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SK Chemicals Achieves Groundbreaking Vertical Integration in Recycling

In a significant move towards sustainability, SK Chemicals has announced the establishment of Korea's first vertical integration in recycling. This pioneering effort involves securing in-house access to essential feedstock for the recycling process, which significantly enhances operational efficiency and cost-effectiveness.

On December 10, 2025, President Ahn Jae-hyun of SK Chemicals revealed that the company has formed a joint venture with Kelinle, a renowned plastics recycling specialist based in Shaanxi, China. This partnership is set to create the Feedstock Innovation Center (FIC), a facility dedicated to processing waste plastics into high-quality recyclable materials. The center is slated to begin its operations in the second half of 2026, providing a steady supply of internal feedstock that will bolster competitiveness in the recycling industry.

The Vision Behind the FIC

The FIC is aimed at revolutionizing the recycling landscape by processing plastic waste that is currently difficult to recycle. Unlike traditional mechanical recyclers that primarily utilize PET bottles as feedstock, SK Chemicals' approach focuses on converting post-consumer textiles, such as discarded blankets, into reusable materials. This innovative process not only diversifies the types of feedstock used but also addresses the critical issue of textile waste, which remains vastly under-recycled globally.

With an initial capacity of 16,000 tons annually, the facility anticipates ramping up production to approximately 32,000 tons, adequately meeting the feedstock needs of SK Shantou, a subsidiary of SK Chemicals. This strategic move is expected to significantly improve the company’s circular recycling business model, which transforms plastic waste into new plastic products on a molecular level, mirroring the functionality of crude oil.

Cost Efficiency and Future Prospects

The formation of the FIC is anticipated to serve as a milestone for SK Chemicals by enhancing the stability of its recycling operations. Historically, recyclers have relied on external suppliers for their feedstock, exposing them to price volatilities and supply chain disruptions. By establishing an internal system for sourcing plastic waste, SK Chemicals aims to drastically reduce uncertainties associated with feedstock availability and stabilize prices.

The FIC will focus on acquiring materials that are typically incinerated due to the challenges of recycling them, thus facilitating a sustainable cycle that minimizes wastage. In fact, it is estimated that the establishment of this center could lower feedstock costs for recycled plastics by approximately 20%, providing a competitive edge in the market.

Moreover, the innovative use of discarded textiles, which are often underutilized, is expected to yield substantial benefits in terms of waste reduction. Currently, an estimated 4.6 million tons of bedding materials are disposed of annually, with a recycling rate of less than 1%. By tapping into this resource, SK Chemicals is poised to not only enhance its material recovery efforts but also to address broader environmental challenges linked to textile waste.

Leading the Charge in Chemical Recycling

As pioneers in chemical recycling through depolymerization, SK Chemicals is at the forefront of transforming difficult-to-recycle materials such as textiles and colored PET bottles into new feedstock. This innovative process ensures a higher quality of recycling compared to traditional mechanical methods, allowing the company to maintain hygiene and purity in the materials produced.

Ahn Jae-hyun, the CEO, emphasized the strategic importance of the FIC, stating, "With this innovation, we have secured a complete recycling value chain, from depolymerization to production and feedstock sourcing. This capability will help us overcome historical price barriers associated with recycled plastics compared to petroleum-derived materials."

In 2023, SK Chemicals already established a chemical recycling production facility in Shantou, creating a global hub for circular recycling and establishing a bridge between research and mass production with the launch of various recycled products.

Conclusion

As SK Chemicals embarks on this ambitious journey towards vertical integration in recycling, the company not only fortifies its market position but also sets a precedent for sustainable practices within the industry. With a robust approach focusing on reducing waste and improving feedstock sourcing, SK Chemicals is poised to lead the transformation toward a more sustainable future for the plastics recycling sector.