The impact of the Strait of Hormuz closure on the price development and availability of construction products
We want to keep our customers informed about the situation in the construction products market, which will affect the entire industry in the coming months. The Strait of Hormuz is closed, and shipments are not moving through the Red Sea and the Suez Canal. If the situation continues, it will have significant impacts on the availability and pricing of raw materials. Currently, rising costs are already evident, particularly in fuel and energy.
How does the closure of the Strait of Hormuz affect construction products?
- Aluminium: Prices have already increased by nearly 10%. More than 5 million tons of aluminium pass through the Strait of Hormuz annually.
- Oil: Prices have risen to over 110 dollars per barrel.
- Plastic products: Normally, 20% of the world’s crude oil and approximately 85% of the Middle East’s polyethylene exports pass through the Strait of Hormuz. Several major petrochemical companies have declared force majeure. Petrochemical products include polypropylene and EPDM rubber which are used in many VILPE products.
- Freight: The alternative route via the Cape of Good Hope adds 10–15 days to delivery times and increases freight costs by 30–50%.
- Energy: In the EU, natural gas prices have increased by over 60% since the beginning of the crisis, impacting production costs across the entire supply chain.
| Key raw materials affected by the situation | Risk impact of disruptions in the Strait of Hormuz |
| Polypropylene (PP plastic) | HIGH – 85% of Middle Eastern PE/PP exports passed through the Strait of Hormuz. |
| EPDM rubber | HIGH – Petrochemical product; multiple manufacturers have declared force majeure. |
| Galvanoitu / ruostumaton teräs | MODERATE – Mainly EU production; energy costs are increasing prices. |
| Aluminium | HIGH – London Metal Exchange price has risen by 8–10%. Price is forecast to reach $4,000/t. Aluminium Bahrain (one of the world’s largest aluminum smelters) is in a force majeure situation. |
| ABS/PC plastic (electronics) | MODERATE – Petrochemical-based, but smaller volumes. |
| Electronics / PCB components | MODERATE – Asia route disrupted; air freight as an alternative. |
From VILPE’s perspective, the situation is currently normal, and there are no disruptions in availability. However, several risk factors have been identified in the market, and their effects may materialize in the near future. At worst, these risks could cause significant delivery delays and price pressures throughout the value chain. We want to have an even clearer overall picture so that we can communicate with you as transparently and clearly as possible.
We encourage our customers to prepare for possible changes. We are actively monitoring the situation and will inform you without delay if changes become necessary. We are doing our best to ensure sufficient availability of raw materials and to keep deliveries running as smoothly as possible.
Our sales team (tel. +358 20 123 3222, sales@vilpe.com) is always here to help. Please contact us if you would like to discuss project-specific needs or have any questions about product availability.