The prolonged closure of the Strait of Hormuz is spreading production cost pressures across Korean industries, from food and beauty to materials, parts, and equipment sectors. Prices of naphtha, epoxy resin, and residual oil—directly affected by rising crude prices—have surged recently, raising concerns that small and medium-sized enterprises producing food packaging, clothing, and construction materials face production disruptions and deteriorating profitability.
Companies' raw material stockpiles are expected to run out soon, signaling the start of full-scale production cost increases.
According to food industry sources on the 19th, major domestic ramen manufacturers hold only about one month's worth of packaging material inventory. Nongshim, with relatively ample reserves, has secured three months' supply. Ottogi relies on supplier inventories without maintaining its own stockpile, and these suppliers reportedly hold only about one month's worth.
These companies worry that securing additional packaging materials through SME partners will prove difficult. Industry observers point to potential supply disruptions across containers, caps, and films—all made from naphtha-based materials.
"Supply instability for naphtha is making it difficult for our partners to secure polyethylene resin," a food industry official said. "Shipment restrictions make additional stockpiling challenging."
The beauty industry is also scrambling to assess supply chains. An Amorepacific representative said the company is "reviewing response measures including securing alternative logistics routes and stabilizing supply chains."
Another beauty industry source said: "Major container manufacturers have secured about two months' worth of raw materials, so there's no immediate production problem, but raw material prices could rise if the situation drags on."
Rising raw material costs and supply concerns are spreading beyond food and beauty to threaten manufacturing broadly. Products facing direct price pressure from rising oil prices include plastics, paint, polyester, asphalt concrete, aluminum, and secondary batteries. As these items serve as basic materials across Korean manufacturing, concerns are deepening that cost increases will transfer to product prices and trigger inflation.
"Petrochemical products are used as raw materials in secondary battery separator production, so cost increases appear inevitable," a secondary battery equipment manufacturer representative said. "This could be a major setback as the secondary battery industry emerges from its slump and approaches genuine sales growth."
The construction materials industry is also on alert as production costs for paint and asphalt concrete are expected to rise. Paint requires epoxy resin while asphalt concrete uses residual oil—both directly affected by crude price increases.
Rising electricity and logistics costs are further squeezing SMEs. Aluminum smelting and processing companies, which consume significant energy, face a double burden from electricity rate hike pressures. The paper industry also faces mounting manufacturing cost burdens as the drying process consumes large quantities of liquefied natural gas.
"Logistics cost increases are a problem, but the paper industry's manufacturing costs have a high proportion of electricity charges, so rising energy costs are a major concern," said Sung Ki-tae, head of the Korea Paper Manufacturers' Association.
Concrete forecasts warning of surging production costs have emerged. According to the Korea Institute for Industrial Economics and Trade report "U.S.-Iran Conflict and Hormuz Risk: Supply Chain Scenario Analysis and Implications" released the same day, domestic manufacturing production costs could rise up to 11.8% if the strait closure extends beyond three months. This assumes international oil prices surge to $150-180 per barrel and LNG prices rise 150-200%.
"This analysis reflects only the direct input effect of energy prices," said Bing Hyun-ji, a research fellow at the institute. "If shortages of key raw materials occur, the actual impact could expand far beyond these estimates."
"Energy-intensive industries such as steel, chemicals, and cement need to pursue parallel strategies of diversifying process energy sources and dispersing raw material procurement routes," Bing added.
