Korean vinyl small businesses hit by Middle East war

The so-called “vinyl alley” at Bangsan Market in central Seoul sits quiet on April 1. Vinyl and packaging materials are sparsely stacked at a shop along the alley. Photo by Jeon Ye-hyun

“Nothing is predictable now. Prices, stockpiles, everything.”

The “vinyl alley” in Bangsan Market in central Seoul remained quiet on Wednesday. Store shelves held only a sparse scattering of tape, zip bags and a few other items. Rolls of vinyl, which usually fill the streets, were nowhere to be seen.

Park Jeong-bum, 51, who deals in specialty vinyl, said supply prices had risen 20 percent starting that day.

“I think factories will raise prices again after seeing how the market develops over the next two weeks,” he said.

Small vinyl businesses are being squeezed from both sides as vinyl prices jump and securing supplies grows increasingly difficult. Fears that disruptions to naphtha supply may persist amid the U.S.-Israeli war against Iran are only adding to the anxiety. Some business owners say petrochemical companies are using the conflict as a pretext for further price hikes.

A notice informs customers that products shipped starting April 1 will be priced 60 percent higher. Photo by Jeon Ye-hyun

War hits Seoul’s 'vinyl alley'

Kang Dae-min, 66, who has run a business on this street for more than 30 years, said notices of price increases now arrive every day. Holding up a notice from a manufacturer, he pointed to a figure 40 percent higher than the prewar price.

“Since mid-March, I’ve had to turn customers away because there has been no supply at all. I lived through the IMF crisis, but this is the first time I’ve considered shutting down the store,” he said.

So far, business owners have managed to hold on with inventory stockpiled by both themselves and factories, but those supplies are now running low. The bigger problem, they say, is that there is no information at all on when the next shipment might arrive.

Kim Tae-su, 66, a supplier of packaging vinyl, said a week had passed since he placed an order, but he was still waiting, an experience he likened to standing in line for rations.

“All I can tell my clients is that deliveries will be delayed,” he said.

Kim Young-su, 73, gave a similar account. “With inventory so scarce, I may have to prioritize long-standing clients and cut off some others,” he said.

Adding to the strain is a pricing system that allows prices to shift between the day an order is placed and the day it is shipped. By the time a delivery arrives, often more than a month later, raw material costs have climbed again.

“Vinyl prices rose 15 percent in March, and they will probably go up another 20 percent this month and in May,” said Park Chang-gyu, 58, who has worked in the business for more than 25 years.

“Because we pay based on the price at the time of shipment, there is hardly any margin left on the wholesale side,” he said.

Smoke rises from the Yeosu Industrial Complex in South Jeolla Province, where naphtha cracking centers are concentrated. Newsis

Suspicions rise over exploitation by petrochem firms

Vinyl manufacturers say they are grappling with problems of their own. Large petrochemical firms produce the naphtha-based raw materials needed to make vinyl, such as polyethylene and polypropylene, but supplies are running short and prices are rising by the day.

Amid growing frustration in the industry, some business owners are accusing petrochemical companies of using the war as a pretext to tighten raw material supplies and push up prices.

One notice sent by a petrochemical company said supply prices for polyethylene and polypropylene would rise by 200,000 won ($132) per ton from March 3, three days after the war began. In February, the increase was just 50,000 won per ton.

Prices have climbed by several hundred thousand won more this month alone. What had cost about 1.3 million won per ton before the war now sells for roughly 2.2 million to 2.3 million won. Petrochemical companies have also reportedly said they will limit sales to prearranged volumes starting in March, putting buyers who place additional orders at a disadvantage.

One business owner raised his voice. “In February, there were rumors that companies were piling up inventory in open-air storage yards because they had so much of it. Does it make sense that as soon as the war began, inventories suddenly became so scarce, and those same companies started restricting supply and raising prices?”

At the heart of the complaint is the claim that petrochemical companies supplying raw materials have preemptively priced in the impact of the war.

The government is also monitoring the situation. An official at the Ministry of Trade, Industry and Resources said the ministry was aware of complaints from small businesses about raw material supplies.

The official added, however, that purchase requests to petrochemical companies had also risen as uncertainty deepened.

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.