Supply-cost pain for Indonesian makers

Indonesian manufacturers are paying more for raw materials and freight as Middle East tensions snarl shipping lanes and unsettle energy markets. (pmi.spglobal.com) S&P Global said Indonesia’s manufacturing purchasing managers’ index fell to 50.1 in March 2026 from 53.8 in February, with delivery delays the worst since October 2021. Survey respondents said the war in the Middle East hit raw-material prices and supplies, disrupting demand and factory output. (pmi.spglobal.com) The pressure is sharpest in petrochemicals and plastics, where the Indonesian Olefin, Aromatic and Plastic Industry Association said about 70% of Indonesia’s petrochemical raw materials come from the Middle East. The group said some materials have become scarce and price ranges have widened sharply. (jakartaglobe.id) The route risk starts far from Java. The United States Energy Information Administration said the Strait of Hormuz carried about 20 million barrels a day in 2024, equal to about one-fifth of global petroleum consumption, so any disruption there quickly feeds into fuel, feedstock and shipping costs in Asia. (eia.gov) Shipping has already been fragile. The United Nations Conference on Trade and Development said the Red Sea and Suez Canal disruption that began in November 2023 put global supply chains at risk, and carriers have kept rerouting vessels around longer paths that raise time and cost. (unctad.org) That matters in Indonesia because manufacturing still made up 19% of gross domestic product in 2024, according to World Bank data. A cost shock in imported chemicals, fuel or freight lands quickly in factory margins, procurement budgets and finished-goods prices. (worldbank.org) Bank Indonesia said in its March 2026 policy review that it is coordinating with the government to mitigate the impact of Middle East conflict on the domestic economy. Deputy Governor Aida S. Budiman said on March 17 that the central bank was watching inflation risks from supply-chain disruption and higher commodity prices. (bi.go.id) (tempo.co) Industry groups say the squeeze is no longer limited to imported resin. The Business Times reported that downstream petrochemical plants were running at about 70% utilization, while the Indonesian Ceramic Industry Association said ceramic factories operated at about 70% capacity in the first quarter, below an 80% target. (businesstimes.com.sg) Global data point the same way. GEP said its Global Supply Chain Volatility Index hit a three-year high in March 2026, with transport costs at a four-year peak as the Middle East war drove shortages and stockpiling. (prnewswire.com) For Indonesian procurement teams, the problem is not only higher prices but weaker visibility. March’s factory survey showed demand softening, export orders slipping and supplier delays worsening at the same time, leaving buyers to price contracts while freight, energy and feedstock costs keep moving. (pmi.spglobal.com)