By La Conceria

Gas and oil prices are rising, as are insurance and transport prices, while the European Central Bank is considering raising interest rates to counter inflation. And the first effects of the war in Iran (after those that affected consumption in Emirati cities) are being felt throughout the fashion industry. A letter from the UNPAC (National Union of Auxiliary Tanning Producers) to stakeholders raises the following question: “Rising energy prices are increasing the cost of raw materials.”

Prices are rising

The situation is very similar to that experienced between 2021 and 2022, when supply bottlenecks resulting from lockdowns and Russian aggression against Ukraine led to price increases. Since the war with Iran, with the consequent destabilisation of the entire region, a similar scenario is being reproduced. The resumption of the conflict in the Strait of Hormuz has practically paralyzed the passage of oil tankers and cargo ships. This has caused, on the one hand, a dizzying increase in energy prices, which has already been passed on to end consumers in Europe. On the other hand, sea and air freight prices are at their highest levels since 2022. This dynamic is driven by one factor: inflation. And for this reason, the ECB, as in 2022, would be considering raising interest rates.

UNPAC already sees the first signs

The effects on the supply chain are not yet imminent, but they are already being felt. “Shipping activity in the Gulf region is increasing the immediate risk to the supply of raw materials in global petrochemical markets,” UNPAC writes. “If the situation persists or worsens, we fear that it will not be possible to mitigate the costs, now out of control, to ensure continuity of supply to the entire tanning system.” Some actors, according to the letter, are already “applying price increases, even speculative.”