Rising prices and stagnant markets: Iran's war hits China's manufacturing sector
has The Iran war shaken manufacturing sector , and Chinese manufacturers and traders are warning of a possible rise in the prices of vacuum cleaners and e-cigarettes if the war drags on, at a time when the economic powerhouse that is a manufacturing hub of the world is facing insane costs.
Weeks of war and the closure of the Strait of Hormuz Asian oil supplies, disrupting the production of oil-derived plastics across the region.
has remained Chinarelatively immune to fuel shortages thanks to its oil reserves and renewable energy, but domestic factories are facing increasingly high raw material bills.
Heavy financial losses
The price of plastic has risen by about 50% since before the Iran-Iraq War, according to Bryant Chen, a manager at the Remo vacuum cleaner factory in Foshan. He stated, "We are incurring financial losses on all our orders."
He explained that the costs of the products he manufactures are significantly affected, citing the plastic, copper used for the vacuum cleaner motor, and the raw materials used in its electrical wiring.
He added: “At this time of year, we usually enter the peak season, but compared to the same period previously, the shipping and production data are not very encouraging.”.
Plastic traders at the Changmoto storage center said the price fluctuations were the worst they had seen in decades.
"It's never been this crazy," said Lee Dong, who started working in the sector two decades ago.
The price of the plastic granules he buys for local factories that make phone cases and electric car batteries jumped sharply in March, triggering days of panic and causing traffic jams in the small town as factories rushed to stockpile them.
Plastic production was affected
The Iran war had a greater negative impact on plastic production than the Covid pandemic when ships could not enter China from there.
Some vendors took advantage of the panic over rising plastic prices and sought to exploit the increased costs.
Plastic prices have fallen by about 10 to 20% from their peak, but he warned of the repercussions of further disruptions to oil supplies.
Traders say that the factories they supply will suffer the most because their direct costs will rise.
High fabric costs
The costs of fabrics scattered on factory floors that are turned into sports pants exported to Europe and North America have also increased by between 10 and 20% due to the Middle East war.
With foreign orders declining, tailors spent months without work.
Two months after migrant worker Jing Jing returned to her hometown in Hubei province, she was paid half of what she used to earn in garment factories in Guangzhou (400 yuan, or $60). She said: “When the tension rises, orders suddenly disappear.”.
Jing Jing joined a number of people looking for work and negotiating for higher wages, while clothing factory owners sat on motorcycles holding up signs looking for employees.
Chen, the owner of the vacuum cleaner factory, said he remains concerned about rising shipping costs if the Iran war continues.
He added: If shipping costs increase, this will lead to a significant increase in the final costs for our customers, and they will not be able to sell normally because the costs are too high.
