Plastics Insider Weekly

Henry Hub gas prices firmed even after a hefty 104 Bcf storage build, prompting the EIA to trim its 2025 spot-price outlook from $4.27 to $4.12 /MMBtu; prompt futures ended the week around $3.79, up 4½ percent. A 90-day U.S.–China tariff truce also brightened the diesel outlook—Gulf-coast vessel traffic had been off 44 percent year-on-year, but renewed trade could tighten already low diesel inventories and nudge freight fuel above $2.20 /gal. For processors, that mix means marginally lower utility costs on gas-fired extrusion and drying lines today, yet a potential rebound in over-the-road logistics costs as summer heat and revived trade lift diesel demand.

Feedstock weakness kept most commodity resins flat-to-softer: U.S. polymer-grade propylene slipped ~5 percent in late April, setting up an expected 7-8 ¢/lb drop in May PP contracts, while ethylene in both the Gulf and Europe drifted near $0.20/lb. Polyethylene, PVC, and styrenics followed that bearish tone, leaving PET the lone riser on bottle demand (≈ $0.05/lb higher since March). In China, new 125 percent tariffs forced PDH operators to chase costlier Middle-Eastern propane, crushing margins even as PP oversupply kept prices low. Net-net: processors can opportunistically top-up polyolefin inventories, but should still budget PET premiums and watch global PP imbalances ripple through export channels.

Skilled-operator shortages tightened another notch. The UK’s incoming immigration white paper will raise the Skilled-Worker visa threshold to graduate level and lift sponsorship fees 32 percent, stripping ~180 mid-skill occupations—including mold-setup techs and maintenance fitters—from eligibility later this year. In parallel, 3,000 machinists struck Pratt & Whitney’s Connecticut engine plant and Indian trade unions called a nationwide strike for 20 May, underscoring labor’s assertiveness. With manufacturing unemployment near 3-4 percent in the U.S. and plastics wages growing >4 percent YoY, processors should expect further wage pressure and may need to accelerate automation or in-house training to secure head-count.

National U.S. industrial vacancy touched 7.1 percent in Q1 —its highest since 2015—yet the Midwest, a plastics heartland, remains supply-constrained at 5.4 percent. New completions collapsed 60 percent year-on-year (65 M sq ft), hinting at stabilising rents, though prime Chicago space still commands ~$6.50/ft² triple-net. Projects continue where demand is hottest: ENGEL opened a 124 k ft² injection-machine plant in Querétaro, ALPLA cut the ribbon on a 24 k m² hub in Thailand, and Berry Global will shutter its Lanett, AL film site on 1 July (-112 jobs). Tenants have a near-term window to negotiate, but long-run capacity additions in Mexico/SEA signal shifting competitive centres of gravity.

Capital-equipment pricing and OEM lead times stayed broadly stable—standard injection presses can now ship in 4-6 months versus 12+ in 2022—yet the secondary market is lively. May features a full-plant Tacony injection-molding auction (20+ presses, closes 21 May) and a 50-lot multi-consignor sale already completed, increasing the supply of bargain machinery. Surveys show 66 percent of processors still plan to buy new primary equipment in 2025, with 39 percent earmarked for expansion, and OEMs are bundling AI-driven controls and cobots to offset operator shortages. Expect continued mild discounting (5-10 percent) on new machines as sellers compete with abundant used inventory.

Amcor and Berry Global approved an $8.4 billion all-stock merger, while ADNOC + OMV aim to combine Borealis/Borouge and acquire Nova for $13.4 billion, setting up a $60 billion polyolefins titan. The U.S. EPA rolled out stricter PFAS limits that could ripple into fluoropolymer supply chains, and EU lawmakers edged closer to recycled-content mandates under the Packaging & Packaging Waste Regulation. Separately, a 25 April flaring incident at Shell’s Pennsylvania ethane cracker lit Beaver County “like dawn,” and a 14 May chemical-plant blast near Seville, Spain forced 25,000 residents to shelter—reminders of operational-risk and public-perception pressures around the sector.