War jolts China's well-oiled manufacturing hub

GUANGDONG

This picture taken on April 27, 2026 shows employees working in a clothing sewing workshop in an urban village in Guangzhou, in southern China's Guangdong province. (AFP)

Vacuum cleaners and vapes could get more expensive if the Iran war drags on for much longer, Chinese factory owners and traders warn, as the world's manufacturing hub reels from "crazy" costs.

Weeks of U.S.-Israeli strikes on Iran and the effective closure of the Strait of Hormuz have choked Asia's oil supply, stymieing the production of plastic, derived from oil, across the region.

Manufacturing giant China has been comparatively sheltered from fuel shortages thanks to oil reserves and renewable energy, but local factories are picking up a ballooning raw materials bill.

"Basically, we've been losing money on all our orders," said Bryant Chen, a manager at vacuum cleaner factory RIMOO in southern Guangdong province's Foshan.

The price of plastic has risen roughly 50 percent since before the Iran war, Chen told AFP as workers behind him fastened suction tubes to metal tanks.

"The costs of the products that we are making are being very greatly affected," the 42-year-old said, listing plastic, copper for the vacuum's motor and raw materials in its power cords.

"Typically at this time we'd be entering peak season, but compared to the same period previously, shipment and production data aren't very optimistic."

Two hours away, plastic traders in storage hub Zhangmutou said price fluctuations were the worst they've seen in decades.

"It has never been this crazy," said Li Dong, 46, who entered the industry two decades ago.

The plastic, rice-sized pellets he buys for local phone case and EV battery factories jumped wildly in March, triggering days of panic that jammed the small town's roads as factories rushed to stock up.

Exporters in Zhangmutou showed AFP a vast range of products their pellets would become, including drones and badminton birdies.

One trader sifted through pink, green and purple beads that she said would be molded into e-cigarette casings sold in the Middle East.

The Iran war has hit plastic production even harder than bottlenecks caused by the Covid pandemic, when ships could not come and go from China, Li said.

Some sellers cashed in on the plastic panic, he added, fighting to take advantage of surging costs.

Li said the price of plastic had dropped around 10 to 20 percent from its height, but he cautioned against further oil hold-ups.

"The factories we supply to will suffer the most because their direct costs will rise," he said.

Chen, the vacuum factory manager, said he was "still worried" about surging shipping costs should the Iran war drag on.

"If shipping costs rise, it will cause the final costs for our customers to increase sharply," he said.

They "will have no way to sell normally, because the costs are just too high."

Chen said RIMOO plans to expand to other markets beyond the Middle East where around 60 percent of its customers are based.

"We are still optimistic," he said. "The market demand still exists."

But analysts warn the war's impact on costs will be felt for months.

"The problem is all of these costs will filter through the supply chains for the rest of the year," said supply chain consultant Cameron Johnson.

"The longer it goes on, that kind of cascades into much bigger problems, particularly if there's not enough oil in general to run stuff."