more viable despite the industry still being underdeveloped with fragmented collection systems and contamination issues. Experts say the naphtha shock will disproportionately hurt small- and medium-size enterprises, which lack the hedging tools, long-term contracts and inventory buffers available to larger companies. As the disruption persists, the region may see a wave of closures and consolidation among smaller manufacturers while larger firms gain market share, potentially prompting companies to adopt a "Middle East plus one" strategy similar to the "China plus one" approach that emerged during the COVID-19 pandemic. The impact is expected to eventually pass through to global brands and retail markets in Europe and the United States, raising procurement costs and increasing lead-time risks worldwide.