--- title: "The Middle East situation is turbulent, and home appliance exports are facing \"growing pains.\"" type: "News" locale: "en" url: "https://longbridge.com/en/news/279904749.md" description: "The turmoil in the Middle East has led to challenges for China's home appliance exports, especially in air conditioning exports. Logistics costs have surged 3-4 times, resulting in a suspension of export operations, with a projected production reduction of over 500,000 units in March. The impact of the war is mainly reflected in logistics and raw material costs, causing significant short-term shocks to exports, but limited medium- to long-term effects. Transportation cycles have lengthened, freight rates have increased, and companies are facing greater cash flow pressure" datetime: "2026-03-20T07:43:11.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279904749.md) - [en](https://longbridge.com/en/news/279904749.md) - [zh-HK](https://longbridge.com/zh-HK/news/279904749.md) --- # The Middle East situation is turbulent, and home appliance exports are facing "growing pains." ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OLaZKbmnzcSnfTKbRzRDWw_KN34j2ksrERJpgO5mYGUHsAA/1000?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OGs4WCw2IWuqGbG8Q4Ppww5HB1Hz5SZIkXID4INhIcAEwAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) As of March 20, the U.S. and Israel's war against Iran has entered its 21st day, and China's home appliance exports are experiencing "growing pains." On one hand, exports to the Middle East are hindered, and logistics costs have surged; on the other hand, raw material costs have risen sharply. The production volume of air conditioning exports to the Middle East has been adjusted downwards for the first and second quarters of this year. Some industry insiders believe that since the countries involved in this war are few, and the impact is mainly related to logistics and raw material costs, the long-term effect on home appliance exports is expected to be limited. **Surging logistics costs hinder air conditioning exports to the Middle East** The Middle East, located in a desert region, generally has hot weather and has become one of the important growth points for China's air conditioning exports in recent years. A relevant person in charge of an air conditioning company told First Financial that their export business to the Middle East has basically been suspended because the freight and other logistics costs from China to the Middle East have increased by 3-4 times, and they expect to resume only after the ceasefire. “The short-term impact of this war on air conditioning exports to the Middle East is significant, and it is even impossible to ship. If the goods are already on the way, it becomes more complicated,” another relevant person in charge of an air conditioning company also stated. A recent research report from the research agency Industrial Online shows that since the conflict in the Middle East has continued to escalate, the planned production volume of China's household air conditioning exports has been significantly adjusted downwards. Overseas customers have canceled or postponed orders due to rising freight costs or shipping companies adding war fees, with an expected reduction of over 500,000 units in March. By 2025, the scale of China's household air conditioning exports to the Middle East is expected to exceed 17 million units, accounting for 20.8% of the total exports, with the core regions impacted by the war having an air conditioning export scale of 8.36 million units, accounting for 10.2% of the total exports, nearly half of the total exports to the Middle East. The Red Sea and the Strait of Hormuz are the core channels for Chinese home appliances heading to the Middle East. After the outbreak of the conflict, ships were forced to detour around the Cape of Good Hope, increasing the journey by 7-10 days, extending the transportation cycle from the original 35-40 days to 50-55 days. Logistics costs have soared accordingly, with the freight for a standard container on the Persian Gulf route reaching $1,327, a month-on-month increase of 35.41%. The war insurance rate has risen from 0.35% to 0.85%, an increase of 143%, with war surcharges per container as high as $2,000-4,000. In addition, some ports have suspended operations or restricted operations, leading to delays in shipping schedules, cargo backlogs, increased risks of order defaults, and rising warehousing costs, further exacerbating the cash flow pressure on enterprises. Customs data shows that China's exports of home appliances to 17 countries in the Middle East are expected to reach $12.577 billion by 2025, a year-on-year increase of 5.1%, with an export volume of 730 million units, a year-on-year increase of 8.2% Industry insiders analyzed to Yicai Global reporters that not only air conditioners but also other home appliances exported to the Middle East will be more or less affected by the current war. **Raw material price surge raises export costs** Even companies not targeting the Middle Eastern market are affected due to the significant rise in raw material costs. Li Mingyang, general manager of Zhongshan Letu Electric, told Yicai Global reporters that their overall costs have increased by about 20%-24% due to the sharp rise in raw material costs, with some materials increasing by 30%, some by 40%, and some even by 50%, which has impacted their acceptance of new orders for small home appliances. After the Middle East conflict, in March 2026, the costs of ABS and PP plastics rose by 40%-50% and 30% respectively month-on-month; copper costs increased by 25%-30% month-on-month; and steel and iron costs rose by 15%-20% month-on-month. "Currently, overseas customers basically do not accept such a rise in costs, and a digestion process is needed. It is estimated that raw material prices will continue to rise, and then the market (and overseas customers) will have to accept it," Li Mingyang said. He revealed that his factory in Zhongshan, which exports electric fans, is still in production, fulfilling orders received before the current Middle Eastern war, using raw materials purchased before the war. "The orders on hand will be completed by April, and we dare not accept new orders now. If we do, we expect to incur losses because the new quotes need to be raised by at least 20% to maintain the original gross profit, which overseas customers currently do not accept." Another home appliance exporter from East China also told reporters that since the outbreak of the Middle Eastern war, raw material prices have fluctuated significantly, but it is very difficult to raise prices for the finished home appliances they export. Air conditioner exports are similarly affected by rising raw material prices. A research report from the Industry Online shows that core raw materials such as copper, aluminum, and plastics account for over 60% of air conditioner production costs. The situation in the Middle East has caused energy price fluctuations and supply chain disruptions, driving raw material prices sharply higher. Based on the average price in February 2026, spot copper prices reached 102,000 yuan/ton, a year-on-year increase of 32.51%, while aluminum and plastic prices rose by 10%-25% driven by oil prices, and refrigerant prices surged by more than 180%. This round of raw material price increases has multiple comprehensive reasons, with the Middle Eastern war being one of the significant driving factors. **Industry gross profit under pressure** The Middle East is one of the regions with relatively high export prices, and this reduction in exports will affect the overall export price. Although some companies are trying to raise the prices of exported products, it is difficult to fully cover the pressure from rising costs. Industry Online predicts that this year, the gross profit margin for the air conditioning industry may decline by 3-5 percentage points, and some small and medium-sized enterprises will fall into the dilemma of "difficult to raise selling prices, while costs surge." An experienced industry insider believes that the Middle East still needs Chinese products, and countries in the Gulf such as Saudi Arabia and the UAE are relatively stable, with consumer power still present. He suggests that export companies should not "involution," and under the backdrop of rising raw material prices, they should raise prices for exported goods when necessary Industry Online analyst Zhang Qingqing expects that the next 1-2 quarters will still be a painful period for air conditioning exports to the Middle East. According to monitoring data from Industry Online, in March 2026, China's household air conditioning export production is scheduled to be 10.14 million units, a year-on-year decline of 12.4% compared to the same period last year, with production schedules for March and the next two months being adjusted downwards to varying degrees. "Looking at the long term, the situation will accelerate the upgrade of Chinese companies from product exports to localized operations," said Zhang Qingqing. For example, Haier has already established a factory in Egypt, radiating to the Middle East and North Africa market, reducing risks through local production. 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