Rising cost of key materials squeezes Korea's home appliance industry amid Iran war

Korea’s home appliance industry faces rising cost pressures as tensions around the Strait of Hormuz push up prices of key materials such as aluminum and sulfur along with shipping costs.

A drone view shows an employee working on the production line of aluminium products at a factory in Huaibei, Anhui province, China, on Feb. 11, 2025, in this photo provided by China Daily. [REUTERS/YONHAP]

Korea’s home appliance industry faces rising cost pressures as tensions around the Strait of Hormuz push up prices of key materials such as aluminum and sulfur along with shipping costs.

The impact of the Iran war extended beyond higher oil prices and exchange rates. Three-month aluminum futures on the London Metal Exchange reached $3,385.50 per ton on Monday, up about 26 percent from a year earlier, according to data from Trading Economics.

The price marks the highest level since 2022, when the Russia-Ukraine war disrupted global commodity markets. Aluminum plays a key role in electronics and home appliances. Manufacturers use it in smartphone frames, refrigerator coolant pipes and evaporators, as well as washing machine motors and control panels.

The recent surge reflects supply disruptions tied to Iran blocking the Strait of Hormuz, which came after U.S.-Israeli airstrikes on Iran on Feb. 28. The Middle East produces about 10 percent of the world’s aluminum, the second-largest share after China, which accounts for about 59 percent.

Sulfuric acid used for heap leaching is seen at Areva's Somair uranium mining facility in Arlit on Sept. 25, 2013. [REUTERS/YONHAP]

Like crude oil, aluminum shipments from the Middle East pass through the Strait of Hormuz before reaching global markets. Major smelters in the region including Emirates Global Aluminium, Aluminium Bahrain and Saudi Arabia’s Maaden have reportedly warned some customers about potential delays in deliveries.

Prices of sulfur have also surged. International sulfur prices recently reached about $661 per ton, roughly 90 percent higher than a year earlier. Sulfur is used to make sulfuric acid, a key chemical used to extract metals such as nickel and copper. Disruptions in supply could, therefore, affect global metal production.

Shipping restrictions through the Strait of Hormuz could lead to shortages of sulfuric acid and force some smelters to cut production, a report from Samsung Futures said.

Nickel producers in Indonesia and copper mines in Africa depend heavily on sulfuric acid from the Middle East. The region supplies about 25 percent of the world’s sulfuric acid. If sulfuric acid shortages push up production costs for metals such as nickel and copper, prices could also rise for products that use those metals, including home appliances and batteries.

The rising costs come at a difficult time for Korea’s appliance industry, which already faces weak global demand and slowing market growth.

Scrap aluminum is piled up at a metal processing site at Pyeongtaek Port in Gyeonggi on Aug. 17, 2025. [NEWS1]

Rising logistics costs add further pressure. The Shanghai Containerized Freight Index reached 1,489.19 on Friday, up 156.08 points from Feb. 27. The increase nearly doubled the 81.65-point rise recorded a week earlier.

Freight rates on Middle East routes climbed particularly high. Shipping costs reached $2,287 per 20-foot equivalent unit, up 72.3 percent as fuel costs and insurance premiums rose.

“Electronics companies will have no choice but to use higher-cost logistics options to maintain production continuity even if transport costs rise,” Samil PwC Business Research said in a report. “That could hurt profitability.”

Industry officials say the biggest concern is that the crisis could continue for an extended period.

Korean appliance makers have already faced financial pressure. In the fourth quarter of last year, Samsung Electronics recorded an operating loss of 600 billion won ($407 million) in its Digital Appliances and Visual Display divisions, after posting a profit a year earlier. The loss followed another operating loss of 100 billion won in the third quarter of 2025.

During the same period, LG Electronics recorded a combined operating loss of 432.6 billion won in its Home Appliance Solution and Media Entertainment Solution divisions. The latter division, which oversees the company’s television business, has posted losses since the second quarter of last year. The division’s annual operating loss reached 750.9 billion won.

Weak profitability in TVs and appliances pushed LG Electronics into its first quarterly operating loss in nine years, with the company reporting an operating loss of 109 billion won in the fourth quarter of 2025.

Washing machines and refrigerators are displayed at a consumer electronics store in Seoul on June. 19, 2025. [NEWS1]

Profits from home appliances such as TVs, refrigerators and washing machines have fallen as consumers replace products less often and market growth slows. Competition among manufacturers has also become more intense.

Chinese appliance makers offering lower-priced products have expanded rapidly in overseas markets and Korea. Companies have also increased marketing spending to defend market share.

“Companies are promoting premium appliances with AI features as their main products, but semiconductor prices have also risen and manufacturing costs remain high,” a home appliance industry representative said. “Companies must recover profitability while keeping prices competitive enough to attract consumers, but the industry still lacks a clear solution.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY KIM KYUNG-MI, LEE SU-JEONG [paik.jihwan@joongang.co.kr]