The price hikes are driven by a surge in rubber costs, as most condoms are made from latex, a form of rubber produced using petrochemicals tied to Middle East supply chains. According to Karex, rubber prices have increased by 8.5% in the past month, fueled by rising oil prices. The company also reports that costs have risen across its supply chain, including for packaging materials and lubricants like silicone oil and aluminium foil. Higher manufacturing and packaging expenses have compounded shipping delays, according to Karex CEO Goh Miah Kiat.
Karex's shipments to Europe and the US now take close to two months to arrive, twice as long as before the war in Iran, Goh Miah Kiat said. The Strait of Hormuz has effectively been shut for two months and remains subject to a blockade by the US Navy, though the specific actions leading to its closure and the expected duration of the blockade are unclear. This disruption has led to broader supply chain cost increases and shipping delays impacting Karex's operations.
The situation is definitely very fragile, prices are expensive.
Despite these challenges, Karex has enough condoms stockpiled to meet demand over the next few months, according to Goh Miah Kiat. The company sells five billion condoms annually and plans to increase output to cope with rising demand. This surge in demand, up 30% this year according to Goh Miah Kiat, is partly driven by US government cuts to foreign aid. The Trump administration slashed funding for the US Agency for International Development by 92% last year, equal to $54 billion, which has triggered increased market demand for condoms.
Shortages could emerge due to shipping disruption, Goh Miah Kiat warned. The broader impact on retail prices and other consumer goods affected by petrochemical supply chain disruptions remains uncertain. The ongoing uncertainties about the blockade's duration and potential further price increases add to the challenges facing the condom industry.
We're seeing a lot more condoms actually sitting on vessels that have not arrived at their destination but are highly required.