South East Asia

The outbreak of the US/Israel/Iran conflict in late February rapidly disrupted global trade, particularly through the Strait of Hormuz which represents a critical route for oil and shipping. Shipping costs surged almost immediately, increasing by 20% to 50% as fuel prices rose, vessels were rerouted and risk-related surcharges were introduced. Energy markets reacted strongly, with oil prices climbing 25% to 40% to create significant cost pressures across transport and industrial sectors.

In contrast, recovered paper prices did not react immediately. During the first weeks of the conflict, prices remained stable or even declined slightly by some 2% to 5% as demand weakened and market participants adopted a cautious, wait-and-see approach. However, as higher energy and logistics costs began to impact paper mills, production costs steadily increased.

By April and into May, this cost pressure started to feed into the market, pushing recovered paper prices between 5% and 10% higher depending on the grade and the region. Additional support came from the impact on demand from the gradual shift towards paper-based packaging.

So while shipping and energy costs surged immediately following the outbreak of the war, there was a delayed response in terms of recovered paper prices. These have risen more gradually as the broader cost increases worked through the supply chain.