Dive Brief:
- Packaging is among the industries that have been hardest hit by the war in Iran and stocks are in a sell-off, according to a Thursday report from financial services firm Morningstar.
- As of Monday, the group’s global packaging and containers index showed a 14% decline in stock prices since Feb. 28, the first day of the conflict, putting the industry as the fourth-worst performing. Only metals and mining, mortgage finance and residential construction fared worse, based on Morningstar global indices. The firm’s overall U.S. market index was down 4.3%
- The Morningstar analysis aligns with data from other reports this week. Jefferies on Tuesday similarly reported a sell-off for packaging and a collective 14% decline in companies’ stock prices since the war began, noting the industry is “significantly underperforming” the S&P 500.
Dive Insight:
“The Iran conflict is escalating from geopolitical risk premia into tangible energy infrastructure disruption,” according to the Jefferies memo.
Packaging stocks already were in a precarious state prior to the war. Multiple analysts noted in late 2025 and early 2026 that this lagging performance could prompt more packaging companies to explore M&A as a means for growth.
Other geopolitical challenges, including for trade, have played a role during the last year. Now, the conflict that originally began in Iran and has spread to other countries in the Middle East is creating further uncertainty and affecting businesses — especially for energy and transport costs. Plastics and metals are among the most negatively affected packaging materials sectors.
The packaging stocks sell-off likely is due to a mix of rising energy costs and concerns of an economic slowdown, according to a statement from Krzysztof Smalec, Morningstar equity analyst. “Packaging is an energy-intensive industry, so the spike in energy prices might compress margins,” in addition to higher oil prices raising the costs for virgin plastics.
Worst-performing industries since Iran war started
Among the worst-performing packaging stocks from Feb. 28 to March 20, Morningstar points to Graphic Packaging International, down 23%; Silgan, down 19%; and Amcor, down 19%. In addition, International Paper is down 18%; Ball is down 13%; Crown is down 12%; Packaging Corporation of America is down 9%; and Sonoco is down 8%.
The industry faces war-related risks such as supply chain disruptions, shipping disruptions and higher freight costs, Smalec said. He noted the cyclical nature of the packaging industry exposes it to impacts during an economic slowdown, and investors may currently be worried about the potential for a broader slowdown.
Morningstar analysts also note that high oil prices suggest inflation will rise, which would prompt central banks to increase interest rates to tame inflation.
Also on Thursday, the Organisation for Economic Co-operation and Development released an updated forecast predicting the Iran war will bump up global inflation in 2026. It project G20 countries will experience 4% inflation for the year, up from 3.4% in 2025. The United States will see 4.2%, up from 2.6% in 2025. That’s 1.2 percentage points higher than OECD’s December projection for U.S. inflation in 2026.
On Wednesday, CNBC reported that economists have upped their odds of a U.S. recession within the next 12 months due to geopolitical risks. Moody’s Analytics’ model puts the risk at 48.6%; Wilmington Trust is at 45%; EY Parthenon is at 40%; and Goldman Sachs is at 30%. Typical risk for any 12-month period is 20%.
President Donald Trump initially predicted the war would last four to five weeks, but that’s becoming a tougher timeline as the one-month mark closes this week. Analysts across the board have described significantly worsening economic conditions if the war drags on longer, and longer-lasting effects.
“While President Trump is attempting to de-escalate, with the Iran conflict leading to energy infrastructure damages, global energy prices are likely to stay higher for longer, which has already rippled to gasoline prices,” Jefferies said. “[I]nflation more broadly could tick up for already stretched consumers.”
Containerboard is the most vulnerable packaging sector during macroeconomic slowdowns and in an inflationary environment, the financial services company said. It puts IP, PCA and Smurfit Westrock among the companies most at risk.
That said, Jefferies points to Fastmarkets RISI’s report last Friday that containerboard prices went up $40 per ton in March, after an unexpected $20 per ton decrease in February. Although demand is still muted, the March price increase is encouraging and could be an early sign that the nearly 10% North American production capacity cuts announced in 2025 could be tightening the market.
“With operating rates in the low to mid-90s with demand at a trough, and better discipline from market leaders, we expect pricing to hold up much better even in a recession,” Jefferies’ memo said.
