Condom maker may raise prices because of Iran war

A worker packs condoms at Karex's headquarters in Port Klang, Malaysia, in September 2017. Manan Vatsyayana/AFP/Getty Images via CNN Newsource

Safe sex could get more expensive if the Iran war continues to disrupt global supply chains, according to a new interview with the CEO of the world’s largest condom manufacturer.

Karex CEO Goh Miah Kiat told Reuters on Tuesday that the company may be forced to raise prices at least 20 per cent to 30 per cent, depending on how long the disruption lasts. Global supply chains have been impacted by the war since the end of February and the chokehold on the Strait of Hormuz, cutting off some of the materials used in condom production.

“The situation is definitely very fragile, prices are expensive,” Goh told Reuters. “We ​have no choice but to transfer the costs right now to ⁠the customers.”

Based in Malaysia, Karex produces condoms, personal lubricants, gloves, medical catheters and probe covers. The company manufactures male latex condoms including ONE, Trustex, Carex and Pasante, and it can produce over 5 billion condoms annually. Karex also exports to more than 130 countries, according to its website.

Goh told Reuters that along with higher costs for manufacturing and packaging condoms, there are delays in shipping.

“We’re seeing a lot more condoms actually sitting on vessels that have not ⁠arrived ​at their destination but are highly required,” Goh said.

CNN has reached out to Karex to see when the price hikes might take place. Meanwhile, Goh told Reuters that the company has enough supply to last a few months.

Global Protection Corp., which is a subsidiary of Karex in Massachusetts, said it has “seen a significant increase in ingredient and material costs driven by the war in the Middle East, including the closure of the Strait of Hormuz.”

Global Protection Corp. CEO Davin Wedel said in a statement to CNN that the manufacturer and distributor of sexual health products does not plan to pass down the prices to consumers yet — until it sees if the higher costs are temporary.

“But if the Strait of Hormuz remains closed, not only will our cost increases get worse but we may end up with condom shortages due to lack of raw materials to make enough condoms to meet consumer demand,” Wedel told CNN.

Since the war in Iran began, Wedel said the company has noticed 20 per cent to 30 per cent increases on packaging, like foil wrappers and plastics; a 30 per cent increase in latex; a 25 per cent increase on condom lubricant; and a 100 per cent price increase on the non-latex condom material nitrile.

“Ironically, this has been like adding fuel to the fire since we are still struggling to adapt to tariffs,” Wedel said. “We haven’t been able to raise prices or cut costs enough to cover current tariff expenses. Our goal remains to keep condoms available at affordable prices, but the conflict in the Middle East threatens to make that mission impossible.”

As gas prices have surged since the Iran war, oil and gas have gotten the bulk of the attention. Economists fear that rising prices could soon lead to a pull-back in consumer spending and oil shortages could stymie production. That’s particularly true in Asia, which relies heavily on Middle Eastern oil for fuel.

But the war has also hurt production of so-called feedstocks – petroleum byproducts that are used to make plastics and other materials. Among them: naphtha, which is used to make packaging materials, and silicon oil and ammonia, which are key ingredients in condom production.

“You hear a lot about crude oil and the impacts to diesel and gasoline – but feedstocks and petrochemicals are in short supply, too,” said Angie Gildea, KPMG global head of oil and gas, in a separate interview.

For example, 41 per cent of Asia’s naphtha comes from the Middle East, Gildea noted. If the countries that make the stuff we purchase – including Malaysia – can’t access raw materials, they have to raise prices to compensate.

But raw materials aren’t the only problem.

Some countries, including Myanmar and Cambodia, have begun rationing fuel. Some schools in southeast Asia, including in Vietnam, have given stay-at-home orders as commutes have become too expensive for students. Industry analysts fear that is also hurting factory workers’ ability to get to manufacturing facilities, potentially slowing production of key products set for delivery overseas – including to the United States.