Seven Months Into the Hormuz Crisis: What the War Has Done to Plastic, PET and Scrap Businesses in India
Recorded ship traffic through the Strait of Hormuz is still a small fraction of what it was before the Iran war began on 28 February 2026. On 6 October 2026, only seven commodity vessels crossed, the fewest since 23 July, and attacks on tankers hit their highest weekly level of the war. In India the effects came in waves. Plastic raw material prices rose by half or more within weeks. The government waived import duty and then let the waiver lapse. Small plastic factories shut lines, and recycled plastic became more competitive on price. Recyclers say the gain is uneven, because brands are slow to buy and clean PET bottles are hard to find. This is how the story has run so far, and what it means for people who collect, sort and recycle.
The strait on 6 and 7 October
On 6 October 2026, shipping data from Kpler showed seven commodity vessels crossing the strait, the lowest count since 23 July. Its counts leave out ships with their transponders switched off. LSEG counted eight, down from 14 the day before. On 7 October the count rose to 10, still well short of the more than 20 recorded on each of the two days before. Before the war, about 125 large commercial vessels passed through every day. Maritime security sources said attacks on tankers in the strait were at their highest weekly level of the war. The latest reported incident, a tanker hit off the north coast of Qatar, caused casualties.
Oil has found other routes. Kpler estimates that crude crossing the strait is at about 74% of pre-war levels. Cargoes loaded on the Gulf of Oman coast and in the Red Sea have more than doubled, so total Middle East crude exports are still at pre-war levels. Plastics have had a harder time. The Middle East supplied over 40% of global polyethylene exports in 2025, and it has long been a large source of India's polyolefin imports, especially polyethylene. Market analysts said in June that replacement cargoes from China and South-East Asia only partly filled the gap.
How the first weeks looked inside Indian factories
By 6 April, the Indian Plastics Federation said polymer raw material rates had risen 50% to 70% in a few weeks. It asked the Centre to treat plastics as an essential commodity and to keep duty relief going for six months. Its president called the situation a structural disruption.
The pain showed up in small towns first. In Balasore, Odisha, plant owners told a reporter in early April that HDPE and LLDPE had risen by about three quarters between 28 February and 1 April. PVC had risen by about 30%. Raw material is close to 70% of the cost of a plastic product, and small makers could not pass the rise on to buyers. Industry associations in the state estimated that more than 40% of smaller units had shut. One extrusion unit was running two of its 12 lines, with about 60 workers instead of more than 350.
Market analysts estimated in June that polymer demand in India may have fallen by as much as a fifth at the peak. Converters could not pass costs on, and monsoon demand was soft.
Delhi helped, then stepped back
On 2 April 2026, the government removed customs duty on 40 petrochemical products, including polyethylene, polypropylene, PVC, polystyrene and PET chips, until 30 June. On 30 June it extended the waiver by two weeks, to 15 July, as a transition. The finance ministry said the aim was to keep enough petrochemicals available in India, since oil companies were told to put LPG output first.
After 15 July, no further notice appeared. Market sources said the usual 7.5% duty had returned on these items. The federation had asked for six months of relief, and the waiver lasted about three and a half months.
Recycled plastic got its moment, but cashing in has been hard
In early April, an industry report said virgin PET cost only about US$200 a tonne more than recycled PET, against more than US$400 in earlier years. The report did not say which market the figure covers. The head of an investment firm that backs recyclers in South and South-East Asia described a "huge" rise in demand from buyers rushing to secure supply. An Indian recycler said it was supplying large volumes to companies looking for an alternative to virgin plastic.
India's own rules were pulling the same way. Since 1 April 2026, food-contact PET packaging must contain 40% recycled content in FY 2026-27. Brands that missed the earlier 30% target can carry the shortfall forward for up to three years, but they must make up at least a third of it each year.
Then the argument began over whether there is enough recycled PET to go around. The PET packaging association, which represents beverage makers, told the Environment Ministry, as reported on 26 April 2026, that food-grade recycled PET supply was about 3.54 lakh tonnes. It put the need at about 6.84 lakh tonnes and asked for a lower target. By our estimate, that is a shortfall of about 3.3 lakh tonnes (6.84 minus 3.54 lakh tonnes). The recyclers' association replied that its 17 food-grade plants have about 3 lakh tonnes of capacity, enough for the year even with carry-forward. It said members plan to reach about 7.5 lakh tonnes by March 2027. Its Director General said in May that 20% to 25% of recycling capacity sat idle because brands and users were not buying enough.
Results from the listed recycler Ganesha Ecosphere, reported on 4 August 2026, show both sides of this. Its profit for April to June was ₹29 crore, up about 170% from a year earlier, and its operating margin rose to 14.1%. Yet its sales volume fell 11.2% from the previous quarter, and management blamed geopolitical tensions and high polymer prices, which led some customers to hold back orders. Management also said demand for recycled PET is greater than supply, while industry use of recycled content is only 20% to 25% against the 40% target.
Our reading is that capacity is not the scarce thing. Clean, sorted bottles and brands' willingness to commit are. Virgin prices keep creeping up. Virgin PET rose by ₹2 a kg from 24 September. Most polypropylene grades and HDPE pipe and film grades went up by about ₹1 a kg from 1 October. Our plastics scorecard and PET bottle scrap report cover the details. If recycled prices do not rise as fast, each step narrows the gap with recycled material.
Analysts caution that the lift may not last. An analyst at the price-reporting firm ICIS wrote in July that recycled resin could ease in the second half of 2026, though not back to the lows seen before the war.
Other recycled materials feel it too
Tyre recyclers tell a split story. The head of a pyrolysis company said in June that tyre pyrolysis oil had risen from ₹35 to ₹40 a kg to nearly ₹60 a kg, which has revived interest in new plants. The same report quotes the tyre recyclers' association president. He said volumes were stable in the March quarter but margins fell. Exports of finished recycled products slowed as freight and insurance costs rose and shipping times lengthened.
Glass is a different case. Firozabad's furnaces run on natural gas around the clock. After gas was diverted to households in March and April, one large maker there cut output by as much as half and raised prices by up to 20%. On 26 August 2026, the president of a glass exporters' body said gas now costs almost three times as much, as cargoes arrive from the US and Argentina. He said exports had fallen about 35% to 40%. We found no data on how this has affected scrap glass buyers.
Why it matters
A strait that stays shut does two things at once. It makes virgin plastic dearer, which lifts what a recycler can pay for clean material. It also makes buyers nervous, and nervous buyers delay orders. India's recycled PET sector shows both effects in the same quarter. The 40% rule gives brands a legal reason to buy, but carry-forward gives them room to wait.
For kabadiwalas, that is the opening. If recycled PET supply is tight, as Ganesha's management says, the missing input is likely clean, single-colour, traceable bottles. This is our reading.
What this means for you
Kabadiwalas and aggregators: Clean, sorted bottles are likely to be the input in shortest supply. Keep clear and green PET bottles apart, remove other plastics, and bale them dry. Write the weight, date and name on every slip, because brands that must show recycled content need records they can audit. This is our suggestion.
Recyclers: Ganesha's quarter shows that margins can rise while volume falls. Try to get volume commitments from brand customers, and do not plan around the war-time price gap lasting. Recycled resin prices may ease if shipping normalises.
Plastic converters and small factories: Recycled PP, HDPE and PET granules can cover part of your demand when virgin prices jump. Test quality and consistency batch by batch before you switch a product line, and agree grades in writing with your supplier. This is our suggestion.
Brand owners and packers: The 40% food-contact PET rule is in force for FY 2026-27. Carry-forward needs at least a third of any shortfall made up each year. The beverage industry and the recyclers disagree on available supply, so confirm offtake with named plants early.
Tyre recyclers and pyrolysis operators: Oil prices help your end product, but weak export demand and dearer freight can erase the gain. Check each export order's landed margin.
Glass makers and bottle buyers: If your furnace depends on pipeline gas, ask your supplier for a written supply plan. Price changes may continue while gas costs stay high.
The bottom line
Seven months in, the Strait of Hormuz has changed how India's plastic and recycling businesses think about risk. Virgin plastic is dearer and less certain, and recycled material is more attractive, but the recycled side has been slow to turn that into steady orders. The winners so far are those who can supply clean, documented material in volume.
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