July 2026 | Market Update

Pricing Pressures Persist Despite Peace

From Chuck Hoop, Business Director, Star Plastics

See what’s inside:

• See what’s inside:
• Market Summary: Post-War Pricing Outlook
• Housing Bill Could Boost Construction
• Manufacturing Activity Reaches Three-Year High
• CEO Confidence Declines, Investment Holds
• EV Batteries Get a Second Life
• Hormuz Crisis Highlights Supply Chain Risks
• Brazil Challenges China’s Rare Earth Dominance
• Cargo Theft Schemes Grow More Sophisticated
• Freight Costs Continue Climbing
• Consumer Brands Face Higher Costs
• Oil Supply Risks Remain Elevated
• Key Takeaways for Plastics Processors

Market Summary

Well, the Monthly Market Update for July was going along famously until the signing of the peace agreement ending the war with Iran and that changed a lot! Of course, it is good news that the war is over and the question becomes – what happens next? We expect resin pricing to begin easing, but the material, timing and size of reductions will depend heavily on demand. We see something that is similar to what we saw at the start of the war, the market will likely unwind in a similar order.

Price reductions should start with commodity resins such as PP and PE, then move into styrenics like HIPS and ABS, and finally into engineering resins such as nylon, PBT, and PC. Additives will probably take six months to settle down, depending on the chemistry and origins of the material, along with whether the supplier experienced disrupted feedstocks. Pigments may be the slowest; standard black and white could improve faster, but specialty colors (high chroma) and imported pigments may take 6–9 months to feel normal again.

The speed and value of those reductions will depend on demand, inventory levels, feedstock costs, and how quickly contract pricing resets. History shows that when a crisis like war occurs, prices shoot up quickly and come down slower than they go up.
ABS continues to be elevated, and July prices continue to be up from May and June, but the reductions are on the horizon. Production costs eased to the low 90’s, down about 5-7 CPP from May into June, but still 19 CPP above last year. Styrene, butadiene and acrylonitrile all remain higher on a year-over-year basis, even though butadiene and acrylonitrile (CAN) reduced slightly in May. For processors, ABS pricing may be near the top short term, but suppliers still have support from higher feedstock costs. Demand is mixed, with electrical/ electronics improving while auto, appliance, and building/construction are weaker.

Polycarbonate also remains high but may be flattening after July. Production costs are still up slightly from May and 21 CPP higher year-over-year. Benzene, phenol and acetone are all sharply higher than last year, although July forecasts show some feedstock relief. Demand looks better in electronics and sheet markets while the automotive sector continues to be soft.

Nylon is mixed, with nylon 6 and nylon 66 both holding at elevated price levels with supply-demand is not tight, but there are manufacturing shifts which are beginning to move the market. Celanese is closing its Sakra, Singapore nylon facility and optimizing North American nylon 66 polymerization, while Lone Star Funds acquired Radici and Domo in Europe. Nylon 6 resin demand is forecast to be up albeit modestly in 2026, while Nylon 66 domestic demand is also slightly positive.

PBT is also under heavy cost pressure as purified terephthalic acid has been holding at 80-85 CPP and butanediol is up between 90-95 CPP, both supporting higher resin prices. U.S. PBT imports are down 22% year-over-year (year to date), while exports are down 20%, suggesting softer trade flows and a more cautious market.

Bottom line: currently, this is not a demand-led growth, but a cost-led market. Feedstocks and energy drove prices up through spring, and while some monomers are starting to ease, year-over-year costs are still much higher. And we don’t see it getting better anytime soon. This is based on the oil reserves which are being depleted on a global scale. 2026 is going to be a ride for sure!

 

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21st Century ROAD to Housing Act Derailed

President Trump abruptly canceled the signing of the bipartisan 21st Century ROAD to Housing Act on the 24th, a major bill aimed at lowering costs and increasing housing supply. Lawmakers were surprised since it had already passed both chambers with broad, bipartisan support. He said he won’t sign it until Congress passes the SAVE Act, which requires voter ID and proof of citizenship. But that bill lacks enough support, creating a delay.

Lawmakers from both parties criticized the move. They say the bill addresses a real affordability crisis, especially as housing costs remain high due to rising prices, interest rates, and inflation. While not a complete fix, it was seen as a meaningful step to ease pressure on buyers and renters.

Plastics Industry Benefits from Improving Manufacturing Trends

The May Institute for Supply Management (ISM) manufacturing report points to a stronger U.S. manufacturing environment, with the PMI rising to 54.0 on June 1, the highest reading since May 2022. New orders, production, backlog, imports, and export orders all improved, which suggests demand is firming and manufacturers are getting busier. At the same time, the report still shows challenges where prices remain very elevated, supplier deliveries are slowing, customer inventories are still too low, and employment remains in contraction even though it improved from April. Pricing volatility, the Iran conflict, tariffs, fuel costs, and supply chain delays were major concerns across the survey.

For plastics processors, the good news is that demand appears to be improving. Plastics and rubber products were listed among the industries reporting growth in May, including growth in new orders, production, employment, and order backlogs. Low customer inventories are also important because they can lead to replenishment orders and stronger near-term production needs.

CEO Confidence Tumbled in Q2 2026

In late May, The Conference Board published an article summarizing CEO confidence, which took a noticeable step backward in Q2 2026, falling to 47 from 59 in Q1. Since anything below 50 signals more negative than positive responses, the survey shows large company leaders have become more cautious about the economy. CEOs now see conditions as materially worse than six months ago, and many expect the broader economy to weaken further over the next six months. Their outlook for their own industries also cooled, although industry-specific expectations remain a little more positive than their view of the overall economy.

Headcount:More CEOs now expect to reduce headcount than add workers, but the majority are not planning major workforce changes. Wage plans remain mostly steady, with increases centered around the 3% to 4% range. Hiring qualified people appears somewhat easier overall, but many CEOs still report trouble finding talent in certain areas.

Capital spending: This is one of the more encouraging pieces of the report. While most CEOs are holding investment plans steady, 37% expect to increase capital spending and only 8% plan to cut back. That suggests companies are cautious but not freezing investment.

Cyber Security: This is the biggest risk concern with nearly two-thirds of CEOs ranking it as a top industry risk. Geopolitical issues and AI/new technology risks also remain major concerns.

Supply chain and energy risks: These moved higher as well, which is important because those areas can quickly affect costs, availability, transportation, and customer demand.

For plastics processors, the takeaway is that customers may become more cautious on orders, inventory, and new program launches if business confidence continues to weaken. At the same time, the fact that capital spending is holding up suggests there may still be demand for automation, reshoring, productivity improvements, and technical material solutions that help customers reduce risk.

Processors should expect continued pressure around cost control, supply chain reliability, cybersecurity expectations, and faster response times. This is not a “panic” signal, but it is a reminder that customers are watching the economy closely and may need stronger justification before approving new projects, price changes, or longer-term commitments. Take a deep dive here.

New Solutions for and upcoming problem of EV Battery ‘Disposal’ – We just found this interesting.

A growing problem in the EV industry has been what to do with the batteries once they are no longer viable for their intended purpose? The WSJ published an article on repurposing old EV batteries; “Self-Driving Car Company Waymo is Repurposing its Old EV Batteries.” Wayco is teaming up with B2U Storage Solutions to turn used batteries from its autonomous vehicles into big energy-storage systems for solar power. Since Waymo’s robotaxis are used way more heavily than personal cars, their batteries wear out faster, meaning Waymo could have a steady stream of batteries ready to reuse. B2U takes the retired batteries, tests them, and packs them into large storage “cabinets.” These systems store extra solar power when energy is cheap and plentiful, then send it back to the grid when demand rises, like after sunset. B2U says one cabinet can power an average home for up to three months. The project will start in California and Texas, two states with lots of solar energy. Besides cutting waste and emissions, Waymo says the effort could also help strengthen the electric grid its cars depend on. Learn more here.LINK

Hormuz Crisis Exposes a Global Flaw That Will Take Years to Fix

The Strait of Hormuz crisis was a reminder that economic chokepoints can be used as weapons. Iran’s closure of the strait showed how one small country can create global disruption without matching the military power of the U.S. or allies. By controlling a key energy route, Iran has been successful in pressuring oil markets, shipping lanes, feedstocks and global manufacturing costs almost immediately. This article shows the validity of the “weaponization of economic interdependence.” The U.S. has long used the dollar and global financial system as leverage through sanctions. In the recent past, we have seen China use its control of rare earths, semiconductors, and critical minerals to pressure other countries. Now Iran has shown that geography and energy infrastructure can be used the same way. Governments will likely respond by trying to reduce dependence on risky chokepoints, but that will be expensive and slow.

For manufacturers and plastics processors, the takeaway is that supply-chain risk is becoming more geopolitical. Disruptions in the Strait can affect crude oil, naphtha, natural gas liquids, freight, resin feedstocks and ultimately material pricing. Buyers should expect more volatility, more supplier caution and a greater need for supply planning. Understand the impact.

The Fight to Break China’s Rare-Earth Dominance Moves to a New Front in Brazil

Another example of the Hormuz crisis is the continued dominance of China in the rare earth industry. Brazil seems to be the next path to recovery. Brazil is becoming a new hot spot in the global fight over rare earths, and the big reason is simple: the West wants another option besides China. Brazil has the world’s second-largest rare-earth reserves, but right now it produces very little. That is what investors are trying to change. Companies from the U.S., Australia, Canada and Europe are moving into Brazil to develop mines and, eventually, processing plants. The goal is not just to dig up minerals, but to build a full supply chain that can separate rare earths, make metals and alloys, and eventually produce magnets. China still controls more than 90% of rare-earth processing and magnet production. Even if rare earths are mined somewhere else, a lot of the material still ends up going through China for the higher-value processing steps. China’s export controls in 2025 reminded everyone how vulnerable Western supply chains are when one country controls so much of the process.

Brazil sees the opportunity, but it does not want to be forced into picking sides. The U.S. wants Brazil to become part of a Western critical-minerals supply chain, while China is still investing heavily in Brazil’s mining and manufacturing sectors. Brazil’s position is basically: we’ll take investment from whoever helps us build industry here, but we are not choosing Washington over Beijing or vice versa. No, rare earths are not a major ingredient in most everyday plastics, but they are critical in the industries that buy a lot of engineered plastics: electric vehicles, electronics, appliances, wind energy, defense, automation, robotics and advanced manufacturing. If rare-earth magnets or components become tight, expensive, or politically restricted, those downstream markets can slow down or redesign products.

In the near-term the impact is more volatility than immediate relief, and while Brazil may have the reserves, building mines, separation plants and magnet production takes years. Brazilian rare earth miner, Viridis, is targeting production in 2028, and full domestic processing may not happen until the 2030s. (Which is what Companies in North America are trying to do now with semiconductors in North America.) This means China’s influence on the rare earth industry is not going away soon. Discover what’s next.

Strange Times Lead to Strange Crimes

Freightwaves reported in mid-June that eight people were indicted in an alleged carrier impersonation scheme.

And you thought it was just AI that was changing the world? Eight people have been indicted in New York over what prosecutors say was a multi-state cargo theft scheme worth about $4.49 million. The charges are still allegations, and none of the defendants have been proven guilty. According to prosecutors, the group allegedly used shipment information tied to real trucking carriers, then impersonated those carriers to pick up freight from logistics facilities in New Jersey, Pennsylvania and Virginia. The legitimate carriers named in the indictment are being treated as victims, not participants.

The alleged thefts took place between October 2025 and April 2026 and involved six separate shipments, including frozen lamb, frozen beef, cheese, copper and cigarettes. The biggest reported losses were two cigarette shipments in March 2026, including one valued at roughly $2.6 million. Prosecutors say the scheme relied on fake or unauthorized use of carrier names, MC (now antiquated) and DOT numbers. The defendants allegedly shared shipment and pickup details through encrypted messaging apps like WhatsApp and Telegram, moved the stolen freight into New York City, transferred it to other vehicles, and then stored or sold it.

The bigger takeaway is that cargo theft is becoming more sophisticated. This was not just a “truck disappears” type of theft; it allegedly involved carrier impersonation, stolen shipment information and coordinated pickup fraud. For shippers, brokers and material buyers, it is another reminder to tighten carrier verification, confirm pickup details, watch for last-minute carrier changes, and make sure logistics partners have strong fraud-prevention controls in place. Continue reading.

 

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The Data-Center Boom Is Sparking a Third Wave of Inflation

Inflation may now have a new driver: the massive AI build-out happening across the U.S.

The concern is not just AI software. It is the physical infrastructure behind it. Big tech companies like Alphabet, Amazon, Meta, Microsoft and Oracle are spending hundreds of billions of dollars on data centers, chips, cooling systems, electric equipment, fiber-optic cable, backup generators and power capacity. Some estimates suggest the total AI infrastructure build-out could reach roughly $8 trillion by 2032. That kind of spending is creating huge demand for materials, components, labor and electricity. Since many of those same inputs are also used in consumer electronics, vehicles, construction, utilities and industrial equipment, the price pressure is starting to spread beyond the tech sector.

We are already seeing examples. Memory and storage chips are getting more expensive, and companies like Nintendo, Microsoft and Sony have raised device prices. Apple has also warned that higher costs are coming. Wholesale prices for electronic components are up sharply, and consumer prices for computer software and accessories have also risen.

The AI boom is also putting pressure on labor and power markets. Data-center construction needs electricians, wiring contractors, engineers and specialty trades, which is pushing wages higher in those areas. At the same time, new data centers require enormous amounts of electricity, and economists expect data centers to account for a major share of U.S. power-demand growth through 2030. That could keep electricity prices rising for consumers and businesses. The article continues that longer term AI could eventually help lower inflation if it improves productivity and allows companies to produce more with fewer resources. That is the optimistic case. But most economists do not expect that benefit to show up right away. In the near term, the AI build-out is more likely to keep pressure on prices.

The bottom line: AI may eventually become a disinflationary force, but right now it looks inflationary. It is creating a major demand shock across chips, electronics, construction, electrical equipment, labor and power. It probably will not create another Covid-style inflation spike, but it could make it harder for inflation to return to the Fed’s 2% target anytime soon.

Freight continues to move the needle in the cost of production of goods in North America.

The Bureau of labor statistics published that transportation costs kept moving higher in May, and trucking was the biggest pressure point.

The Bureau of Transportation Statistics reported that freight transportation and equipment costs were up 2.5% from May 2025 to May 2026. That means transportation providers are still facing higher costs to operate, maintain equipment, and move freight. The biggest year-over-year jump was in trucking, which was up 17.3%. That is the number that really stands out because truck freight touches almost every part of the supply chain, especially domestic resin, packaging, additives, and finished goods shipments. Water transportation was also up sharply at 11.0%, while air freight rose 5.7%. Rail was basically flat, up only 0.3%, and freight/cargo arrangement services were up 1.7%.

Looking back to January 2019, transportation cost inflation is still significant. Water transportation is up 58.8%, trucking is up 41.8%, freight/cargo arrangement is up 33.3%, rail is up 23.3%, and air is up 14.2%. So even where some costs have cooled, the overall transportation cost base is still much higher than it was pre-COVID. The big idea is that freight remains a real cost driver. Transportation accounted for 19.4% of the overall increase in producer service costs, which means it is still playing a meaningful role in inflation across the supply chain.

For plastics processors and material buyers, this means freight needs to stay front and center in cost planning. Even if resin prices stabilize, higher trucking and water freight costs can still push delivered material costs higher. It also supports the need to review freight terms, shipment sizes, inventory timing, and supplier locations because transportation is no longer just a small add-on cost — it is a major part of the total delivered price.

Consumer products giants cite rising costs, supply chain pressures from Middle East conflict

You aren’t the only ones seeing price increases. Some of the biggest consumer products companies in the world are dealing with the same pressure from higher raw material, resin, feedstock, and logistics costs tied to the conflict in the Middle East.

Procter & Gamble, Clorox, and Newell Brands all recently said their costs are moving higher, even though they have mostly been able to avoid major production shutdowns or product shortages so far. P&G expects the conflict to create about a $150 million after-tax cost hit this fiscal year from higher raw materials, feedstocks, and logistics. The company also said that if oil reaches $100 per barrel, it could add up to $1.3 billion in annual costs before they take steps to offset it. One major issue is the impact on feedstocks used to make surfactants, which go into products like detergents and cleaning supplies. P&G said the industry has lost around 20% of the primary feedstock used to make surfactants when factoring in both supply and logistics constraints. The company also noted pressure in materials like nonwovens, polyethylene, and polypropylene, but said strong supplier relationships and flexible manufacturing have helped keep products available.

Clorox is seeing a similar situation. The company expects the Middle East conflict to add $20 million to $25 million in supply chain costs in its fiscal fourth quarter, and management warned that the number could grow if the conflict drags on.

Newell Brands, which owns brands like Rubbermaid and Coleman, pointed directly to higher oil prices driving up both transportation and resin costs. The company has already put selective price increases in place for resin-heavy products, including coolers and Rubbermaid Brute refuse containers. Newell also increased inventories after the Iran conflict began, to help protect against possible supply disruptions.

The bigger takeaway is that these increases are not isolated. Higher oil, resin, feedstock, and freight costs are moving through the entire supply chain, from resin producers to plastics processors to major consumer brands. While supply has largely continued flowing so far, the cost pressure is real, and many companies are already taking pricing action to manage it. Unpack the details.

The Countdown to a Major Oil Price Surge Has Begun. Oilprice.com published an article concerning an upcoming oil shortage

In summary, the world has been using oil inventories like a savings account to make up for lost supply from the closure of the Strait of Hormuz. Since about 20% of global oil used to move through that route, the loss is huge. So far, prices have not completely exploded because commercial inventories and strategic reserves have helped fill the gap. But those inventories are being drawn down fast. Key phrases to watch are “operational minimum” and “tank bottoms.” Basically, even though the world may still show billions of barrels of oil in inventory, not all of that oil is actually usable. A lot of it is needed just to keep pipelines, refineries, tankers, trucks and storage systems operating. Once inventories get too low, the system becomes stressed. That means more price volatility, possible rationing in some markets, tighter fuel availability and a much smaller margin for error.

Markets are still acting too calm because many traders believe the Iran conflict and Strait of Hormuz closure will be resolved soon. That optimism has kept futures prices from rising as much as the author thinks they should. But if the closure continues, the article suggests the market could suddenly reprice oil much higher, possibly $150 per barrel or more.
Even if a peace deal were reached soon, oil flows would not instantly return to normal. The article says it could take months to restore traffic through the Strait under ideal conditions meaning the supply problem could linger even after the headlines improve. Don’t assume today’s oil price reflects the full risk. If inventories keep falling, fuel, freight, feedstocks and resin-related costs could move higher quickly. We are sleepwalking into an oil supply crunch, and once buyers realize how thin the buffer has become, prices could jump fast. See how this unfolds.

 

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