Home / Business and Economy / Middle East Crisis Triggers 'Covid 2.0' Price Hikes in Australia
Middle East Crisis Triggers 'Covid 2.0' Price Hikes in Australia
16 Mar
Summary
- Manufacturers warn of sharp price rises and rationing due to supply chain issues.
- Some companies report freight charges have jumped as much as 250 percent.
- Australia's fuel security is questioned amid global oil price surges.
The ongoing Middle East conflict is causing significant strain on Australian supply chains, prompting warnings of 'Covid 2.0' price hikes. Manufacturers are alerting customers to expect sharp rises and possible rationing as the prolonged closure of the Strait of Hormuz creates a transport bottleneck.
Several major plastics suppliers have notified clients about passing on increased costs. Impact International, which imports resin from the Middle East, Thailand, and Japan, has already raised prices by 15 percent due to a 250 percent surge in sea freight charges. Managing director Aleks Lajovic likened the current supply chain instability to the early days of the COVID-19 pandemic.
Australia's sole polypropylene manufacturer, Viva Energy, also announced price increases for resin used in packaging and automotive parts, anticipating 'significant impacts' on regional and local supply chains. Companies like Vinidex, Polypipe, and Pipemakers Australia have informed customers of up to a 50 percent price jump for April deliveries compared to March, with new rates effective from April 13 and existing quotes canceled from March 31.
Polypipe will also implement a 24 percent diesel levy on all deliveries starting March 23. This situation intensifies scrutiny on the Albanese government's fuel security measures. Critics argue Australia should maintain at least 90 days of fuel reserves, rather than the current approximately 30-37 days' supply, to mitigate risks from global oil price volatility and potential export restrictions from Asian countries, from which Australia imports 90 percent of its refined fuel.
