South Korean construction firms are facing a severe material shortage following disruptions to global naphtha supplies caused by the war in Iran [1, 2].
This crisis threatens the stability of the national building sector by increasing costs and halting projects. The shortage specifically impacts the production of PVC, a critical component for construction sheets and other essential materials.
Naphtha serves as the primary feedstock for ethylene and PVC [1, 2]. With the outbreak of the Iran-related war earlier this year, the supply chain for these chemicals was disrupted, leading to a scarcity of PVC-based construction sheets [1, 2]. This has created a ripple effect through the supply chain, leaving warehouses empty and construction sites stalled.
One manufacturer handles approximately 130 sheet-type products [1]. Currently, about 30% of those products are out of stock [1]. The resulting scarcity has driven up material prices, placing an unsustainable financial burden on smaller firms.
Industry observers report that the crisis is no longer limited to the smallest players. "Closures of small and medium-sized construction companies are continuing, and as mid-sized and large construction companies also begin to shake, the sense of crisis is growing," Jung Hyun-woo said [1].
Local news outlets have highlighted the severity of the situation. An anchor for YTN said that the red light for the supply and demand of construction materials has been on for a long time due to the naphtha crisis caused by the Iran war [1].
As the cost of raw materials continues to climb, the industry faces a period of instability where project deadlines cannot be met, and bankruptcies may increase among firms unable to absorb the price hikes [1, 2].
“Closures of small and medium-sized construction companies are continuing”
The situation underscores the vulnerability of South Korea's construction industry to geopolitical instability in the Middle East. Because the sector relies heavily on imported naphtha for PVC production, any conflict in Iran directly translates to domestic infrastructure delays and financial instability for small-to-mid-sized builders who lack the capital to hedge against volatile material costs.
