US–Iran Tensions Strain GCC Recycled Paper Mills, Raising Costs and Operational Risks

US–Iran Tensions Strain GCC Recycled Paper Mills, Raising Costs and Operational Risks

US–Iran Tensions Strain GCC Recycled Paper Mills, Raising Costs and Operational Risks

- Input costs are also on the rise. Prices of key materials such as chemicals, starch, and essential spare parts are increasing due to logistical bottlenecks and delayed shipments.

The below article is exclusively written By Rajasekar Veerichetty, Deputy Managing Director – Al-Jawdah Paper, Saudi Arabia, for The Pulp and Paper Times

Geopolitical tensions between the US and Iran are creating mounting challenges for recycled paper mills across the GCC region, impacting raw material supply, operational efficiency, and overall production costs.

GCC mills, heavily dependent on imported OCC and mixed waste paper from Europe, the US, and Asia, are facing increased shipping risks and rising insurance premiums. These disruptions are not only driving up costs but also causing intermittent delays in material availability. While local waste paper collection remains stable, the unpredictability of imported supplies is adding pressure on procurement strategies.

Input costs are also on the rise. Prices of key materials such as chemicals, starch, and essential spare parts are increasing due to logistical bottlenecks and delayed shipments. In addition, critical machinery components and new equipment are arriving late, affecting maintenance schedules and slowing down ongoing and planned projects. As a result, production costs per ton are climbing, squeezing profitability for regional mills.

Operationally, the situation is further complicated by limited access to international expertise. Travel restrictions, visa challenges, and reduced air connectivity are making it difficult for overseas specialists to support project erection and commissioning. This is leading to delays in expansions, upgrades, and major maintenance activities, increasing operational risk.

Despite these challenges, the market outlook remains cautiously stable. Higher input costs may push paper prices upward, although competitive pressures and existing long-term contracts are likely to moderate the pace of increase. While packaging and tissue sectors are expected to absorb some of the cost burden, margins may remain under pressure in the short term.

Demand conditions in key markets such as Saudi Arabia and the UAE continue to hold steady, with packaging demand supported by the growth of e-commerce and FMCG sectors. However, prolonged geopolitical uncertainty could slightly dampen industrial activity and consumption over time.

Industry experts suggest that GCC mills should adopt proactive strategies to navigate the evolving landscape. Diversifying supplier bases, strengthening local sourcing, and maintaining adequate inventories of critical inputs are becoming essential. Additionally, exploring local alternatives for technical support and focusing on operational efficiency will be key to sustaining competitiveness.

Overall, while GCC recycled paper mills continue to operate and meet regional demand, rising costs, supply chain disruptions, and restricted access to foreign expertise are placing increasing pressure on both pricing and project timelines. Mills that can effectively manage these challenges through strategic planning and supply chain resilience are likely to remain better positioned in the current environment.
 

Published at : 2026-03-27T19:48:46+00:00">Mar 27, 2026 07:48 PM (IST)