August 2025 | Market Update
China Manufacturing Continues Decline; News on PC, ABS, PA, PBT and More
From Chuck Hoop, Business Director, Star Plastics
Pricing
Lotte announced a flame-retardant (FR) ABS price increase for its Starex brand FR ABS at 45 CPP for August 1st. They are citing antimony specifically for the increase and NOT tariffs. We’re seeing FR ABS nearing $2.20 per pound TL, delivered on lead time of 10 weeks for imports. The letter can be seen here.
On June 27th, Formosa announced a 7 CPP increase on PE products for implementation the following day. There were not reasons stated in the letter as to why the increase was being announced. Following suit, LyondellBasell and ExxonMobil also announced very late in June, increases for PP for July 1st implementation. Letters are attached here.
Sabic announced price increases on the specialty side of the business which includes: Noryl +25 Cents/KG, LNP Lexan & Cycoloy +50 Cents/KG, along with Ultem +2 Dollars/KG and all LNP Compounds + 60 Cents/KG and being effective August 1st. The letter can be seen here.
Polycarbonate
The North American polycarbonate (PC) market remains ‘cloudy’ by uncertainty, as the 90-day pause on reciprocal tariffs, stemming from President Trump’s executive order on tariffs which is set to expire on Friday August 1st. While the US is a net exporter of PC and only about 30% of its domestic demand is supplied by imports, many of those imports come from countries facing steep reciprocal tariffs—South Korea (26%), EU (15%), and Thailand (37%). A temporary 10% duty is currently in place, but should full tariffs be reinstated, supply would most likely tighten, and therefore, prices start to rise for the first time this year. Despite this, regional PC supply is still considered adequate due to soft demand and lower raw material and Asian PC prices. Recall that last month I spoke about the shift of PC imports from China to SE Asia and Europe which seems to be continuing.
On the demand side, no significant month-over-month changes were reported. However, sectors like automotive and construction are under pressure with U.S. light vehicle production, which is down 5% year-to-date and expected to fall similarly through 2026. The construction sector is forecast to grow by only 0.7% this year, compared to 5.2% growth in 2024. Tariffs on metals (aluminum and steel) have worsened conditions for these industries. Meanwhile, we haven’t seen any significant disruptions in PC production or the supply chain that were reported this month.
ABS
The ABS market in North America remains unsettled due to tariff uncertainty as I said in the PC section. ABS is especially vulnerable to these tariffs, with about 40% of U.S. demand met through imports—primarily from South Korea (49%) and Taiwan/China (20%). These countries face potential tariff hikes up to 25–32% but that is a moving target, in addition to current duties. Although the U.S. Mexico Canada Agreement (USMCA). USMCA agreement remains in place—offering some relief via continued imports from Mexico (12%)—the looming possibility of broader tariff implementation has left suppliers and consumers cautious. The current 10% duty on non-North American imports is manageable for now but could result in cost-driven supply restrictions if full tariffs are reinstated.
Supply in July was adequate, supported by steady international and domestic flows, along with weaker demand and falling freight rates. Prices for imported material may be under upward pressure due to tariff uncertainty, especially for FR ABS, which remains tight and expensive. On the demand side, conditions are weak—particularly in the automotive sector, which is projected to decline 5% year-over-year. Higher steel and aluminum tariffs and ongoing uncertainty over trade policy are compounding challenges across the value chain.
Nylon
The North American nylon market remains stable with no significant supply disruptions or demand spikes. Global capacity increases have led to plentiful supply, and production costs for nylon 6 and nylon 66 rose slightly in July to 75 CPP and 88 CPP, respectively. Feedstock costs have stabilized, and market pricing remains unchanged at 153 CPP for nylon 6 and 174 CPP for nylon 66 due to reduced demand and softening cost inputs. Demand continues to be weak, particularly in the automotive sector, which again (from above) is forecast to decline 5% year-over-year. About 25% of nylon 66 and 6% of nylon 6 demand are exposed to tariff-related uncertainty (go figure) and a shift toward EV production. Increased capacity in China and potential trade retaliation may weigh on U.S. exports and future price stability. While current conditions are steady, the market outlook remains cautious, with limited near-term volatility expected.
PBT
The PBT market in North America remained stable in July, with unchanged prices averaging 145 CPP and steady supply conditions as it has been all year. Domestic production is strong, and imports—especially from Taiwan and China, which makes up 60% of U.S. import volume—remain stable. While PBT is not directly targeted by new tariffs, indirect effects from broader trade measures on aluminum, steel, and automotive chains are creating uncertainty.
Demand growth is currently limited but could improve in the near term. Specialized PBT grades continue to command premium pricing due to limited competition, while neat resin faces downward pressure from abundant low-cost Asian imports. Freight costs have improved, helping sustain stable price conditions. Despite market steadiness, players remain cautious and focused on protecting market share amid ongoing tariff-related uncertainty.
PBT prices in North America remain competitive due to stable supply and low production cost volatility. The average price for neat resin is 145 CPP, for buyers purchasing truckload volumes and with annual demand over 500,000 pounds. Smaller volumes or specialty compounds may be more. Increased imports—often priced 10–15% below domestic levels—are putting pressure on U.S. producers, especially as Asia benefits from lower feedstock costs due to added BDO capacity locally. Meanwhile, China’s restrictions on antimony exports have led to price increases for flame-retardant grades. Despite these pressures, overall PBT pricing remains steady, with domestic producers holding firm on standard grade pricing with rising import competition.
Did you hear about the strategic merger of Trivalence Technologies into the Star Plastics platform?
It gives us the best of the best in serving you, our customers! We’re a company that can provide you solutions for all your thermoplastic needs. The platform now includes:
Manassas Polymers, LLC, a high-performance nylon recycler based in Calhoun, Georgia
A strategic partnership with LATI S.p.A., with a license to manufacture and distribute highly engineered thermoplastic compounds
An exclusive relationship with Star Advanced Material Co., Ltd. in Shandong, China to provide polymer compounding, sales and technical services in the Asia Pacific region
A growing footprint in Mexico, serving regional molders and supporting near-shoring efforts
Toll manufacturing services, available at multiple locations in North America and the Asia Pacific Region
The press release can be found here.
In other market news:
China PMI Signals Continued Decline in Manufacturing
China’s manufacturing activity declined for the third consecutive month in June, with the official purchasing managers index (PMI) registering at 49.7—slightly up from May’s 49.5 but still signaling contraction. Despite the recent China-U.S. trade truce, lingering tariffs continue to pressure the economy. Subindexes showed modest improvement: production rose to 51.0, new orders returned to expansion at 50.2, and export orders improved to 49.7. Meanwhile, the non-manufacturing PMI, reflecting services and construction, edged up to 50.5. Although Chinese officials, including Premier Li Qiang, remain publicly optimistic, economists are cautious. They note slowing momentum, weak exports, and diminishing fiscal support. Goldman Sachs anticipates only targeted easing measures at the upcoming July Politburo meeting, rather than broad stimulus. Analysts warn that without more aggressive policy action; China may struggle to meet its 5% annual growth target amid ongoing challenges in the property and labor markets. Full article here.
The US economy
Inflation picks up again in June, rising at 2.7% annual rate
On July 15, NBC News and other outlets reported that U.S. consumer prices rose in June, signaling that President Donald Trump’s tariffs are starting to impact the broader economy. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) increased 0.3% for the month, bringing the 12-month inflation rate to 2.7%—in line with Dow Jones expectations.
When stripping out the more volatile food and energy components, core inflation rose 0.2% in June, putting the annual core inflation rate at 2.9%,also matching consensus forecasts. This announcement, while expected, may influence the Fed and the long term interest rate adjustment decisions but has yet to be seen.
On the Tariff front…
During July, trade deals were cut with various counties bringing down the tariffs based on their investment in the United States and other factors. President Donald Trump and Japanese Prime Minister Shigeru Ishiba have agreed to a trade deal that imposes a 15% tariff on all U.S. imports from Japan, down from the 25% rate Trump had previously threatened. In return, Japan will invest $550 billion into the U.S. economy and will open its markets to American goods such as cars, trucks, and rice. Japan, the fifth-largest trading partner of the U.S., had a trade surplus of nearly $70 billion in 2024. Ishiba said the deal would strengthen cooperation between the two nations and support high-quality job creation and manufacturing.
In addition to the Japan deal, the Trump administration announced new trade agreements with the Philippines and Indonesia. The U.S. will reduce tariffs on Filipino goods to 19%, down from 20%, while the Philippines will not impose import duties on U.S. products. Trade between the two countries reached $23.5 billion in 2024, with key imports from the Philippines including semiconductors, auto parts, and textiles. The U.S. also finalized a deal with Indonesia, instituting a 19% tariff on Indonesian imports while Indonesia agreed to eliminate tariffs on American goods. U.S.-Indonesia trade was valued at $38.3 billion last year, with major imports including palm oil, solar panels, and cocoa butter. These deals are part of a broader push by the Trump administration to revise trade relationships ahead of an August 1 deadline.
On July 17th, (and updated July 23rd) NAM (National Association of Manufacturers) along with other news outlets, reported the following tariff updates for Canada, Mexico and the EU:
(Of course these are subject to change
- 25% (down from 35%) Tariff on Canadian goods effective August 1: The July 10 letter to Canadian Prime Minister Carney cites Canada’s failure to stop fentanyl drugs from “pouring into” the U.S., as well as concerns about tariff and non-tariff policies and trade barriers that cause an “unsustainable trade deficit with the U.S.”, including Canada’s dairy trade policies. The letter did not address any delineation on USMCA compliant goods.
- 25% (down from 35%) tariff effective on Mexican goods effective August 1: The July 11 letter to Mexican President Sheinbaum acknowledges Mexico’s help to secure the border, but cites Mexico’s “failure to stop the cartels,” as well as concerns about tariff and non-tariff policies and trade barriers. The letter did not address any delineation on USMCA compliant goods.
- 15% (down from 25%) Tariff on EU Goods Effective August 1: The July 11 letter to European Commission President von der Leyen threatens the EU with a 30% tariff, a number “far less than what is needed to eliminate the trade deficit,” and refers to an expectation of “complete, open market access to the U.S.”
National Association of Manufacturers also covered the semiconductor market in June
SkyWater Technology is taking a leading role in rebuilding domestic semiconductor manufacturing in the U.S. As the only investor-owned, U.S.-based pure-play foundry, SkyWater is reshoring critical parts of the chip supply chain to reduce reliance on foreign-made semiconductors. Its unique “Technology as a Service” model blends advanced R&D with manufacturing, enabling customers to co-develop technologies without needing to invest in their own fabrication facilities. The company recently expanded its footprint with the acquisition of Infineon Technologies’ semiconductor fab in Austin, Texas, strengthening its ability to support both commercial and government partners while building a complete domestic supply chain.
Despite the momentum, the semiconductor industry faces steep financial hurdles. With infrastructure and equipment investments requiring billions of dollars and long lead times, SkyWater underscores the importance of stable federal support. The company welcomed recent pro-manufacturing tax reforms, including increased investment credits and R&D expensing, which are vital to sustaining U.S. competitiveness. CEO Thomas Sonderman warns that without these incentives, America’s ability to scale domestic manufacturing remains limited—especially as China surges ahead in global chipmaking. For SkyWater, policy is not just about funding but about securing the nation’s technological future and manufacturing independence. Full article here.
SkyWater isn’t the only game in town when it comes to the production of semiconductors
TSMC (Taiwan Semiconductor Manufacturing Corporation) is accelerating its expansion in Arizona to meet surging U.S. demand for advanced semiconductors, particularly for artificial intelligence and high-performance computing. CEO C.C. Wei announced that the production schedule for some facilities will be pulled forward by several quarters, forming a “gigafab cluster” to serve U.S. clients like Nvidia and Apple. This expansion is part of a broader investment totaling $165 billion, covering six chip fabs, two advanced packaging facilities, and an R&D center. The company’s first Arizona fab, which began mass production late last year, is reportedly achieving production yields comparable to its Taiwan operations. TSMC also sees long-term growth potential in emerging sectors like humanoid robotics, which could surpass electric vehicles in market size, although significant traction isn’t expected until after 2026.
Despite global trade uncertainties and tariff threats, TSMC reported a record-breaking second quarter with a 61% rise in net profit and a 39% revenue increase. The company raised its full-year revenue growth forecast to 30%, buoyed by strong demand for AI and high-performance computing chips, which now account for the majority of its business. While geopolitical tensions loom—particularly around U.S. tariffs on Taiwanese imports—TSMC has so far seen little impact on customer behavior. In contrast, ASML, a major equipment supplier to TSMC, issued a more cautious outlook citing trade risks. Nonetheless, TSMC’s aggressive U.S. expansion and resilient financials position it as a key player in the reshaping of the global semiconductor supply chain. The full story is here.
Home Prices Hit Record High in June, Dragging Down Sales
The Wall Street Journal reported that U.S. home prices hit a record high in June, with the median existing-home price reaching $435,300. Yet the spring housing market—typically the busiest season—was weak due to high mortgage rates above 6.5% and continued affordability challenges. Existing-home sales fell 2.7% from May to a 10-month low, and while inventory has risen in places like Texas and Florida, supply remains below prepandemic levels nationally, sustaining price pressure. Buyers are gaining some leverage as more sellers cut prices or offer flexibility, and some buyers are seeking creative solutions like assumable loans to manage costs. Despite a slight uptick in mortgage applications, the overall market remains sluggish, and a sustained recovery in 2025 looks unlikely unless interest rates drop significantly. The full article is here.
Plastics News reported the forecast for housing starts to continue through 2026
The residential construction sector continues to struggle, with no recovery expected in 2025 or 2026. Housing starts are projected to fall 4% this year and another 4% next year, extending a downturn that began in mid-2022. Contributing factors include persistent inflation, high interest rates, and declining immigration, which has worsened labor shortages in construction. The total number of housing starts in 2026 is expected to land between 1.2 million and 1.3 million. Key pressures on the sector include tariffs, rising import costs, and a weakening dollar, all of which are pushing up prices for building materials and homes. Higher Treasury yields are also driving mortgage rates up, further dampening demand. While there’s still uncertainty, the outlook suggests no quick turnaround, with conditions possibly worsening into 2026 unless inflation eases and labor supply improves. The full article is here.
Freightwaves reported on shipping costs in mid-July
Container shipping rates on key Asia–U.S. routes are falling as weakening import demand and tariff tensions driven by President Trump’s policies take a toll on global trade. Tariffs are now significantly impacting consumer prices and shipping costs, with U.S. inflation rising 2.7% in June. Importers, who once managed to avoid higher costs by frontloading goods amid past global disruptions, are losing that advantage. Meanwhile, the European Union has threatened retaliatory tariffs on $84 billion in U.S. goods but is delaying implementation to pursue a negotiated resolution as the U.S. eyes a 25% tariff hike by August 1.
Despite disruptions like those in the Suez Canal, reduced demand has kept ocean freight prices low, especially during what is typically a high-demand peak season. Rates from Asia to the U.S. West Coast dropped 24% to $2,369 per TEU, and East Coast rates fell 5% to $4,888. Rates to the Mediterranean also declined, while Asia–Northern Europe prices rose 4%, likely due to shifting trade patterns. In response, carriers have cut trans-Pacific shipping capacity by nearly 25% to balance supply and demand. Outside the U.S.–China trade dynamic, investments such as Syria’s $800 million deal with DP World show how global logistics players are repositioning to take advantage of changing trade routes and loosened sanctions. See the full article here.
Trump waives Biden air emissions rules for plastic resin plants
President Donald Trump’s administration has granted two-year waivers to dozens of plastic resin and chemical plants, exempting them from strict air emissions rules enacted under President Joe Biden in 2024. The waivers affect facilities operated by major industry players like Formosa, Dow, and Sabic, among others, primarily along the Gulf Coast and in parts of the Midwest. The Biden-era rules had mandated ‘fence line air monitoring’ for 80 chemicals—including carcinogens like benzene and vinyl chloride—aiming to protect nearby communities. Trump officials argued that these regulations were impractical, citing technological limitations and national security concerns tied to maintaining domestic chemical production.
Industry groups praised the decision as vital to preventing plant shutdowns and safeguarding supply chains, while environmental advocates condemned it as a threat to public health. The waiver orders also extended beyond petrochemicals to include coal plants, iron ore processing sites, and sterilization facilities. The full article can be seen here.