May 2026 | Market Update
Price Pressure Persists Across Polymers
From Chuck Hoop, Business Director, Star Plastics
What’s Driving Your Material Costs Higher
Welcome to the May issue of the Monthly Market Update.
The level of price increase activity we saw from the end of March into April was unlike anything we’ve seen in recent memory. I had no fewer than 80 increase notices come across my desk, covering olefins, styrenics, and engineering resins. On top of that, we also saw movement across nearly every major input category, including additives, pigments, fiberglass, and even cardboard.
Logistics continues to add another layer of pressure. Diesel fuel prices remain at extremely high levels and are expected to stay elevated for the duration of the conflict. Between resin, additives, packaging, and freight, the market is dealing with cost pressure from just about every direction right now.
Dive into this month’s edition to find out what’s included!
- Pricing Shockwaves Hit Every Polymer Family
- Global Supply Chains Under Pressure: Strait of Hormuz Effect
- Housing in 2026: Slow Progress, Lingering Pressure
- Builder Confidence Slips Again—What It Signals for the Market
- Remodeling Boom Quietly Gains Strength
- No Escape: Resin Prices Climb Across the Board
- M&A Momentum Builds in Plastics and Automotive
- Tariff Refunds: A Hidden Cash Opportunity Opens
- AI Investment Surge Signals Future Materials Demand
- Auto Market Strain: Rising Debt, Shifting Demand
- Manufacturing Expands—But Plastics Lag Behind
- Consumer Confidence Drops Sharply
Resin Pricing
For polymers, increases were varied and occurred often in April. What we have seen in price announcements and market movement are as follows:
ABS: 12-20 cents per pound (CPP) with flame retardant versions up an additional 30 CPP. Butadiene and acrylonitrile costs are the big watch items, and production cuts or Asian shortages will keep the market tight.
PA 6 – 9-15 CPP: with supply available. Demand has been steady to soft, and Asia saw decent orders in late March before things cooled off in mid-April. Near term, nylon 6 raw material volatility is still a major factor.
PA 66: 10-15 CPP with supply available. Demand is weak in spots, but the cost side is still ugly, especially with butadiene and HMDA pressure.
PBT: 6-13 CPP minimum. Import costs have skyrocketed. Buyers are trying to lock in local supply because Asian availability looks less reliable. Demand is still soft, especially with automotive weakness.
PC: 8-12 CPP for general purpose with more coming in May and June. We estimate another 8-10 CPP. PC is getting squeezed mostly from higher feedstock costs and tighter global supply. North American buyers are trying to lock in local supply because Asian availability looks less reliable.
PP: 15-22 CPP with more announced already for early May. Spot prices jumped early in April.
PE: 24-30 CPP with another 20 CPP announced for May. And this is after 10-15 CPP in March.
Strait of Hormuz Blockade Snarls Supply Chains for Manufacturers
In an early April article published by the National Association of Manufacturers (NAM), the effect of the Strait of Hormuz closing goes beyond fuel (and plastics). The strait blockade is turning into a lot more than just an oil story. It’s driving up oil and liquefied natural gas (LNG) prices, but it’s also choking off key raw materials that manufacturers rely on, including fertilizer, sulfur-related products, aluminum, and helium. That means the impact is spreading well beyond energy and into agriculture, metals, semiconductors, batteries, and industrial production. In other words, this is becoming a broad supply chain problem, not just a fuel cost issue.
The biggest pressure points come from how much of the world’s supply moves through that region. We’ve all heard that around 20% of global oil and LNG flows through the strait, so prices have jumped fast, and industry leaders are warning the disruption may last even after the war ends. Fertilizer prices are also climbing sharply, which could hurt crop yields later this year. Sulfur disruptions are creating risks for battery materials, chipmaking, and critical minerals processing. On top of that, aluminum prices are rising after production shutdowns in Qatar, and helium shortages are adding more strain to industries like semiconductors, medical equipment, and aerospace. Overall, manufacturers are facing a growing mix of higher costs, tighter supply, and longer-term uncertainty across multiple essential inputs. Dive deeper.
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Housing for 2026 – National Association of Home Builders
We did some research on the housing market for 2026 prior to the current political environment. The National Association of Home Builders (NAHB) reported mid-February that the 2026 housing outlook is cautiously positive, but the market is still dealing with a lot of pressure. Builders and buyers are facing affordability issues, labor shortages, rising material costs, and broader economic uncertainty. Mortgage rates have eased a bit, and NAHB expects them to trend slightly lower through the year, which should help support housing activity, but a sustained drop below 6% will likely not happen until 2027. At the same time, the country is still short about 1.2 million housing units, which continues to keep affordability strained. In terms of activity, single-family construction is expected to grow only modestly in 2026, while multifamily starts are projected to decline further as tighter financing and higher construction costs continue to weigh on development. Remodeling remains a bright spot, supported by strong home equity and aging-in-place demand. On the resale side, inventory is improving and the market is shifting toward a more balanced environment, which is helping slow price growth and slightly improve affordability. Even so, many buyers remain hesitant because of concerns around job security, policy uncertainty, insurance costs, and overall market stability. The main takeaway is that 2026 should see incremental improvement, but not a major rebound. See the details.
Since the actions of the United Stares on February 28, builder sentiment has improved slightly in March, but the overall picture is still cautious. The NAHB/Wells Fargo Housing Market Index rose one point to 38, which means builder confidence is still well below the neutral 50 mark. Builders are dealing with the same core pressures: affordability remains a major issue for buyers, while builders continue to face high land, labor, and construction costs. On top of that, economic uncertainty and concerns tied to the Iran conflict and oil prices are making it harder for buyers to commit, even with mortgage rates easing a bit in February. At the same time, builders are still leaning heavily on incentives to keep demand moving. About 37% cut prices in March, with an average reduction of 6%, and 64% offered sales incentives. All three main components of the index improved modestly, with current sales conditions at 42, future sales expectations at 49, and buyer traffic at 25. Regionally, the Northeast, Midwest, and South were flat, while the West slipped slightly. Overall, the market showed a little more optimism in March, but affordability and uncertainty are still keeping both builders and buyers cautious. See the full outlook.
The February 17 NAHB housing outlook and the March 16 builder sentiment report together show a housing market that remains under pressure, but is not collapsing. The February outlook is the more strategic view, projecting cautious optimism for 2026 as slightly lower mortgage rates, modest improvement of affordability, and a more balanced resale market help support limited gains in single-family construction and remodeling. Even as multifamily units remains soft the report makes it clear that the market is still constrained by high home prices, labor shortages, rising material costs, and policy uncertainty.
NAHB Housing Market Index (HMI) – The NAHB/Wells Fargo Housing Market Index (HMI) is designed to gauge and track the pulse of the single-family housing market. The HMI is based on a monthly survey of single-family builders who are asked to rate three specific conditions of the housing market:
- Present sales of new single-family homes
- Expected sales of single-family homes for the next six months and
- Traffic of prospective buyers of new single-family homes
Each month, the HMI depicts overall builder sentiment toward housing market conditions on a scale ranging between 0 and 100. A higher reading (>50) is an indication that the majority of builders feel confident about the current and near-term outlook for housing. Lower readings signify less optimism among builders.
HMI Key Findings: April 2026 – Builder confidence in the market for newly built single-family homes fell four points to 34 in April. Here are the readings for the three HMI indices in April:
Current sales conditions fell four points to 37.
Sales expectations in the next six months dropped seven points to 42.
Traffic of prospective buyers posted a three-point decline to 22.
The latest HMI survey also revealed that 36% of builders cut prices in April, down slightly from 37% in March. The average price reduction was 5%, down from the 6% figure in March. The use of sales incentives was 60% in April, down from 64% in March, and marking the 13th consecutive month this share has reached 60% or higher.
Learn more at the NAHB website
Home Remodeling Profit Margin Jumps on Demand and Business Practices
In a recent NAHB article, remodelers had a very strong 2024, with profitability hitting its best level in almost 30 years. Net profit margins climbed to 6.3%, up from just 3% in 2011, while gross margins improved to 29.9%. A big reason was lower trade contractor costs, which dropped from 36% of revenue in 2021 to 30% in 2024. On top of that, the housing affordability crunch is keeping a lot of homeowners in place, so instead of moving, they are putting money into upgrades and renovations. That has created steady demand for remodeling work and helped contractors run healthier, more disciplined businesses. For the plastics business, that is a positive signal because stronger remodeling activity usually supports demand for a wide range of plastic-heavy products used in residential projects. That can include:
- Vinyl windows
- Siding
- Pipe
- Fittings
- Wire and Cable
- Electrical housing
- Lighting components
- Bath and kitchen materials
- Appliance-related parts
When remodelers are making better margins and carrying stronger balance sheets, they are generally in a better position to keep projects moving and spend on materials with less hesitation. For plastics suppliers, compounders, and processors, that suggests a healthier repair-and-remodel channel, even if new home construction remains uneven.
Nowhere to hide as prices increase across global resin markets
In an early April article in Plastics News, Frank Espisito wrote that the resin markets are moving up fast, and the increases are spreading well beyond just one or two materials. The Iran war and the disruption through the Strait of Hormuz have tightened up global supplies of both resin and the oil and gas feedstocks used to make it. So, producers are pushing through aggressive price hikes across nearly every major resin family. In North America, PE and PP already moved up in March, and even bigger PE increases are being talked about for April. PS is also facing a major jump, with PVC, PET, and engineering resins moving higher too. On top of that, export demand is pulling more U.S. material overseas, which means domestic buyers have less supply available to lean on when producers try to raise prices. Fuel surcharges are adding even more pressure.
For buyers, this means the window to buy at lower prices is getting smaller. If you wait too long, you are not just risking higher resin prices, but also tighter availability and added freight costs. The good news is that demand in markets like automotive, construction, and consumer goods is still somewhat soft, so buyers still have some room to negotiate. But that only helps if conversations are happening early and proactively. Overall, this is a market where buyers need to stay close to suppliers, lock in what they can, and avoid assuming prices will ease in the near term just because demand is uneven. Learn more.
Mutares hungry for more plastics M&As
In an article in Plastics News, Mutares is quickly becoming a bigger name in plastics and automotive M&A, especially for businesses that need a reset or turnaround. They first moved to buy Sabic’s engineered resins business in Europe and the Americas, and now they’re also adding part of Magna’s automotive lighting and roof systems business. The bigger picture is that Mutares is building a much larger automotive and plastics-related platform through its Amaneos Group, using a mix of acquired suppliers and component businesses. They’re also clearly signaling that North America is a major growth target, especially after opening a Chicago office and calling out the U.S. as a key expansion market.
For OEMs and plastics processors, this could mean both opportunity and some uncertainty. On the positive side, a bigger, more aggressive owner could invest in improving underperforming businesses. Because Mutares specializes in turnaround situations, customers should expect some transition risk as these businesses get reorganized, integrated, or pushed for profitability. For North American processors, that means it will be important to watch for changes in product strategy, plant footprint, customer focus, and service levels. Understand the impact.
Trump administration to begin accepting tariff refund applications
In a recent article, Steve Toloken of Plastics News wrote that the U.S. Customs and Border Protection (CBP) has now said it will start accepting International Emergency Economic Powers Act (IEEPA) tariff refund requests on April 20 and Phase 1 will cover certain unliquidated entries plus some entries that are within 80 days of liquidation. That matters because the Supreme Court ruled on February 20, that IEEPA does not justify these tariffs, which opened the door for refunds on duties that were collected under that authority. CBP’s latest materials also show this will be a phased process rather than a one-shot repayment, with the agency building out procedures as it expands the system.
For plastics companies, the takeaway is straightforward: this could become a meaningful cash recovery opportunity, especially for importers of resin, additives, compounds, and finished plastic components that paid IEEPA-based duties over the last year. But it is not going to be instant or simple. CBP is prioritizing the cleaner claims first, and trade lawyers are still warning that timing, documentation, and scrutiny of claims will matter. In other words, eligible companies should be getting their entry data, liquidation status, and support files organized now, because the refund path is opening, but the easier claims are likely to move first, and the more complicated ones may take longer. Delve deeper.
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Taiwan Semiconductor Manufacturing Company (TSMC) Shows Where AI Demand is Headed
Mid-April, the Wall Street Journal wrote an article on the investment by TSMC in the AI sector. This is basically a reminder that TSMC is one of the biggest real-world tests of whether AI demand is as strong and durable as everyone thinks it is. The company is spending at a massive level to stay ahead, with CapEx far above what Wall Street expected, because it sits right in the middle of the AI buildout. That looks great while demand is hot, especially since TSMC has strong pricing power and margins, but the risk is much bigger for chip manufacturers than for the tech companies building data centers. If Amazon or Microsoft overbuild, they can usually find ways to use that capacity later. If TSMC overbuilds, it can end up with incredibly expensive production assets sitting underused, which hits profits fast.
For plastics processors, the big takeaway is that this is another sign that AI infrastructure is still driving heavy investment, and that matters because chip plants, server buildouts, power systems, and electronics manufacturing all consume a lot of plastics and engineered materials. More semi conductor and AI-related expansion can support demand for materials used in housings, connectors, insulation, thermal management parts, electrical components, and cleanroom-related applications. At the same time, it is also a warning sign: if AI demand slows and chipmakers pull back, that could ripple into weaker demand across processors supplying electronics, industrial equipment, and data center supply chains. For plastics processors, this reads as both an opportunity and an early signal to watch closely, because TSMC’s spending decisions can hint at whether the AI boom has staying power or is starting to cool. Take a closer look.
America’s Pandemic Car Bubble Is Now Trapping Buyers in Debt
The auto market is showing another pressure point as more consumers trade in vehicles that are worth less than what they still owe. About 30% of trade-ins in Q1 this year had negative equity, and the average underwater amount was around $7,200, up 42% versus five years ago. A big part of this, traces back to the pandemic period, when vehicle shortages pushed prices sharply higher and many buyers financed expensive vehicles at elevated values. Now those vehicles are coming back to market, but their resale values are not holding up against the loan balances. This reminds me of the ‘Red Carpet Lease’ in the early 1990s (yes, I’m old). That’s when Ford wanted to jump start sales of the Explorer and they took limited money down, a 2-to-3-year lease and in 3 years, many vehicles came onto the market and prices dropped for good used vehicles. To keep payments manageable, buyers are stretching loans longer, with the average new-car loan now around 70 months and more consumers moving into very large monthly payments. Negative-equity buyers financed nearly $56,000 on average in Q1, about $12,000 more than the typical new-car buyer, with average payments hitting a record $932 per month. That creates a tough cycle: buyers roll old debt into a new loan, extend the term, and become more exposed if rates stay high, used values fall, or household budgets tighten. The article also points out that borrowers rolling negative equity into new loans are more than twice as likely to face repossession within two years.
Why does it matter to you? This is another signal that the auto consumer is getting stretched. If affordability worsens, OEMs and Tier suppliers may see more pressure on vehicle mix, production schedules, and launch timing—especially on higher-priced models where plastics content can be significant. Processors serving the automotive sector should keep a close eye on order patterns, especially for trim, lighting, under-hood, EV components, and interior programs. Even if overall auto sales do not fall sharply, the mix could shift toward lower-cost vehicles, longer model life cycles, and tighter cost-down pressure, which usually flows back through the plastics supply chain. Unpack the details.
Numbers to Watch:
Purchasing Manager’s Index (PMI) Report
The Institute for Supply Management (ISM) reported that in March, the manufacturing Purchasing Manager’s Index (PMI)was 52.7% which is 3 consecutive months of expansion. Manufacturing kept moving in a positive direction in March, with ISM Manufacturing rising to 52.7 from 52.4 in February. That means the sector expanded in overall production, new orders, and order backlogs all stayed in growth mode. The big headline, though, is that costs are climbing fast. The PMI jumped to 78.3, which is the highest level since mid-2022, while supplier deliveries slowed even more, pointing to a tougher supply environment.
At the same time, the report shows the recovery still has some weak spots. Employment stayed in contraction, inventories slipped further than February, and export orders dipped back below growth territory. The tone from manufacturers was cautious too, with 64 percent of comments coming in negative. A lot of that was tied to tariffs and the war in the Middle East, both of which are adding uncertainty and pressure to supply chains. One important callout for you as a processor: Chemical products were still expanding, but plastics and rubber products were one of just three industries that contracted in March, so plastics processors are still dealing with a tougher environment even while broader manufacturing looks better.
The University of Michigan (UM) Consumer Sentiment Index
This a long-running monthly pulse check on how Americans are feeling about the economy. It’s put out by the University of Michigan and has been around in some form since the late 1940s. Each month, the survey asks about 50 core questions that cover things like personal finances, business conditions, and what people expect from the economy going forward.
For April, consumer confidence took a hit, down about 11%, and that slide has been building since the Iran conflict started. Sentiment is now about 9% lower than it was a year ago, and the weakness showed up across pretty much every group, regardless of age, income, or political leaning. People are feeling less confident about business conditions, their own finances, and the cost of big-ticket items like cars and appliances. Consumers are clearly tying that stress back to the Iran conflict, especially with higher prices and weaker asset values weighing on them. This month’s report also notes that almost all of the survey responses came in before the temporary cease-fire announced on April 7, so there’s a chance confidence could bounce a bit if supply chain issues ease and gas prices settle down.
On top of that, inflation worries jumped sharply. Year-ahead inflation expectations climbed from 3.8% in March to 4.8% in April, which was the biggest one-month jump in a year and puts expectations well above the more normal pre-pandemic range. Longer-term inflation expectations also moved up, hitting their highest level since November 2025. So overall, consumers are not just feeling worse about the economy right now—they’re also getting more nervous that higher prices may stick around longer than hoped. The April preliminary numbers are below:
| April | March | April | MoM | YoY | |
| 2026 | 2026 | 2025 | Change | Change | |
| Index of Consumer Sentiment | 47.6 | 53.3 | 52.2 | -10.7% | -8.8% |
| Current Economic Conditions | 50.1 | 55.8 | 58.8 | -10.2% | -16.2% |
| Index of Consumer Expectations | 46.1 | 51.7 | 47.3 | -10.8% | -2.5% |
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