SK Chemicals achieves Korea's first vertical integration in recycling through in-house feedstock sourcing

- Establishes a joint venture with China-based PET recycler Kelinle to build a Feedstock Innovation Center (FIC)
- Targeting start-up in the second half of 2026; in-house feedstock to enhance cost competitiveness in the recycling business

SEOUL, South Korea, Dec. 10, 2025 /PRNewswire/ --  SK Chemicals will achieve Korea's first vertical integration of recycling by securing in-house access to the feedstock required for recycling.

SK Chemicals (CEO: Ahn Jae-hyun) announced on Dec. 10th that it will establish a joint venture with Kelinle, a plastics recycling specialist in Shaanxi Province, China, to build the Feedstock Innovation Center (FIC), a facility for processing waste plastics.

The Feedstock Innovation Center (FIC) will process waste plastics into feedstock. Once the facility is completed, SK Chemicals will secure a value chain that extends beyond the production of chemically recycled materials to encompass the sourcing of waste plastics. Among domestic chemical companies pursuing depolymerization-based chemical recycling, SK Chemicals is the first in Korea to establish a corporate entity equipped with facilities for sourcing waste plastics.

The two companies plan to establish a process on an idle site of about 13,200 m² owned by Kelinle in Weinan, Shaanxi Province, China, to convert waste through a series of steps into recycled raw materials. Kelinle, which has operated a plastics recycling business in the local market for the past 10 years, will leverage its local network to procure feedstock, and PET pellets will be produced after pretreatment using SK Chemicals' technology.

The Feedstock Innovation Center (FIC), unlike mechanical recyclers that rely on PET bottles as feedstock, will be designed to convert end-of-life textiles, such as discarded blankets and the fines generated during PET-bottle shredding, into feedstock for chemical recycling. It will start with an initial capacity of approximately 16,000 tons per year of PET pellets and will ramp up to about 32,000 tons per year, supplying most of the feedstock required by SK Shantou.

Ensuring stable feedstock supply and cost competitiveness

The company expects the establishment of the FIC to become a major milestone that significantly enhances the competitiveness and stability of SK Chemicals' circular recycling plastics business, which the company is cultivating as a future growth engine. SK Chemicals' depolymerization-based circular recycling business breaks down waste plastics into molecular-level feedstock and then uses it to produce new plastics. In this model, waste plastics function as a primary raw material, much like crude oil. Accordingly, securing a reliable supply of waste plastics at competitive prices is a critical foundation for the recycled-plastics business.

Typically, recycled-plastics producers procure waste-plastic feedstock from external suppliers. As a result, they are inherently exposed to price volatility and supply instability depending on collection conditions and market dynamics. With global regulations increasingly mandating the use of recycled materials, the industry expects rising demand for waste plastics to further exacerbate price volatility and supply instability.

Establishing an in-house sourcing system for waste plastics is expected to reduce feedstock uncertainty and further improve cost competitiveness. The FIC will primarily handle inputs that have typically been incinerated because they were difficult to use as recycled feedstock, enabling procurement at a lower cost than that for clear PET bottles, which are easier to recycle. The company's analysis indicates that, once the FIC is fully operational, it could both secure a stable supply of feedstock for the circular recycling business and reduce waste plastic raw material costs by about 20%.

Reusing waste blankets that have typically been incinerated or landfilled is also expected to deliver meaningful waste-reduction benefits. Globally, an estimated 4.6 million tons of bedding are discarded each year, yet the recycling rate is less than 1 percent.

Although materials such as discarded blankets offer a cost advantage over clear PET bottles for procurement, converting them back into feedstock requires advanced technology, and there have been no commercialized cases to date. As the first company in the world to commercialize depolymerization-based chemical recycling, SK Chemicals can recover difficult-to-recycle wastes such as textiles, fiberfill, and colored PET bottles as feedstock.

The depolymerization-based recycling process, unlike mechanical recycling that relies on physical shredding and reprocessing, returns discarded plastics to molecular-level feedstock. This enables repeated recycling without quality degradation, and it is also superior to mechanical recycling from a hygiene standpoint.

Ahn Jae-hyun, CEO of SK Chemicals, said, "With the FIC, we have secured a complete recycling value chain that extends from depolymerization and material production to feedstock sourcing. The cost advantage gained by turning hard-to-recycle wastes such as discarded blankets into resources will help break down the price barrier of recycled plastics, which has historically been higher than petroleum-based materials."

Meanwhile, SK Chemicals established a chemical recycling-based production subsidiary in Shantou, China, in 2023, creating a global hub for circular recycling with the commercial production of r-BHET and CR-PET. In Korea, the company has built the Recycle Innovation Center (RIC) at its Ulsan plant, linking depolymerization pilot facilities with copolyester production to form a research-to-production bridge. At the same time, SK Chemicals has been advancing its circular recycling value chain by accumulating depolymerization and repolymerization technologies for textile waste, including discarded banners and fabrics.

About Kelinle

Kelinle is a plastics recycling specialist based in Shaanxi Province, China. The company collects and processes waste plastics and produces and sells PET flakes. Beyond materials processing, it maintains dedicated R&D staff for recycling operations and, through academic–industry collaboration with Xi'an University of Technology, holds a total of 12 recycling-related patents.

Recyclable waste PET feedstock price trend (Source: Korea Environment Corporation)

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