Surging oil prices push Hong Kong’s laundry sector to freeze hiring, halt orders

he sharp rise in “red diesel” has significantly raised operating costs for laundry businesses, which rely heavily on diesel-powered boilers.

Photo: Handout Surging oil prices are driving up costs for Hong Kong’s laundry sector, with the tripling of fuel prices forcing some operators to turn down new orders and freeze hiring.

An industry representative said on Monday that the price of industrial diesel, commonly known as “red diesel”, had surged from about HK$6 (80 US cents) per litre in late February to as high as HK$17.50 in early April – an increase of more than 190 per cent in just over a month.

The sharp rise has significantly raised operating costs for laundry businesses, which rely heavily on diesel-powered boilers to generate steam for high-temperature washing and sterilisation, particularly for hospital linens and hotel laundry. “This is something we have never seen before, and I have been in the industry for 20 years,” Dragon Kong Yuen-lung of the Hong Kong Laundry Services Association told a radio show, highlighting that local prices had not risen as steeply in past oil crises. “Even during the Russia-Ukraine war a few years ago, international oil prices were around US$143, and industrial diesel was about HK$10.50 per litre. “Now, international oil prices are only just over US$110, yet it has risen to HK$17.50 – this is something we have never seen before.” Kong said spending on diesel typically accounted for 10 to 20 per cent of production costs, but had now risen to as high as 60 per cent.

For a mid-sized plant using around 100,000 litres of diesel per month, the increase translated into an additional cost of more than HK$1 million monthly, he said. “As a low-margin industry, there is no way we can absorb such a sharp increase,” Kong said, adding that some operators had already stopped taking new orders as they were unable to price contracts amid volatile fuel costs.

He said operators were struggling to pass on the higher costs to customers, as most contracts with hotels and hospitals are fixed through tenders, leaving little room for price adjustments.

Oil storage tanks and oil tankers at Tsing Yi depot.

Surging oil prices are driving up costs for Hong Kong’s laundry sector.

Photo: Sam Tsang Attempts to cut costs through measures such as freezing hiring, streamlining operations and improving efficiency had offered only limited relief, he said, describing the impact as “a drop in the bucket” compared with the scale of the increase.

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原文链接: 南华早报