January 2026 | Market Update

Power, Policy, and Plastics: What’s Moving the Market This Month

From Chuck Hoop, Business Director, Star Plastics

The Best U.S. Colleges for Plastics Engineering Degrees
An article from Plastics Today is a quick overview of why plastics and polymer education matters right now, and it frames the industry as a strong career bet given the scale of the U.S. plastics economy, job footprint, and shipment value. It emphasizes that modern plastics programs aren’t just teaching classic processing and polymer science—they’re also building in sustainability, automation, digital manufacturing, and real-world problem solving. This article highlights what sets the top schools apart: strong lab facilities that feel like actual manufacturing environments, close industry partnerships, internships, specialized coursework (like polymer science, injection molding, and sustainable materials), and faculty with real industry experience. The takeaway for employers is that grads from these programs show up ready to contribute with a solid materials/processing foundation, hands-on equipment and software experience, quality and process optimization knowledge, and familiarity with circular economy and industry 4.0 concepts. Spoiler alert – if you just want the shortlist without clicking through the slideshow, the featured programs include Penn State Behrend, Auburn University, Pennsylvania College of Technology, UMass Lowell, UMass Amherst, Western Washington University, University of Wisconsin–Stout, Ferris State University, New Jersey Institute of Technology, and Case Western Reserve University. Read the full article here.

U.S. Data Centers May Need Even More Power
From ENERGYWIRE, data centers may require much more power than estimates have suggested just a few months ago. AI-related demand alone is expected to jump to about 106 gigawatt (GW) by 2035 versus 78 GW projected in April. A big driver is that new data centers are getting much larger and more energy-intensive—today only around 10%, top 50 megawatt (MW), but many planned sites are pushing past 100 MW. A huge chunk of this growth is tied to the PJM region (which includes data-center-heavy Virginia plus states like Ohio, Pennsylvania, and Illinois), where strong fiber networks, maturing AI tech, and policy incentives—like Pennsylvania’s sales tax exemption on data center equipment—are pulling in more projects. The near-term wrinkle is timing: even though projects reportedly doubled between early 2024 and 2025, lots of them aren’t under construction yet, and it can take roughly seven years for a typical data center to come online. Net-net, the grid crunch—especially in the Eastern Interconnections section of PJM LLC, – a regional transmission organization – may show up before the full wave of new facilities is even operational, which explains the urgency behind industry groups like the National Association of Manufacturers (NAM) pushing policy roadmaps to keep energy and AI expansion on track. Continue reading.

Why does this matter to you? Basically, the AI/data-center boom is likely to make electricity more expensive and harder to get on short notice. This hits plastics processors right in the conversion costs -drying, extrusion, molding, chillers, and material handling; all chew through power, so higher rates and demand charges can squeeze margins or push prices up. On top of that, grid congestion can slow down plant expansions or even create reliability risks, which can turn into longer lead times and capacity constraints for buyers. It also is a demand tailwind for certain plastics—think wire & cable, conduit, electrical enclosures/connectors, and lots of flame-retardant and higher-performance components—so it’s both a cost pressure and a market opportunity depending on where you sit.

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A Challenging 2025 in the Compounding Sector
There has been a lot of caution from customers, stop-and-go ordering, softer-than-expected markets, and a big dose of uncertainty tied to interest rates and tariffs. Folks at Star Plastics, and other compounders described a year that wasn’t a total bust, but definitely uneven—some pipelines showing momentum, some programs getting pushed out, and customers oscillating between hesitation and last-minute urgency. There were still bright spots, though: health care demand looked solid for several companies, PVC and wire/cable were strong for some, and data centers, infrastructure, and certain specialty segments offered real pockets of growth. Big players like LyondellBasell’s compounding unit and Avient posted mixed performance, emphasizing cost discipline and resilience in a volatile macro environment. Tariffs introduced in April added another layer of friction—especially for imported machinery, pigments, and additives—prompting companies to localize supply, qualify alternates, or pass through costs where they could. Sustainability stayed important but more practical than hype-driven, with attention shifting toward workable recycled-content solutions, PFAS replacements, and compliance with evolving rules like Extended Producer Responsibility (EPR), plus niche innovations like near-Infrared spectroscopy (NIR)-detectable black. Heading into 2026, the vibe seems to be cautious optimism: many expect modest improvement if rates ease and trade policy stabilizes, while others think meaningful market lift may not arrive until later in 2026 but I don’t have any data to support these statements. So the plan for most seems to be diversify end markets, keep investing selectively, and stay close to customers rather than betting on a single big rebound. Click to read more.

Inside the Fed
NAM reported on December 11 that the Fed cut interest rates on December 10 by a quarter point, bringing them down to a range of 3.50% to 3.75%. The decision was anything but unanimous. Chairman Jerome Powell said the central bank is trying to walk a tightrope between keeping inflation under control and not hurting the job market, especially with tariffs pushing prices up in the short term. He stressed that the Fed’s job is to make sure those one-time price bumps don’t turn into ongoing inflation. At the same time, he flagged a worrying twist in the data: federal stats may be overstating job growth by as much as 60,000 jobs a month, meaning the economy might actually have been losing jobs since April.

The vote itself was the most divided in six years—three officials dissented, with two thinking there shouldn’t have been a cut at all and one wanting an even bigger one. Looking ahead, Fed officials are divided on where rates go next: most expect more cuts through 2026, but a few see no change or even a small hike. They still think inflation will stay a bit above the 2% target, around 2.4% in 2026, though that’s slightly better than they thought back in September, and they’re more optimistic about GDP growth. On top of all that, Powell’s term as chair ends in May, and he only has three more meetings to lead. President Trump is already interviewing potential successors, and by 2026 there’ll be a different mix of voting members on the Fed’s policy committee, which could shift the tone of future decisions. Dive into the full article.

Why might this matter to you?
From several news sources, this matters to plastics buyers and processors because a Fed rate cut can make money a little cheaper right now—so financing inventory, funding tooling, buying a new press/extruder, or green-lighting a plant project gets easier on the margin—but the super split vote (9–3) is basically the Fed telling the market “we’re not confident about the path,” which usually means more rate/FX volatility and less predictable customer demand. Add Powell’s comment that jobs data may be overstating growth by ~60,000/month (implying the economy could have been softer since spring), and that’s a big red flag for plastics because when hiring and confidence wobbles, orders tend to slow in packaging, appliances, housing products, and durable goods that drive resin consumption. Meanwhile, if tariffs are adding near-term price pressure, that can keep inflation “sticky” and keep the Fed cautious—so buyers may see continued cost noise (such as freight), while processors may have to stay sharper on pricing cadence, surcharge language, and not getting caught long on high-cost resin if demand cools. Finally, with Powell’s term ending in May and the voting mix changing, the “rules of the road” for rates could shift again, which matters for anyone trying to plan 6–18 months out on CapEx, staffing, and contract pricing.

Adnoc Completes Acquisition of Covestro
Plastic News reported in December that the Abu Dhabi National Oil Company (ADNOC) (through a unit tied to XRG P.J.S.C.,) has officially closed its acquisition of Covestro, the German materials company. The deal was €11.7B and first confirmed back in October 2024 after a long rumor cycle. On top of the purchase, Adnoc is also putting in €1.17B as a capital injection to help fund Covestro’s investment plans and its “sustainable future” strategy—bringing the total value to about €14.7B when you include assumed debt and that extra funding. Covestro says it’s targeting climate neutrality for Scope 1 and 2 by 2035, and Scope 3 by 2050. CEO Markus Steilemann framed the close as the start of a “joint journey” with XRG, positioning XRG as a long-term partner to help drive Covestro’s transformation. Covestro becomes the core platform for XRG’s Performance Materials and Specialty Chemicals business. Covestro is keeping a lot of independence it seems with the same management team, HQ staying in Leverkusen, and German governance and works agreements remain in place based on the article. XRG says it will work with management on efficiency and resilience—but no plans to sell, close, or dramatically shrink Covestro operations as part of the deal. View the full article.

Panama Ports Deal Hits Impasse as China Makes New Demands for Its Approval
BlackRock and Mediterranean Shipping Company (MSC) agreed back in March to buy a big bundle of ports from Hong Kong’s CK Hutchison—including two key terminals at the Panama Canal—in a deal meant (in part) to ease U.S. concerns about China’s influence around the canal. Now China is throwing a wrench into it: Beijing is basically saying it’ll block the transaction unless Cosco (China’s biggest shipping company, state-owned) gets a majority stake and real control/veto power. BlackRock/MSC were apparently willing to consider letting Cosco in as an equal partner, but “majority control + veto rights” is a non-starter for them—and the White House is signaling the same.

So, the deal is stuck. Hutchison keeps operating the Panama terminals for now, while China frames the ports as leverage in broader U.S.–China trade/tariff negotiations. The article also notes Panama’s canal authority is moving ahead with plans to bid out new port-development concessions on both sides of the canal (with big global operators expected to bid), which could change the long-term competitive picture around the waterway. Full article here.

Why does it matter to you in the plastics industry? A significant volume of resins, additives, masterbatch, packaging components, and finished plastic goods move in containers—and the Panama Canal is a major artery for U.S. inbound/outbound freight between countries. If politics or control fights slow investment, change operating rules, or trigger retaliatory trade moves, it can show up as longer lead times, more routing uncertainty, and higher freight costs—all of which hit plastics margins fast (especially for high-volume commodity moves and time-sensitive engineered programs).

Freight Index
As normal, we look at key metrics in the freight industry, and the CASS Freight index has been a standard for years. Below is a summary of their report for the month of November leading into December:
Freight is basically hunkering down right now: November 2025 shipments ticked up a bit from October (+0.7% month over month, +2.7% seasonally adjusted), but they’re still down hard versus last year (-7.6% y/y), keeping the market on track for roughly a ~6% decline in shipments for 2025. Total freight spend (expenditures) was essentially flat (-0.2% m/m and -1.2% y/y) because lower volumes are being partially offset by higher rates—rates are implied up around 6.8% y/y, helped by a shift toward more truckload and less LTL. Truckload linehaul pricing is still up year over year (+2.2%), but the pace is cooling versus October, even as holiday demand and capacity constraints are giving carriers a brief edge heading into December. The Q3 bump from pre-tariff shipping ahead of the Oct. 5 import tariff deadline has faded as those inventories get drawn down in Q4, and while early holiday spending looks surprisingly resilient (hinting some demand might be building), tariffs are likely to keep pushing prices up and affordability down in 2026. Near term, stormy, frigid December weather tied to La Niña is pinching spot capacity and has pushed spot rates higher in recent weeks—maybe not a long-lived effect, but it adds fuel to the idea of an eventual cycle turn. On top of that, the EPA’s 2027 low-NOx rules may come in partially (tech stays, but the costly warranty/useful-life extensions could be dropped), which could motivate some 2026 pre-buys for fleets that can afford it, though probably not a huge wave given private fleets are still working down excess capacity from 2023–2024.

Materials overview –
Polycarbonate (PC) is basically in a “material is available and not enough excitement” mode right now based on several market data points including Chemical Marketing Analytics (CMA). Demand in the market seems to be lackluster while supply stays available, it seems producers are running around ~68% operating rates and keeping capacity focused on the Americas. Exporting to Asia/Europe doesn’t make economic sense at the moment. Imports are still hanging in there competitively despite tariffs—Taiwan and China seem to be successfully holding share. On pricing, December is assessed at 2 CPP down from November.

ABS is a similar story, just with a little extra trade/tariff drama layered in. In North America, the market still has material available, and demand continues to be a bit soft, and tariffs are now just consistently baked into invoice pricing (so at least the, “How are we charging for this?” confusion has calmed down). Mexico’s proposed tariff reforms continue to be a new uncertainty—especially since Mexico has historically been used as a transit point for “dumping” into the U.S. Trade, Mexico volumes seem to be increasingly replacing imports that used to come from South Korea/Japan, and Taiwan, China imports up year-over-year. On pricing, December ABS in North America seems to be flat at $1.46 CPP, though there’s some upward pressure from styrene and the ongoing antimony flame-retardant additive cost increases that we have seen for some time.

Nylon 6 and nylon 66 are coming into year-end looking “well supplied,” with nylon 6 specifically called out as amply supplied and buyers reporting adequate access to suppliers. Costs did tick up (nylon 6 up 8 CPP in production cost and nylon 66 up 4 CPP, and the CMA report projects slight price increases next month tied to those higher costs. For December, other industry sources land prices at $1.50 for nylon 6 and $1.70 CPP for nylon 66, with demand described as soft. The big demand wildcard is automotive: with ~60% of North American nylon 6/6 going into automotive applications, and China’s big capacity additions could leave nylon 66 feeling “long” if demand doesn’t show up in 2026.