June 2025 | Market Update
Price Increases, Volatile Commodity Resins and Shipping Concerns
From Chuck Hoop, Business Director, Star Plastics
Pricing Update – May
There were eight price increases noted with Covestro announcing a 15 CPP increase in mid-May (notably with no formal justification) and SABIC has not yet followed with a similar PC increase.
In the engineering materials / flame retardants, SABIC implemented a targeted increase (not general PC) for: Flame retardant Valox™ and Cycloc™ grades. Justification: Antimony (ATO) price increases, long anticipated. Effective Date: May 15 (announced May 1). Celanese mirrored this approach, raising prices globally on many ATO-containing grades: Including nylon 6, nylon 66, TPV, PP, PBT, and POM. Range: $0.10 to $1.25/kg (North America).
In the commodity materials, Dow announced: May 1 – LDPE & LLDPE: +5 CPP (held) and HDPE: Initial +5 CPP but adjusted to +3 CPP. June 1 (Announced): HDPE, LDPE, LLDPE: +5 CPP increase upcoming. Finally, three fabrication material suppliers announced increases including Plaskolite, Gehr, and AZ Polymers.
Key Takeaways
Volatility continues in commodity markets, with increases often unjustified or speculative (e.g., Covestro). ATO-based price pressure is materializing across major manufacturers — this may indicate further specialty material hikes in the coming months. Polyethylene dynamics reflect supply tension, especially with held vs. retracted increases, and now stacked pricing going into June. Fabrication materials may be feeling upstream cost pressures or taking margin, warranting further scrutiny on pass-throughs.
CNBC reported late in May that mortgage rates rose for the third consecutive week, hitting their highest level since January at 6.98%. Despite this, mortgage applications to purchase homes increased 2% from the prior week and were 18% higher than a year ago, helped by rising housing inventory. In contrast, refinance applications fell 7% for the week, though they remained 37% higher than last year. The dip in refinancing was led by a 6% drop in conventional and a 16% drop in VA refinances. Rates slightly declined at the start of the holiday-shortened week due to mixed signals in a consumer confidence report, which hinted at weakening labor market conditions. https://www.cnbc.com/2025/05/28/mortgage-rates-highest-level-since-january.html?utm_source=758421&utm_medium=email.
The International Longshore and Warehouse Union (ILWU) has strongly condemned President Donald Trump’s tariffs
Calling them “reckless,” “shortsighted,” and harmful to American workers. They argue the tariffs function as taxes that disproportionately hurt working-class families while enriching the wealthy, increasing prices, causing job losses, and straining international relations. The union highlights a sharp decline in trade at West Coast ports, especially with China, and warns that reduced global commerce threatens hundreds of thousands of supply chain-related jobs. They cite rising costs in fuel and construction materials leading to layoffs and delayed shipping services as evidence of the tariffs’ damage. The ILWU rejects the “America First” trade policy, calling it chaotic and harmful, and asserts that tariffs have failed to improve trade balance while passing costs to U.S. consumers. They urge a move toward fair trade policies that protect jobs, lower taxes, and prioritize working-class Americans, calling on unions and citizens to oppose the tariffs. Read the full article here.
Transportation Rates Likely to Surge During Tariff Pause
U.S. and Chinese officials have agreed to a 90-day truce in their trade war, significantly reducing tariffs to encourage further negotiations. The U.S. will lower tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on U.S. goods from 125% to 10%. This move is expected to temporarily boost global trade activity. During this time, freight rates are projected to surge as importers rush to ship goods during the tariff pause. Ocean freight will see immediate increases, followed by domestic trucking in July and August. This mirrors capacity strains seen in late 2021–2022. Similar to what we saw in quarter one of this year, the spike in shipping volume may strain global logistics. Larger importers are likely to secure transportation more easily, while smaller shippers could face delays and higher costs due to tight capacity. Shippers are urged to act swiftly—shipping early can minimize delays and cost spikes. Leveraging high-frequency data tools like SONAR can help businesses monitor and respond to shifting freight dynamics during this high-demand period. Read the entire article here.
China’s economy and export activity have seen a sharp decline recently, according to a report by The Wall Street Journal. In April, China’s National Bureau of Statistics revealed that manufacturing activity had fallen to its weakest level in over a year, while exports dropped to their lowest point since 2022—during the peak of the COVID-19 pandemic. The Purchasing Managers’ Index (PMI), a key gauge of economic health, dropped to 49 in April, signaling contraction (as readings below 50 indicate shrinking activity). Similarly, the export index fell to 44.7, underscoring significant weakness in trade.
Analysts suggest these developments are closely tied to the 145% tariffs imposed on Chinese goods. In response, China implemented a 100% tariff on U.S. companies operating within the country and restricted the export of critical raw materials and minerals used in advanced technologies, including batteries. According to the article, Goldman Sachs estimates that the U.S. accounts for roughly one-third of China’s economic growth, with 10 to 20 million Chinese jobs depending on U.S. demand. Read the entire article here.
Semiconductors May Become Less of a Concern in the Future
The COVID-19 pandemic highlighted the world’s heavy reliance on semiconductors, exposing vulnerabilities in global supply chains. However, this dependency is expected to ease in the coming years. According to a recent McKinsey report (April 2025), semiconductor companies worldwide are projected to invest approximately $1 trillion by 2030 in new fabrication facilities. These investments could significantly expand global production capacity, with industry revenues also expected to surpass $1 trillion annually by the end of the decade. While there are challenges to scaling up semiconductor production, they are considered manageable. Key hurdles include high up-front capital costs, long-term operational expenses, growing demand for advanced materials in node manufacturing and packaging, reliance on offshore sources for critical raw materials, and logistical complexities arising from shifting production and increased material needs. Addressing these issues will be critical, but the scale of planned investments offers a promising outlook for a more resilient semiconductor ecosystem. Full article here: https://bit.ly/433X38h.
Long Beach Sees Record TEUs Amid Trade War Developments
In April, the Port of Long Beach processed a record 867,493 twenty-foot equivalent units (TEUs), surpassing even the peak volumes seen during the COVID-19 pandemic by nearly 6%. This marks the 11th consecutive month of import growth at the port. The surge in container traffic is largely attributed to the temporary pause in tariffs announced in early May, which spurred a rush to move goods before potential duties take effect. However, this momentum may not last. Port authorities anticipate a significant decline in import volumes—potentially up to 10%—once the tariffs are reinstated. This record-breaking performance comes despite broader economic concerns, including warnings of mass layoffs in the trucking and retail sectors, as reported by FreightWaves. Subsequent to this we’ll see delays on inland freight moves and rail congestion as the containers move their way inland. Read the entire article.
Transportation Concerns Looking Forward –
In early May, FreightWaves reported on an Apollo Global Management survey warning of potential large-scale layoffs in the trucking and retail sectors. The survey suggests that new tariffs and growing consumer uncertainty are likely to reduce freight volumes and discretionary spending. Imports—which account for approximately 20% of the trucks on U.S. roads—are a key factor, and disruptions in the supply chain are expected to hit the retail sector particularly hard, especially given its reliance on goods from China. As inventory shortages mount and consumer confidence declines, the economic outlook becomes increasingly challenging. Apollo also highlighted the heightened risk of stagflation—a scenario characterized by stagnant economic growth coupled with persistent inflation.
Federal Reserve and Interest Rates
On May 7th, the Federal Reserve held interest rates steady, citing growing risks of rising unemployment and persistent inflation. While there are still expectations for rate cuts later in the year, the timing and scale of those cuts remain uncertain.
U.S. Existing-Home Sales See Sharpest Drop in Over Two Years, Signaling a Slow Start to Spring Market
Coming from the WSJ, sales of existing homes plunged in March, recording the steepest monthly decline in more than two years and signaling a sluggish start to the spring homebuying season. The National Association of Realtors reported Thursday that existing-home sales fell 5.9% from February to a seasonally adjusted annual rate of 4.02 million, the largest drop since November 2022. The sharp decline has tempered hopes of a spring rebound. Traditionally the busiest time of year for the housing market, spring typically draws in families looking to move before the new school year, as well as sellers aiming to list when demand peaks. But ongoing economic uncertainty, elevated mortgage rates, and persistently high home prices appear to be keeping many potential buyers on the sidelines. This downturn is also likely to ripple through other parts of the economy, especially sectors tied to the housing market. Retailers specializing in home remodeling, furniture, appliances, and home improvement supplies could feel the pinch as fewer existing-home transactions typically translate into less spending on renovations and upgrades. Read the full article here.
Market Indicator: Housing Sector
As of mid-May, the U.S. housing market is showing early signs of recovery. CNBC reports a 2% rise in mortgage applications over a two-week period, with a more substantial 18% increase year-over-year. This uptick follows a period of suppressed activity due to historically low housing inventory and fluctuating interest rates. Key Drivers: Slight Increase in Inventory: After years of limited supply, even a modest rise in available homes is stimulating demand. Interest Rates Stabilizing: Rates are currently just above 6.5%, which, while still high compared to pre-pandemic levels, appear to be stabilizing—giving buyers more confidence. Implications: The market may be entering a transitional phase, moving away from the stagnation seen in early 2024. Rising applications suggest improved buyer sentiment, potentially signaling a more active summer selling season. Sustained increases in inventory and rate stability will be key to maintaining this momentum.
Retailers Signal Price Hikes as Tariffs Begin to Bite
Starting in June and continuing through the summer, American consumers are expected to see price increases across a wide range of goods as major retailers respond to new tariffs on imported products. Walmart was the first major company to publicly announce impending price hikes, as reported by The Wall Street Journal in mid-May. The retail giant, which serves 9 out of 10 Americans, cited increased import costs due to tariffs as the primary reason. The announcement drew criticism from the President, who suggested Walmart should absorb the added costs rather than pass them on to consumers.
Following Walmart’s lead, several other major retailers have signaled similar moves. According to USA Today, companies such as Nike, Best Buy, Adidas, and Mattel have either confirmed or suggested price increases in the wake of the tariffs. Some retailers, like Target, have been more cautious in their language—cutting their sales forecasts but stopping short of confirming price increases, instead stating they “continually adjust pricing,” which many analysts interpret as a signal that increases are likely but will not be explicitly announced.
Meanwhile, Home Depot has taken a different stance, expressing a desire to maintain current prices. However, the company warned that some product availability could be impacted as a result. The trend underscores growing pressure across the retail sector as companies grapple with rising import costs. As more brands respond, consumers should be prepared for higher prices on everyday items throughout the summer. Read the entire WSJ article here.
U.S. ruling that Trump tariffs are unlawful stirs relief and uncertainty
On May 29, a U.S. trade court ruled against most of President Trump’s tariffs, stating he had exceeded his authority. This sparked relief in financial markets, boosting chip makers, banks, luxury, and auto stocks. The U.S. dollar also strengthened slightly. However, uncertainty remains as the Trump administration plans to appeal. The ruling undermines Trump’s tariff-centered trade strategy and may slow bilateral deals with other countries. Germany and the European Commission declined to comment due to ongoing legal proceedings. Analysts suggest the pause in tariff enforcement may benefit critics of Trump’s trade approach and market traders seeking volatility.
University of Michigan Consumer Sentiment Survey – May
On Friday, May 30, 2025, consumer sentiment was reported to be stabilized during May after four months of decline, holding steady at an index of 52.2, the same as April but down from 69.1 a year ago. The stabilization followed President Trump’s 90-day pause on Chinese import tariffs, which led to slightly more optimistic views about short-term business conditions. However, concerns about personal finances and economic uncertainty remain high. Items to note: 64% of consumers expect business conditions to worsen in the next year, unchanged from April but sharply up from 29% in November. Two-thirds of consumers expect unemployment to rise, up from one-third in November 2024. Consumers are increasingly concerned about stagnant incomes and declining purchasing power. 38% say high prices have already eroded their finances, and 68% expect further erosion in the next year. Overall, while sentiment has stopped falling, consumers remain anxious about inflation, job security, and income prospects amid ongoing political and economic uncertainty. https://spectrumlocalnews.com/nc/triad/business/2025/05/30/consumer-sentiment-may-2025-university-of-michigan-surveys-of-consumers