March 2025 | Market Update

Tariffs, Reshoring and Shipping Fees

From Chuck Hoop, Business Director, Star Plastics

Pricing in the Market
CMA came out this past Friday and ‘stability’ continues to be the word. ABS seems to have stable supply and demand even with the planned Ineos shutdown coming up. Automotive will be challenged where ABS is commonly used, with the tariff on aluminum and steel of 10% set to be imposed on March 12.

Nylon overall is stable coming into the new year with feedstocks and demand both flat. Prices held for both 6 and 66 in February with costs projected to move up slightly in March. Knowing that, the cash costs for 6 dropped 1 CPP and 66 was flat in February so any change in pricing (down) will be a margin hit for the producer. There are no major changes in production expected in the near term in both 6 and 66.

In PC, they made up for the slow reactions in 2024 to cash cost reductions since mid-2024 with a reduction of 5 CPP in both GP and optical grades. Again, this is more of a catch up in 1 month which should have been a 1 CPP reduction of 5 CPP total over the last five to eight months. We haven’t seen these significant types of reductions from suppliers in the last six months, certainly not in the last 30 days. The market is flat from a demand perspective, like most materials right now and supply was stable even with the Sabic Mt. Vernon start up in mid-January which took until mid-February to get online. There are no major production events to change the outlook of supply. Demand depends on the actions of the new administration it seems. All of these prices and market conditions are subject to change in the administration’s policies on trade with Canada, Mexico, and China. We’ve been hearing that from just about every market analyst in every segment.

ABS, Injection $1.44
ABS, Extrusion $1.34
Nylon 6 $1.57
Nylon 66 $1.78
PBT $1.46

Polystyrene is on the move – As a commodity, styrene moves like polypropylene or polyethylene and with that, Styropek announced 5 CPP for March 1st and American Styrenics is up 4 CPP for March 1st. We see no other price increases nor decreases in the engineering grade resin markets. PVC took at 3 CPP bump for mid-March implementation by Geon, setting raw material costs and the genesis of the increase.

Polyethylene from Formosa is moving up on March 1st by 5 CPP with the announcement coming on February 21st.

Polypropylene is taking a bump up from 1 to 5 CPP from Rhetech (depending on the code), using IHS as a peg and an increase of of 5 CPP for homopolymer PP.

In more market news: ADNOC and NOVA Chemicals
In early February, Chemical & Engineering News (along with other news agencies) reported that Adnoc (Abu Dhabi National Oil Company) along with OMV (Australian refiner) are looking at buying NOVA chemicals, a Canada-based leader in the petrochemical industry. If they move forward, this will make for a USD $17B company in sales. Giving them some leverage in negotiations up and down the supply chain. The full story from C&E is here: https://cen.acs.org/business/mergers-&-acquisitions/ADNOC-OMV-look-buy-Nova/103/i3

When it comes to current events in the market, it is much about the new administration and the policies and executive orders set forth. As an industry we need to recognize and manage these things and there is a lot going on currently!

Tariffs:
The National Association of Manufacturers published a recent report that the United States–Mexico–Canada Agreement (USMCA) was vital in shifting key imports away from China to North America. A quick fact sheet:
Fully one-third of all U.S. manufacturing inputs come from Canada and Mexico,
Some 70% of what we import from Canada and nearly 60% of imports from Mexico are capital equipment, industrial supplies and automotive parts that go into further manufacturing in the U.S.
The value of U.S. imports of manufacturing materials from North America is now three times greater than the value of materials coming from China.

In summary, tariff announcements for China/Mexico/Canada include:
25% tariff on imports from Mexico 10% tariff on energy imports from Canada 25% on all other Canadian imports These tariffs are effective April 2nd. Don’t forget that goods from China already have a tariff of 25% from President Trump’s first term, and new tariffs will be on top of those.

China Tariff: The additional 10% tariff on products from China (and Hong Kong) were effective on February 4. See the Customs and Border Protection guidance on U.S. customs implementation the additional duties on imports from China.
China’s Tariff Response: On February 4, the of Chinese Ministry Finance and its State Council Tariff Commission announced it would impose additional tariffs of:

•15% on coal and liquified natural gas imports from the U.S. and
•10% higher duties on crude oil, farm equipment and large cars and pickup trucks
Both of the above started February 10.
•In addition to the above, more stringent mineral controls were implemented by China’s commerce ministry and customs officials also announced they would impose global export controls on items related to tungsten, tellurium, bismuth, molybdenum and indium.

As of Wednesday, February 27th, President Trump threatened to impose 25% tariffs on imports from the European Union, claiming that the economic and political bloc was formed “to screw” the U.S. “We’ll be announcing it very soon,” he told reporters of the EU measures on Wednesday.

PFAS Regulations – becoming less of an issue?
On January 21st, the Trump Environmental Protection Agency withdrew a pending Biden administration plan by setting discharge limits on the toxic “forever chemicals” known as PFAS. The Environmental Working Group (EWG) posted an article on its website concerning PFAS regulation. On January 21st, President Trump withdrew former President Biden’s plan on PFAS regulation. The full story is here: https://www.ewg.org/news-insights/statement/2025/01/trump-epa-withdrawal-pfas-effluent-limits-setback-public-health-ewg

‘Back to Plastic’
Plastics News reported on President Trump’s ‘back to plastic’ executive order the first week of February. In summary, President Trump said he would sign an executive order against what he termed federal government restrictions on the use of plastic straws. “I will be signing an executive order next week ending the ridiculous Biden push for paper straws, which don’t work,” Trump said: “BACK TO PLASTIC.” In July 2024, President Biden issued an 83-page report on plastics policy that included calls for phasing out federal procurement of single-use plastics by 2027 in foodservice operations, events and packaging, though the report was never implemented. The full story is here: https://www.plasticsnews.com/news/trump-plans-executive-order-straws-saying-its-time-go-back-plastic?utm_source=pn-braeking-news&utm_medium=email&utm_campaign=20250207&utm_content=article1-headline

Tariffs on Aluminum
Reuters and the National Association of Manufacturers (NAM) reported in early February that President Trump was set to announce a 25% steel and aluminum tariff in latest trade actions. If signed into law, on February 10th of 25% tariffs later on Monday on all steel and aluminum imports into the U.S., on top of existing metals duties, in another major escalation of trade policy. These will take effect on March 12th. These actions increase the opportunity for a multi-front trade war, the European Union signaled it may retaliate, and Trump promised further announcements on Tuesday or Wednesday of broader reciprocal tariffs to match those of countries importing U.S. goods.

The entire Reuters story is here: https://www.reuters.com/markets/asian-eu-steelmakers-shares-fall-after-trump-escalates-tariffs-2025-02-10/ and NAM is here: https://www.whitehouse.gov/presidential-actions/2025/02/adjusting-imports-of-steel-into-the-united-states/?utm_source=704612&utm_medium=email

Related to this news on Aluminum, Plastics News published an article mid-February concerning Coke and the expected increase in the use of PET for packaging of their products with the increase of aluminum costs. The CEO of Coke James Quincy said that the company will review sourcing aluminum domestically and adjust pricing to ‘mitigate’ costs. While aluminum is more expensive than PET, it is more recyclable. The entire story is here: https://www.plasticsnews.com/kickstart/trump-tariffs-prompt-coke-use-more-pet

Reshoring of business from Asia
It seems reshoring is gaining more and more momentum! In the first issue of the year of the Design2Part Magazine had an article about re- or onshoring business in the last 2 years. In summary: Bain & Company, a global management consulting group, published the results of a study that said there has been an acceleration in strategic reshoring by businesses worldwide. The surveyed 166 CEO’s and COO’s with revenues of no less than $1B in revenues. 40% of those surveyed were from companies with greater than $10B in revenue.

A few of the highlights of the article:
1 For those planning to bring business home it went from 63% in 2022 to 81% in 2024 and only 36% increased offshoring efforts.
2 Why come back? Geopolitical landscape, increased costs, and pressure to reduce carbon footprint.
3 The Inflation Reduction Act (IRA) which gives companies tax credits for reshoring operations especially in key markets – semiconductors, clean energy tech, and EV supply chains.
4 Also, the US CHIPS Act is an additional tax incentive motivating the production of chips being manufactured in the USA.
5 AI motivated Graphic Processing Units (GPUs), and components are expected to increase by 30% in 2026 which will potentially cause an AI chip shortage.

All that said, it seems that reshoring or nearshoring are here to stay helping to bring back the US economy. The entire article can be seen here: https://www.d2pmagazine.com/2025/02/10/the-rise-of-onshored-manufacturing/

Taiwan and the semiconductor market
President Trump is adding a 10% tariff on semiconductor chips starting March 12. Taiwan currently produces between 60% and 70% of the world’s supply of semiconductors and of those, I have seen 1 company, TSMC (Taiwan Semiconductor Manufacturing Company) producing nearly 90%. This equates to 55% to 64% of the world’s supply comes from 1 company in Taiwan. This is why the Federal government started the CHIPS program in 2022 to motivate the production of semiconductors in the United States.

From the Associated Press on February 14th –
TAIPEI, Taiwan (AP) — Taiwan President Lai Ching-te said Friday he would communicate more with the U.S. over President Donald Trump’s concerns over the chip industry and invest more in the U.S, hours after Trump ordered reciprocal tariffs on trade partners. The full article can be seen here: https://apnews.com/article/taiwan-president-tariffs-semiconductors-trump-616f3fbdb20b017c2d19bd1c18a570f1

New review of unfair trade practices is coming up
The United States Trade Representative (USTR) by order of President Trump has issued a Federal Register Notice to identify unfair trade practices on February 20th. The comments are due on the 11th of March and release its report on the 1st of April. The USTR has an interest in submissions related to the “largest trading economies” and economies that have the largest trade deficit in goods with the U.S., citing among others, Australia, Brazil, Canada, China, the EU, India, Japan, Korea, Mexico, Taiwan, and the UK.

Shipping fees in the news on February 21st.
There are more fees in the news and this time it is in shipping which will increase costs to all most likely. The Trump administration has proposed fees on Chinese-built and operated commercial vessels. Under the proposal announced by the U.S. Trade Representative (USTR), ships constructed in China would face fees of up to $1.5 million per U.S. port call. Plus, vessel operators with a Chinese-built ships in their fleet could be charged $500,000 per ship per port call. The Trump administration said the fees on Chinese-built and -operated ships aim to counter China’s dominance in global shipbuilding and maritime transport. For reference, China’s shipbuilding market share grew from less than 5% in 1999 to more than 50% in 2023, and according to the United States Trade Representative office (USTR). China’s ownership of the global commercial fleet increased to more than 19% as of January 2024. The country also controls 95% of shipping container production and 86% of the world’s supply of intermodal chassis. Read the entire article here from Freight Waves. https://www.freightwaves.com/news/us-port-charges-on-china-vessels-add-to-supply-chain-uncertainty