Key Takeaways
- Four separate forces, not one event, reshaped packaging costs: Gulf aluminum supply disruption, US import tariffs, the Strait of Hormuz squeezing crude and plastics feedstocks, and a paper market still clearing post-COVID overcapacity.
- Gulf supply disruption (the region accounts for roughly 9% of global aluminum exports) combined with US import tariffs of 50% to push primary aluminum to multi-year highs, where prices have held.
- Secondary aluminum is exempt from US tariffs and stays comparatively cheap. That matters: around 70% of aluminum cans use secondary metal while foil is mostly primary, so can and foil prices have moved very differently.
- PET resin spiked hardest in Europe, driven almost entirely by production costs. The US stayed largely insulated, which pushed European buyers to reroute supply chains away from Asia and the Middle East toward American product.
- Paper sits in post-COVID overcapacity. Prices are flat to down year on year while aluminum and plastic surged, making paper comparatively cheap and putting material switching back on the table.
- For test liner, Expana’s forecasting team estimates roughly 90% of the price increase has already happened. There is limited upside, and a seasonal decline is expected through year-end.
Packaging costs have been reset, and the reset has been building for months. Tariffs, energy-market swings, recycled-content requirements and shifting trade flows hit aluminum, plastic resins and corrugated board at once, leaving a cost environment that is harder to read, harder to budget for and harder to defend to stakeholders. No single event explains it. Four distinct forces have been at work: Gulf supply disruption in aluminum, US import tariffs, the Strait of Hormuz squeezing crude and plastics feedstocks, and a paper market still clearing post-COVID overcapacity. In a recent Expana webinar, market reporters Andrew Woods and Artem Segen, with forecasting VP Tom Bundgaard, set out where each market now stands and what buyers should do next.
Aluminum: a tale of three markets
Artem Segen, who covers metals and paper packaging at Expana, argued that aluminum only makes sense once you split it into three distinct markets: global primary, US primary and secondary.
Primary aluminum and the Gulf
Primary prices climbed to multi-year highs through May 2026, and they have stayed elevated since. The Strait of Hormuz’s effect on packaging costs shows up clearly here. The war and the closure of the strait choked off supply from the Persian Gulf, which produces a large volume of aluminum products and accounts for around 9% of global exports. With that supply constrained for months, the market ran short just as demand grew in transport and infrastructure. Segen expects a meaningful volume of aluminum to flow back onto the global market once shipping through Hormuz fully resumes, though local players estimate Gulf producers will need one to two months to rebuild output to pre-war levels.
The US is a separate story
US primary prices hit an all-time high in October 2025, driven not by the Gulf but by import tariffs of 50% in place since 2025. The US makes little of its own aluminum. Between 80% and 82% of what it consumes is imported, so tariffs feed almost straight into domestic prices. Even with the global shortage easing, Segen expects tariff pressure to keep the US market elevated, with the Midwest premium over the LME already at record levels.
Why cans and foil diverged
Secondary aluminum, made from scrap, is the third market, and it behaves differently again. Scrap is exempt from US tariffs, so secondary prices have stayed well below primary, and roughly 40 to 42% of global aluminum comes from scrap. For packaging, that split is decisive. Aluminum foil is mostly made from primary metal and has seen steep year-on-year increases. Around 70% of aluminum cans use secondary metal, which has kept can prices far more muted, and in some cases negative month on month. Underneath all of it sits weak packaging demand, particularly from a declining alcohol and beverage sector across the US, Europe and China since 2024.
Plastics: Europe exposed, the US insulated
Before the conflict, the plastics market ran on weak demand and ample supply, with PET prices, most visible in plastic bottles, drifting steadily downward. That ended when war broke out and the Strait of Hormuz closed.
Andrew Woods, a senior market reporter at Expana, explained that Europe was the most exposed region. The closure of the strait drove up production costs and disrupted imports of resins and feedstocks, and European prices rose sharply, almost entirely on cost rather than any real demand surge. Much of the buying was panic-driven, with manufacturers prioritizing material security over immediate consumption.
The US stayed comparatively insulated thanks to its domestic feedstock base, and its price increase was far shallower. That gap forced European buyers to rewire supply chains, switching away from Asia and the Middle East toward American product. Exports from the US to destinations such as Belgium and Spain climbed rapidly.
China was not immune. Output fell 7.4% month on month (and 1.3% on an annualized basis), and with export demand robust, some market sources expect tightness ahead even though domestic demand stays soft. Thin producer margins have given little reason to lift output.
The production-cost engine: crude and feedstocks
For plastics in particular, production cost is the leading indicator, and that cost runs through the Strait of Hormuz. Around 20% of global crude production passes through the strait, so its de facto closure hit the oil market hard. Brent topped $120 a barrel and has held in a $90 to $120 range for a long stretch.
Woods described a dual impact. Constrained crude flows raised production costs, while elevated bunker-fuel and diesel prices pushed transport costs up across shipping. The feedstock picture is starker still. Around 90% of global petrochemical trade by value flows through Hormuz, and Asian plastics producers source 60 to 70% of their naphtha supply via the Middle East. Naphtha is cracked into ethylene and then into plastics, so the disruption drove feedstock prices up across Europe and Asia, with Europe again the hardest hit.
A peace deal has now been signed, and plastics buyers have welcomed it, but the market is still working through the aftermath. Two questions remain open: how long crude and shipping flows will take to return to normal, and whether shippers trust the route enough to resume full volumes.
Paper: the overcapacity advantage
Paper tells the opposite story, and its main driver predates the conflict entirely. Both the European and US markets have lived with overcapacity since the post-COVID demand boom faded around the second half of 2023. In an oversupplied market, Segen explained, production cost rather than supply and demand becomes the main price driver.
Raw-material costs have risen only moderately. The US has seen some upward movement in pulp and waste-paper prices, and US producers began cutting output in 2025 to rebalance and protect margins. In Europe, pulp has firmed slightly, but waste paper remains in heavy oversupply, which keeps prices low. Energy costs, pushed up by the Middle East conflict, and high fuel-driven logistics costs have been the main levers European producers used to argue for higher prices.
The result is striking. Paper packaging prices have been broadly stable month on month and have largely declined year on year, even as aluminum and plastic surged. That has prompted some companies to look at shifting more of their packaging mix toward paper, which now looks markedly cheaper than the alternatives.
The forecast: how much upside is left?
Tom Bundgaard, Expana’s VP of forecasting, closed the session by turning from the rear-view mirror to the road ahead, using test liner as a worked example.
His team’s fundamentals model produces a “fair” price band. It is not what Bundgaard personally considers fair, but what two decades of market behavior suggest the market treats as fair given current supply, inventory and cost conditions. “The market does really not care what I think is fair,” he said. When the actual price sits below that band, it cannot hold, and it tends to rise.
At the end of 2025, test liner prices sat below the fair band while the band itself trended upward, what Bundgaard called “double upward pressure.” Prices duly rose. The question now is how much further they can go, and his answer is: not much. Prices have climbed to roughly 90% of the way toward the top of the fair band, producer profits have moved from the low end to a relatively high level, and the main cost drivers (gas in particular, down sharply in recent months) are now turning down.
Seasonality reinforces the view. Test liner usually peaks in May or June before sliding into December. Bundgaard’s models point to a summer 2026 peak followed by a gradual decline toward year-end, with confirmation of the downturn likely in early Q3. He stressed the fall is unlikely to be immediate, since seasonal declines start slowly, but the direction of travel is set.
The bottom line
The headline volatility is real, but the more important shift is relative. Aluminum, plastic and paper have each responded to a different mix of pressures, and the cost gap between them has widened more than any single price. For food and beverage procurement teams, that reframes the task. The pressing question is not simply when to buy, but whether the current material mix still makes sense now that paper looks cheap, can and foil prices have split, and most of the upside in primary materials looks already spent.
Click here watch the full webinar on demand, or find out more about our packaging coverage here.
FAQs
Why did aluminum and plastic prices diverge so much between regions?
Because the exposure differs. Europe relies heavily on Middle Eastern feedstocks and imports, so the Hormuz closure hit it hardest. The US has a strong domestic feedstock base for plastics and was more insulated, while its aluminum prices are driven more by 50% import tariffs than by Gulf supply.
Is now the time to switch packaging materials to paper?
Paper is comparatively cheap right now because of post-COVID overcapacity, and some companies are already exploring a shift. The advantage depends on how quickly aluminum and plastic prices normalize now that a peace deal is in place, so weigh any switch against the forecast outlook rather than the current spread alone.
When will prices normalize now that a peace deal has been signed?
That is still uncertain. The main variables are how quickly crude and shipping flows resume through the Strait of Hormuz and whether shippers trust the route. Estimates for Gulf aluminum supply alone returning to pre-war levels run to one or two months, with broader normalization harder to pin down.
How much more upside is there in packaging prices?
For test liner, Expana’s forecasting team estimates roughly 90% of the increase has already happened, with limited upside and a seasonal decline expected into year-end. The same fundamentals approach is applied across other packaging commodities.
What is the single most important takeaway for buyers?
The cost gap between materials has moved more than the absolute prices. The strategic question is less about timing a single purchase and more about reassessing material mix in light of how differently each category has responded.
Written by Expana
