Circular materials in 2026: where the value is moving
Recycled-plastics and pyrolysis-oil markets have matured fast. We lay out where margins are forming, which feedstocks are tightening, and how policy across South East Asia is reshaping the investable opportunity set for circular materials over the next two years.
By Orofante Research
Circular materials have moved from a sustainability talking point to a market with real spreads, real offtake, and real capital at work. The question for 2026 is no longer whether the transition happens, but where along the value chain the economics actually accrue.
Where margins are forming
Three shifts stand out:
- Feedstock is the constraint, not demand. Clean, well-sorted feedstock — recycled PET flake, used cooking oil, mixed plastics suitable for pyrolysis — is tightening faster than conversion capacity.
- Policy is pulling demand forward. Recycled-content mandates and extended-producer-responsibility schemes across the region are turning voluntary buyers into obligated ones.
- Operators beat financiers. The returns are concentrated in those who can build, permit, and run facilities reliably — not those who simply fund them.
What we are watching
We expect the spread between virgin and recycled materials to stay volatile but structurally supported, and we see the most durable opportunities in integrated positions: securing feedstock, operating conversion, and locking offtake.
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