Jakarta. Indonesia’s plastic industry is facing mounting pressure as the Iran–Israel conflict disrupts global supply chains, constraining access to petrochemicals and driving up prices.

The disruption is partly linked to restricted traffic in the Strait of Hormuz, a critical artery for global petrochemical shipments. The bottleneck has limited the flow of raw materials from the Middle East, a region that supplies the bulk of Indonesia’s inputs.

Fajar Budiono, secretary general of the Indonesian Olefin, Aromatic and Plastic Industry Association (Inaplas), said around 70% of the country’s petrochemical raw materials originate from the Middle East. Supply disruptions have made materials increasingly scarce, with some products nearly unavailable in the market.

“Raw materials are no longer available. Prices are rising, and the gap between minimum and maximum prices is now extremely wide,” Fajar said on Monday.

He explained that plastic production relies heavily on naphtha, a refined oil product that is processed into monomers and eventually turned into plastic. However, naphtha supplies have tightened significantly amid the ongoing disruption.

The uncertainty has forced manufacturers to scale back operations, with many reluctant to accept new orders due to concerns over raw material availability. Industry players are seeking alternative supplies from Asia and Southeast Asia, but those efforts have also hit obstacles.

According to Fajar, suppliers such as China are prioritizing domestic demand, limiting exports and exacerbating shortages in overseas markets.

“Even from China, they are focusing on their domestic needs. So supply is truly limited,” he said.

Facing supply constraints, companies are increasingly turning to innovation to sustain operations. Measures include using recycled materials, exploring substitutes for plastic, and redesigning products to reduce raw material usage.

“At this point, innovation is the only way forward, while we wait for global supply conditions to normalize,” Fajar said.

He also urged the government to accelerate the development of alternative feedstock industries, including the coal downstream industry and the use of crude palm oil (CPO), to reduce reliance on oil-based inputs.

Fajar noted that China has built greater resilience by diversifying its raw material sources across coal, natural gas, biomass, and oil. This allows its industry to better withstand global shocks.

“Even if they need to meet domestic demand, they can still hold up because their raw materials are complete,” he said.

While hoping tensions in the Middle East ease soon, Fajar said the current crisis should serve as a catalyst for Indonesia to fast-track industrial transformation and reduce dependence on a single source of raw materials.

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