Global conflict and the three-phase supply impact

The conflict in the Gulf — specifically around key shipping straits — is creating a tiered impact on the building product supply chain. The industry is moving through three distinct phases: the initial domestic impact of diesel costs, followed by mounting logistical hurdles, and finally, a significant spike in the cost of finished goods that has yet to fully hit New Zealand shores.

The vulnerability is most acute in petroleum-based products. Approximately 40% of the raw materials for Polyethylene (PE) and PVC originate from the affected strait. 

While some large suppliers have stockpiles that offer a temporary buffer, core ingredients for timber resins and paints have already seen localised surges of up to 50%. 

And even if the ceasefire holds in the short term, ship owners and their insurers will want a sustained period of ‘no threats’ before normal coverage resumes and backlogs flow through.

Low confidence and market softness

Domestic sentiment shifted abruptly when the conflict started on 28 February. While the early months of 2026 showed promise, April has been "really soft" in terms of new inquiries. And while the year started with overall business confidence at high levels, the war has acted as a primary depressant on the market. The ANZ Business Outlook survey reported confidence fell 26 points in March, down from 59 to 33, as firms digested the potential implications of the Middle East shock.

Political realities and the "omnibus" deadline

Compounding these issues is the political cycle. As an election year, the industry is facing a race to pass the New Zealand “omnibus Bill” with a looming deadline at the end of May for this bill to be introduced to parliament and to ensure it passes before the end of the government’s term in September.

A critical component of this legislation is the shift in council liability settings from "joint and several" to "proportional," a change viewed as vital for how the industry manages long-term risk.

Government-led confidence 

The government does have levers available: a healthy pipeline of health and education infrastructure spending, with the school standardisation programme and regional hospital plans together representing genuine positivity for the industry.

But the sector needs the government to communicate that pipeline clearly and provide transparent mechanisms for cost recovery on fixed-price contracts. Certainty from the government would be the single most effective confidence-building measure available right now.

The industry has endured a long, hard run. It deserves a path forward it can actually build on.