Construction sector in Asia set to be hit hard by Strait of Hormuz blockade
The ongoing chaos in the Strait of Hormuz is about to make construction projects a lot more expensive, especially in Asian countries like Japan. According to a report from Linesight, the construction world is already feeling the squeeze caused by the standoff between the US, Israel, and Iran at this vital chokepoint.
The fallout from the war on Iran is not just about oil; it has also had a huge impact on the massive energy required to actually make building supplies. When Iran throttles the Strait of Hormuz – a narrow gap between Iran and the UAE that handles 20% of global oil – shipping and energy costs go through the roof.
As with previous geopolitical shocks, freight, insurance, and related costs are rising. Even without a formal closure of the strait, uncertainty in logistics may cause an increase in input costs. Sustained Red Sea disruption between 2024 and 2025 cut Suez transits and extended voyage times. Linesight argues that this ‘tight baseline’ makes markets more sensitive to fresh shocks this year.
This sensitivity is particularly acute in Asia, where major economies are scrambling for alternative supply sources. Japan, for instance, is the most vulnerable country to these shortages, as it traditionally imports about 30% of its aluminum supply from the Middle East.
With key refineries in Abu Dhabi and Bahrain damaged in the conflict, Japanese manufacturers are bracing for a prolonged shortage that could take at least a year to resolve. Other nations in Southeast Asia, China, and South Korea also face significant risks as their inventories of specialized metal products begin to run dry.
As rising energy costs get passed on to other sectors, quarrying, calcination, smelting, and transport also become more expensive. Here is the breakdown of what commodities are likely to be hit the hardest:
Aluminium: This is the big one. Since Gulf countries pump out about 9% of the world’s supply, any hiccup here is felt everywhere. Major smelters in Qatar and Bahrain have already had to halt operations or shipping. In Japan, where automakers get 70% of their aluminum imports from the Middle East, the price of the lightweight alloy has already jumped about 13% since hostilities began.
Steel and Cement: Both are energy-hungry to produce. If gas prices stay high, the cost of running those massive kilns and furnaces gets passed straight to the buyer. In addition to that, cement is heavy, which means if ships have to take the long way around, those freight surcharges will add up fast.
Copper: While the Middle East is not a copper hub, it provides the sulphur needed to process it. With half of the world’s sulphur exports now at risk, according to the report, copper prices are primed to spike.
The bigger picture
This shift in the construction sector is not happening in a vacuum. The Strait of Hormuz is a classic chokepoint and has become the ultimate leverage for Iran, which is at a disadvantage militarily to the US and Israel. If negotiations falter and open hostilities begin again, we can expect Iran to use their only card left: Shutting down the strait and only allowing through vessels that pay a toll.
Historically, even the threat of closing the Strait has sent markets into a tailspin, as there are very few pipelines that can bypass it. While negotiations are supposed to be underway, the grandstanding and maximalist demands from the Trump administration, on the one hand, and Iran’s distrust and lack of faith in the negotiations on the other, seem to indicate that a quick and painless solution is very unlikely.
The conflict has already pushed oil past the $100-a-barrel mark. On the ground, the toll is heavy: reports indicate tens of thousands of buildings in Iran have been destroyed by airstrikes, while iconic structures like Dubai’s Burj Al Arab have taken hits.
Suppliers are already bracing for impact. UK building material supplier Travis Perkins, for example, has hinted that energy surcharges are likely on the way. If this blockade does not let up soon, we are not just looking at a temporary blip – it will be a total ‘reset’ of what it costs to build anything.
“Recent disruption is not about a single event, it is the accumulation of energy volatility, constrained logistics and geopolitical risk across multiple routes,” said Derek McNamara, vice president at Linesight. “Project owners and manufacturers that focus early on visibility, optionality and realistic lead times are far better placed to protect cost certainty and program delivery.”
