Rising tensions between the United States and Iran are creating mounting challenges for recycled paper mills across the Gulf region, known as the GCC.
The sector is heavily dependent on imported recovered paper, particularly OCC (old corrugated containers) and mixed waste paper from Europe, the United States and Asia. Geopolitical instability has led to higher freight costs, increased insurance premiums and growing uncertainty in supply chains.
Although local waste paper collection remains relatively stable, the unpredictability of imports has made procurement strategies more complex. Delays and disruptions in shipments risk directly affecting production.
Sharp rise in input costs
At the same time, the cost of key inputs is rising. Prices for chemicals, starch and spare parts are increasing due to logistical bottlenecks and delayed deliveries.
Critical machinery components and new equipment are also arriving later than planned, impacting maintenance schedules and investment timelines.
– Production costs per tonne are rising, squeezing profitability for regional mills, writes Rajasekar Veerichetty, Deputy Managing Director of Al-Jawdah Paper, in an analysis for The Pulp and Paper Times.
The trend is tightening margins in an already competitive market.
Limited access to expertise adds pressure
Beyond supply chain disruptions, operations are also affected by reduced access to international expertise. Travel restrictions, visa challenges, and limited air connectivity are making it difficult for foreign specialists to support the installation and commissioning of new projects.
This is leading to delays in expansions, upgrades and major maintenance work, increasing operational risks.
Despite these pressures, the market outlook in the Middle East remains relatively stable in the short term. Demand in key markets such as Saudi Arabia and the United Arab Emirates continues to hold, supported by growth in the e-commerce and FMCG sectors.
However, prolonged geopolitical uncertainty could gradually dampen industrial activity and consumption.
Industry experts point to the need for proactive strategies, including diversifying the supplier base, strengthening local sourcing, and maintaining adequate inventories of critical inputs. Reducing reliance on external expertise and improving operational efficiency are also seen as key to maintaining competitiveness.
Overall, mills in the region continue to operate and meet demand, but pressure is increasing. Rising costs, supply chain disruptions and limited access to expertise are likely to impact both pricing and investment timelines going forward.
Source: The Pulp and Paper Times
Fact check
GCC countries rely heavily on imported recovered paper. Geopolitical conflicts can quickly disrupt shipping routes, raise insurance costs and limit access to key inputs, making the sector highly sensitive to global trade disruptions.
