Rising Petrochemical Costs Push Korean Restaurants and Retailers to Cut Packaging Use

Rising petrochemical prices linked to tensions in the Middle East are prompting restaurants, retailers, and small businesses in South Korea to reduce packaging use and curb waste-related expenses as supply chain uncertainty continues to affect raw material costs.

Industry groups and small business organizations said costs for petrochemical-based materials used in disposable foodservice packaging and waste handling products have increased sharply amid concerns over logistics disruptions around the Strait of Hormuz during stalled U.S.-Iran negotiations.

Some locations of restaurant chain Outback Steakhouse have reportedly stopped packaging complimentary dessert beverages such as coffee and green tea following the outbreak of conflict in the Middle East. The move was aimed at reducing spending on disposable packaging materials including paper cups and plastic lids while encouraging in-store consumption.

According to the Ministry of SMEs and Startups and export support centers, prices for petrochemical-derived subsidiary materials have risen by three to four times in some cases. Industry groups also reported disruptions in the delivery of base materials after certain suppliers refused to accept orders.

The Korea Plastics Industry Cooperative Federation said 92.1% of domestic plastic processing companies had received notices of price increases for raw materials. Polyethylene (PE), widely used as the inner coating for paper cups and in plastic lids, bags, and packaging films, recorded an average price increase of 13%.

The rise in PE costs has increased pressure on foodservice operators and retailers already dealing with higher logistics and operating expenses. The paper packaging sector has also been affected because PE is commonly used in coated paper cups and takeaway beverage containers.

Small business owners have additionally sought to reduce the use of garbage bags as concerns over supply shortages and further price increases spread through the market. Industry sources said instability in the supply of naphtha, a key petrochemical feedstock used in trash bags and other plastic products, contributed to temporary hoarding of volume-based waste bags in some areas.