Market Introduction

The global circular economy for chemicals market was valued at USD 600 billion in 2024 and grew at a CAGR of 12% from 2025 to 2034. The market is expected to reach USD 1863.50 billion by 2034. The growing emphasis on sustainability will drive the growth of the global circular economy for chemicals market.

Concept of circular economy of chemicals is a key solution that aspires to minimize the footprint of chemical production and consumption on the environment by optimizing the utilization of resources and minimizing waste. The circular model strives to close the loop on the linear one, where versatile materials are mined, used to create something, and then discarded, by methods of reuse, recycling, and regeneration. In a chemical industry context, this is implementation of products and processes that enable materials to be recycled and re-used again without the same aftermath of greenhouse emissions and increasing the reliance on virgin fossil-based feedstock. The major drivers of this transformation are the utilization of bio-based feedstock, concepts of green chemistry and process intensification and the application of digital technologies to more efficient resource capture and optimization. The idea also promotes industrial symbiosis, such that one process waste or by-product can be used as a source by another process thus using fewer resources generally. Major chemical firms are incorporating circularity in their value chains with product redesign, investment in circular systems, including closed cycles, and partnering with downstream consumers to ensure recovery of materials at the end of the cycle. The final objective of the circular economy of chemicals is to disconnect economic development with resource depletion and environmental degradation, promote innovation, and also meet the sustainability objectives of the planet with global strategies adopted to minimize the carbon footprint.

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Recent Development

• The following proprietary technologies will be licensed and commercialised by Lummus Technology, a global provider of process technologies and value-driven energy solutions, and Sumitomo Chemical: Sumitomo Chemical's highly effective polymethyl methacrylate recycling (rPMMA) technology and its proven low-density polyethylene/ethylene vinyl acetate (LDPE/EVA) production technology.  Since Lummus is the sole and global licensor of both technologies, Sumitomo Chemical's cutting-edge innovations will be made available to a global clientele, bolstered by Lummus' extensive global marketing network and engineering prowess.  Using the advancements previously made at Sumitomo Chemical's pilot plant in Japan, Lummus and Sumitomo Chemical will advance the rPMMA technology in order to achieve early commercialisation and help create a more carbon-neutral society.

Market Dynamics

Drivers

The growing emphasis on sustainability – The circular models will enable companies to maximize the use of resources by using less virgin raw material resources and by recovering valuable by-products, thereby reducing costs. It does not only reduce the cost of production, but it also reduces risks of fluctuations in the price of raw materials and possible disruptions in the supply chain. Also, circular solutions can help organizations to almost eliminate the generation of wastes, thus saving companies money on waste disposal and improving economic performance in general. In addition, there is a strong trend of companies moving to synergize with their own ESG models and net-zero pledges, both of which require low-carbon, energy- efficient and resource- responsible production processes. By adopting circular economy solutions, companies can achieve these goals and increase its corporate image and stakeholder confidence. Additionally, the implementation of digital technologies, i.e. data analytics and real-time monitoring, to monitor the flow of resources and optimize that of materials is reinforcing the inward facing application of the circular approach.

Restraints

High initial investments costs – The steep cost of the initial investment to switch towards using systems based on circularity of the processes is one of the greatest obstacles. Advanced recycling technologies, product redesign to make it possible to recycle and use of circular design to make manufacturing processes follow through may involve significant capital expenditure. To a large number of companies, particularly the small and medium enterprises, these costs are prohibitive. The other important constraint is the absence of in-house technical skills required to embrace the adoption of complex circular processes, e.g., chemical recycling or closed-loop manufacturing. Lack of sufficient knowledge and training means that the firms will not develop or pursue sustainable alternatives effectively. Another issue would be complexity of operations, because the shift towards circular models can be disruptive to the established supply chain which leads to supply disruptions and other uncertainties.

Opportunities

Regulatory pressure – European Green Deal, REACH policies, and country-level circular economy strategies are encouraging recycling, waste reduction and a push to manufacturers to use cleaner processes. Such policies are usually followed by punishment or rewards, which drives enterprises to move towards a circular economy in order to be compliant and competitive. Also, there is a change in consumer demand based on consumer preference which is becoming more conscious about the environment which also drives the market’s growth. Stakeholder activism and investor expectations are equally crucial, since the consideration of environmental, social, and governance (ESG) performance has entered into the fundraising. Institutional investors are investing funds in businesses that show they are sustainable, including having circular supply chains. Moreover, the international efforts of global sustainability including the Sustainable Development Goals (SDGs) or the climate commitments being made internationally are helping animate global movement towards circular models. This macro-level transition is encouraging governments, industries, the civil society to decide their methodologies to be coherent with the low-waste, low-carbon objectives.

Segment Analysis

Regional segmentation analysis

The regions analyzed for the market include North America, Europe, South America, Asia Pacific, the Middle East, and Africa. Europe emerged as the most significant global circular economy for chemicals market, with a 38% market revenue share in 2024.

The European continent is the leading player in the global circular economy of the chemicals market, owing to its well-developed regulatory system, high-end environmental policy and pioneering sustainability ideals. The strict environmental standards of the region such as single-use plastic bans and recycled content requirements in the packing have compelled the move to find circular solutions. Europe also has a good recycling infrastructure, well-developed waste management systems, the active cooperation of governments, industries and the research organizations. Most advanced economies such as Germany, the Netherlands, and France, have invested ample resources into circular technologies, including chemical and mechanical recycling. Furthermore, the European consumers are, in general, much more aware about the environment, thus there is demand in the market concerning the products that have circular qualities. The other factor that enhances leadership in the region is funding and support of research and innovation by the EU on green chemistry, bio-based feedstocks and circular supply chains.

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Chemical type Segment Analysis

The chemical type segment is divided into plastics, specialty chemicals, industrial solvents, agrochemicals, petrochemicals, surfactants and detergents and adhesives and sealants. The plastics segment dominated the market, with a market share of around 35% in 2024. The consumption of plastics, especially polyethylene (PE), polypropylene (PP), and polyethylene terephthalate (PET), is widespread to many industries including packaging, consumer goods, automotive, and electronics industries. They are source materials due to their durability and cheapness, yet the characteristics contribute to the long-time pollution of nature. Reacting to this, the emphasis on so-called circular solutions, i.e. recycling, reuse, inclusion of bio-based or recycled material, has also increased in the plastics value chain. Mechanical recycling is the most common circular approach, particularly concerning the plastics of packaging grades, and as such, it is the most used one, owing to its cost-effective nature. Other regulatory actions that are expediting the pace of industry-wide shifts are regulations like the EU Single-Use Plastics Directive, Extended Producer Responsibility (EPR) programs, and the worldwide prohibition of some plastic products. Moreover, main brand owners, and packaging firms are establishing high targets of recycled content, which stimulates even more demand. Consumer awareness has also been also very instrumental and sustainability preferences have grown which now factor into purchases.

• In order to promote sustainable practices and innovation in the chemical sector, Hindustan Unilever Limited (HUL) advocated for the establishment of technology focus areas and governmental interventions to speed up the materials transition.  A HUL-FICCI knowledge paper on material transition for the chemical industry included these suggestions.  This knowledge paper was published on March 24–25 in New Delhi during the Resource Efficiency and Circular Economy Industry Coalition (RECEIC) global symposium. 

Process type Segment Analysis

The process type segment is divided into mechanical recycling, chemical recycling, bio-based feedstock integration, closed-loop production systems and industrial symbiosis. The mechanical recycling segment dominated the market, with a market share of around 37% in 2024. According to the circular economy for chemicals market, mechanical recycling enjoys a leading role in the marketplace, especially because it has matured, is cost-effective, and has a strong infrastructure. It entails the physical treatment of plastic waste including collection, sorting, cleaning, shredding and remoulding with no change made to the chemical composition of the polymer. Mechanical recycling is more dominant because its capital investment is relatively lower than chemical recycling, it is easier to implement and recovery of materials is high in sorted and clean waste streams. It has been implemented in developed and developing countries with the available recycling sectors and regulations that encourage plastic waste management. Its growth is also propelled by government interventions like Extended Producer Responsibility (EPR), plastic recycling targets and prohibition of landfills on any kind of recyclable material.

End-use industry Segment Analysis

The end-use industry segment is divided into packaging, automotive, textiles, construction, electronics, agriculture, personal care and others. The packaging segment dominated the market, with a market share of around 33% in 2024. The plastic packaging industry, in particular, contributes to a huge percentage of world plastic wastes, and much of the plastic wastes are disposed in the landfill or environmental wastes. Consequently, it has emerged as one of the leading targets of circular economy solutions, stimulating the development and funding of recycled and bio-based materials, eco-design, end-of-life recapturing systems. Governments of most countries have implemented very strict laws against packaging waste, including the European Union Packaging and Packaging Waste Directive and Extended Producer Responsibility (EPR) schemes to require the use of recyclable or recycled material and to facilitate the reuse of materials. Packaging also attracts particular attention when it comes to sustainability because environmentally-minded customers are shifting toward purchasing products that have environmentally-friendly packaging or have little or no packaging at all to be recycled.

• Mirova, a trailblazing impact investor in the natural capital space and an affiliate of Natixis Investment Managers, and Neste, the world's top supplier of renewable diesel and renewable jet fuel as well as an expert in providing drop-in renewable chemical solutions, announced a combined EUR 10 million investment in Recycling Technologies Ltd. (‘Recycling Technologies’), a specialised provider of plastic recycling technology.  The goal is to promote the shift to a circular economy for plastic and quicken the development of chemical recycling.

Some of the Key Market Players

• Arkema S.A.
• BASF SE
• Borealis AG
• Braskem S.A.
• Covestro AG
• Dow Inc.
• DSM-Firmenich
• DuPont de Nemours, Inc.
• Eastman Chemical Company
• INEOS Group
• LyondellBasell Industries
• SABIC

Report Description