MethodologyContact usSupportLogin
Track Asian paper and board markets with Fastmarkets market intelligence. View our latest price data and forecasts to protect your margins today. Get price data now.
Global energy markets are currently experiencing a shock due to the growing conflict between Iran, Israel and the US in the Middle East. Approximately 20% of the world’s oil and a similar percentage of liquefied natural gas (LNG) pass through the Strait of Hormuz, a crucial shipping corridor located along Iran’s southern coast. By early March, the attacks on vessels in and around the strait had left roughly 150 oil and gas tankers stranded, effectively halting maritime traffic. Several Middle Eastern ports, including Jebel Ali in the UAE, were temporarily shut down after drone strikes sparked fires. Additionally, Iran targeted Saudi oil facilities and even a major Qatari LNG plant, resulting in the loss of about 20% of the global LNG supply.
Asia is highly dependent on these impacted energy supplies. According to the International Energy Agency, about 80% of the oil and oil products shipped through the Strait of Hormuz and about 90% of the LNG (mostly from Qatar and UAE) go to Asia. China and India together account for about 40% of the approximately 15 million barrels of oil per day shipped through the strait, and other markets in Asia, including Japan and South Korea, account for a similar share. These supplies are extremely important to meet energy needs for Japan and South Korea.
In 2024, net energy imports accounted for 87% of Japan’s total energy supply and 84% of South Korea’s total based on data available from the International Energy Agency (IEA). This is because Japan and South Korea use large volumes of oil and gas to meet their energy needs (56-57%), and almost 100% of their crude oil and gas needs are supplied by imports. For China, net energy imports accounted for 24% of its total energy supply in 2023, a lower share due in part to coal accounting for 71% of its energy use, while oil and gas account for 26%. Still, China is highly dependent on oil imports. IEA data show net crude oil imports furnished 74% of China’s crude oil supply in 2023. In the near term, China may be insulated from an immediate impact due to its high level of stored reserves, but the longer the conflict persists, the more likely China will start to feel the effects. Other Asian economies have varying levels of dependency on oil and gas to meet their energy needs. Energy imports accounted for 58% of energy supply in Thailand, 45% in Vietnam and 37% in India. Indonesia, on the other hand, is a net exporter of energy. Note that all of these countries are relatively dependent on imports to supply their crude oil needs, with shares ranging from 57-88%, although Indonesia is at 35%. Table 2 provides more information on energy supplies for these countries.
The developments in the Middle East have thrown international energy markets into turmoil, driving fuel prices sharply higher worldwide. Brent crude oil surged above $100 per barrel in the days following the outbreak of the conflict, rising by over 40% from levels seen in late February. At one point, Brent prices spiked close to $120 per barrel before strategic reserve releases helped bring them down slightly. The US benchmark oil, West Texas Intermediate, also rose, exceeding $90 per barrel, a 36% increase over its pre-conflict level of late February. On Thursday March 19, Brent crude futures rose to nearly $117 per barrel after Iran targeted a Qatari facility housing the world’s largest LNG export plant in retaliation for an Israeli strike on its South Pars gas field. On Tuesday March 24, Brent prices were at about $104 per barrel, while WTI remains near $90 per barrel. The Dubai crude oil price (based on Platt’s assessment) for Asia is up even more, posting a 96% increase as of March 20 compared with February 27, 2026.
Natural gas prices experienced an even more dramatic rise. In Asia, gas prices have climbed sharply. Platt’s Japan Korea Marker (JKM) gas price, a benchmark for spot LNG prices in North Asia, shows prices up 102% as of March 20 relative to before the conflict began. These gains are more than those seen in Europe. As discussed in the recently published Alejandro Mata Lopez’s Viewpoint on the impact in Europe, Europe’s leading gas price benchmark, the Dutch TTF, soared more than 60%, climbing from the low €30s per megawatt-hour (MWh) to around €52-60 per MWh in the first week of March. Recently, European natural gas futures jumped about 25% to over €68 per MWh, the highest level in over three years, following Iran’s missile strikes on key energy infrastructure in the Middle East. In China, LNG import prices through the China National Offshore Oil Corporation (as reported by CEIC) shows prices climbing 29.4% from February 27 to March 13, before slipping 1.2% by March 20. This price is more of a longer-term, contract price, but its gains mean that price adjustment mechanisms are already being triggered.
Reports suggest that one means of dealing with the surging oil and gas prices is a swing toward coal. As a consequence, coal prices are also rising in some locations, although not by nearly as much as oil and gas. Benchmarks for coal prices in Asia are currently up about 15-16%. For example, the Global Coal Index produced by South Korea’s Ministry of Trade, Industry and Energy is up 15.3% as of March 20 from where it was on February 27. Prices for Newcastle coal from Australia are up 18-24% since the start of the conflict based on assessments by Platt’s. However, steam coal prices in China show little to no change in prices from late February through March 18-20.
There is wide variability in energy usage across Asian paper and board mills. As shown in Figure 1, China, India and most of Southeast Asia, including Indonesia, Thailand, the Philippines and Vietnam, are heavily dependent on coal with it accounting for 71-76% on average of purchased energy usage for the production of major paper and board grades. The use of oil and gas for paper and board production in these countries is more limited. In contrast, Japan, South Korea and Malaysia are much more dependent on oil and gas, with these two fuel sources accounting for 44-71% of fuel consumed.
Using Fastmarkets’ Analytical Cornerstone, we ran a scenario to gauge the impact of higher energy costs for Asian mills by grade, based on a 100% increase in oil and gas prices and a 15% increase in coal prices. This scenario applies the approximate changes in energy prices seen through March 20. The increases reflect spot prices, so mills may be insulated from the increases in the near term depending on their fuel supply contracts, but the longer the conflict lasts and supplies are diminished, the more the higher prices will play through to mill costs. The impact of the higher energy costs is relatively modest for those mills that largely use coal, but the impact production dependent on oil and gas is significant. For China, India and most of Southeast Asia, the added costs range from $4.81-12.00 per tonne for containerboard grades and $5.59-23.79 per tonne for boxboard grades. (Note that for China, the estimated increases are likely overstated given the flatness in coal prices.) The high end of the boxboard range is for Southeast Asia, particularly Indonesia due to the relatively high share of gas used at APRIL’s Kerinci mill and Fajar’s duplex mill — although reports suggest that this mill currently is not operating. The impact on Japan and South Korea for all packaging grades and Malaysia for containerboard grades is much higher due to the high level of oil and gas consumed at mills in these countries. For this group, the increases in costs range from $24.42-61.22 per tonne for containerboard and $28.42-50.37 per tonne for boxboard. This level of increase is likely to have substantial impacts on prices in these domestic markets and limit the ability of producers to export, especially if the higher energy costs persist.
For uncoated woodfree (UWF) and coated woodfree (CWF) grades, the variance is again wide with the impacts on South Korea and Japan much higher than on other countries in Asia (note that Malaysia does not produce woodfree paper). The increase in costs for UWF in South Korea is only $12.69 per tonne, so it remains competitive with the increases seen across the rest of the region excluding Japan, which range from $8.00-13.73 per tonne. For CWF, the low end of the range at $7.22-8.66 per tonne is occupied by Southeast Asia and India, while China and South Korea would see much higher increases of $17.45-24.03 per tonne and Japan, at the top end of the range, would see costs surge by an average of $62.07 per tonne.
While these cost increases range from fairly modest to significant, there are other costs that will also add pressure on Asian suppliers. First, chemical costs will increase. Prices for some chemicals such as resins, polymers (used for water treatment, wet end retention, wet strength agents, etc.) and coating binders are already up as much as 100%, although their per tonne usage is low. Other chemicals are likely being affected as well, albeit to a lesser extent. Available data indicate caustic soda spot prices in China are up 13% (data from Chemsino as reported in WIND) as of March 20, 2026, relative to February 27, while corn starch prices are up 8-9% across several provincial markets (data from China Corn Market Network as reported in WIND).
Another important source of added costs is from potentially higher shipping and fuel surcharges. These costs will have cumulative impacts in that they affect ocean freight rates for old corrugated containers (OCC) as well as local transport costs — due to higher gasoline and diesel prices — for mills to transport imported inputs from the port to the mill as well as shipping final products to customers both domestically and abroad. As discussed in PPI Asia on March 20, specific to OCC, there were reports of freight increases of $50-300 per 40-foot container depending on origin and destination. An assumed increase of $200 per tonne for a 40-foot container translates to an increase of $5-10 per tonne for OCC, and suppliers over the past two weeks had asked for increases at this level. Fastmarkets’ benchmark price for OCC imports into Southeast Asia and Taiwan was up US$5 per tonne from March 6 to March 20 for OCC supplies from the US, Europe and Japan. The uncertainty over the actual level of freight increases led to a reduction in orders, although some buyers did choose to undertake some restocking. More increases are likely as the freight and fuel surcharges become clearer in April. Every $100 surcharge for a 40-foot container translates to $4-5 per tonne in additional costs. Regarding local transport, one source in Vietnam indicated its local transport costs have risen $40 per 40-foot container, which translates to about $2 per tonne.
Meanwhile, prices for packaging imports into Southeast Asian ports were stable for containerboard and up $10 per tonne for duplex between February and March. The stability for containerboard resulted as local markets saw some resiliency in demand due to the various religious festivals being celebrated, but supply remained abundant, especially as demand from China for recycled containerboard declined. For duplex, the increase was attributed to higher prices for volumes from China because of the increases seen in that market over the past six months.
Market participants in Southeast Asia expect a rise in prices in April as suppliers aim to pass on the higher transport costs both for ocean and land freight as well as other added costs caused by the conflict. Furthermore, suppliers are being cautious with export orders as they are not sure how to charge for freight given the uncertainty in the level of surcharges. Suppliers are concerned that they will have difficulty passing costs onto customers, especially in China, due to oversupply and weak demand.
Looking at the cumulative impacts of the various sources of higher costs, there is potential for an additional $5-10 per tonne for ocean freight for OCC, $10-15 per tonne for higher energy costs, $2-5 per tonne for local transport costs (one way) and an additional amount for chemical costs. This yields a total increase of $19-35 plus chemical costs, but it may be difficult to pass on these costs given the sluggish regional demand and excess supply.
Finally, there will be numerous significant impacts on the economies across Asia given their dependency on fuel from the Middle East, the resulting influence on inflation and the subsequent impact on manufacturing and consumer demand. Higher fuel and food costs (due to higher fertilizer costs) will push inflation up again across the region. For the near term, some governments are undertaking policies to try and reduce the impact through the release of strategic reserves, export restrictions, fuel subsidies, price freezes or caps, and tax reductions. But these actions can hurt fiscal balance sheets and budgets and may be hard to sustain depending on how long the conflict continues. And even if there is a de-escalation in the next month or so, the impacts will linger, especially for LNG because of damage to the infrastructure that will require lengthy repairs. This means that Asian economies are likely to see slower growth in 2026 than in 2025, which will result in weaker paper and board markets.
Stay informed as global energy costs shift. Follow our ongoing coverage and get expert insights and market forecasts for the Asian paper and board industry. Unlock market forecasts.