Chinese factory owners and traders are warning that consumer goods ranging from vacuum cleaners to vapes could get more expensive if the Iran war continues.

Weeks of US-Israeli strikes on Iran and the effective closure of the Strait of Hormuz have choked Asia’s oil supply, driving up the cost of plastic across the region. China’s manufacturing hub is now absorbing what one manager called “crazy” costs.

How is the Iran war affecting China’s manufacturing industry?

The Iran war has disrupted oil supply through the Strait of Hormuz, pushing up plastic prices by roughly 50 percent since the conflict began.

China has been partly sheltered from fuel shortages through oil reserves and renewable energy, but factories are absorbing sharply higher raw material costs. Supply chain consultant Cameron Johnson warns these cost increases will filter through supply chains for the rest of the year.

What are factory owners in China saying about rising costs?

Bryant Chen, a manager at vacuum cleaner factory RIMOO in Foshan, southern Guangdong province, said the company has been losing money on every order. Plastic, copper for motors and raw materials in power cords have all risen sharply.

“Typically at this time we’d be entering peak season, but compared to the same period previously, shipment and production data aren’t very optimistic,” he said.

Two hours away in the storage hub of Zhangmutou, plastic traders said price fluctuations were the worst they had seen in decades. Li Dong, 46, who has worked in the industry for two decades, said: “It has never been this crazy.” The plastic pellets he supplies to phone case and electric vehicle battery factories jumped wildly in March, triggering days of panic that jammed the town’s roads as factories rushed to stock up.

How does the Iran war compare to Covid-era supply disruptions?

Li said the Iran war has hit plastic production even harder than the Covid pandemic, when ships could not move freely in and out of China. Some sellers cashed in on the plastic panic, fighting to take advantage of surging costs. Li said prices had since dropped around 10 to 20 percent from their peak, but cautioned that further oil disruptions would hit the factories he supplies hardest, as their direct costs would rise.

Exporters in Zhangmutou showed a vast range of products their pellets would become, including drones, badminton birdies, and e-cigarette casings destined for the Middle East.

How are Chinese garment factories coping with the crisis?

For exporters, the Middle East crisis has compounded the hangover from Donald Trump’s sweeping global tariffs last year. The US Supreme Court struck down those levies as illegal, but tariffs on Chinese goods entering the US still sit at around 20 percent.

One garment factory owner on the outskirts of Guangzhou said overseas clients are afraid to place orders while manufacturers cannot pin down changing costs. “As a result, everyone is in a mutual state of decline,” said Zhou, 55.

Fabrics on his factory floor, being made into sweatpants for Europe and North America, have risen 10 to 20 percent in cost due to the Middle East war. As overseas orders dropped, seamstresses went months without work.

Migrant worker Jingjing returned to her hometown in Hubei province for two months, earning half what she now makes in Guangzhou. “When tensions rise, orders suddenly disappear,” the 42-year-old said.

What happens if the Iran war drags on?

Chen said RIMOO plans to expand beyond the Middle East, where around 60 percent of its customers are based, and remains cautiously optimistic about long-term demand. But he warned that rising shipping costs could make products too expensive for customers to sell. “If shipping costs rise, it will cause the final costs for our customers to increase sharply,” he said.

Supply chain consultant Cameron Johnson said the broader impact will be felt well beyond the current disruption. “The longer it goes on, that kind of cascades into much bigger problems, particularly if there’s not enough oil in general to run stuff,” he said.