Exclusive: Textile Recycler Circulose Is Restarting Its Recycling Plant

Two years after bankruptcy, textile recycler Circulose is resuming production.

The company, formerly known as Renewcell, will restart its commercial-scale production at its Ortviken plant in Sundsvall, Sweden, it announced on Monday, marking a key test case for whether next-generation textile recycling can scale after a turbulent period for the sector.

The company plans to resume production of Circulose, a recycled pulp made from discarded cotton textiles, in the fourth quarter of 2026 while existing inventory produced prior to Renewcell’s bankruptcy continues to supply brands.

The restart follows long-term volume commitments from 11 fashion brands, including H&M, Mango, Marks & Spencer, Bestseller, C&A and Reformation among others, which have pledged to incorporate the material into future collections.

The move comes nearly two years after the former operator of the plant, Renewcell, filed for bankruptcy, casting doubt over the commercial viability of chemical textile recycling at scale. Circulose, acquired in 2024 by private equity firm Altor, has since shifted strategy, prioritising secured demand and pricing reform before bringing production back online.

“The plan was to align the production restart with confirmed demand,” said chief executive Jonatan Janmark, a former McKinsey partner who joined Circulose in late 2024. “With commitments from 11 brands, we are now moving forward with confidence.”

The Ortviken facility is the world’s first commercial-scale chemical textile recycling plant. At full capacity, it was designed to process large volumes of post-consumer cotton waste into dissolving pulp that can replace virgin viscose and lyocell in man-made cellulosic fibres. And its restart offers promise, if done right this time around.

What’s Different This Time

Renewcell’s collapse was widely attributed to a gap between technological capability and market uptake.

While brands piloted Circulose, volumes remained insufficient to support the capital-intensive plant, and price premiums compounded through the supply chain.

Janmark, said the company has spent the past year restructuring its commercial model to avoid repeating those mistakes.

Rather than selling pulp into the fibre market and relying on downstream adoption, Circulose negotiated strategic partnerships with major viscose producers Tangshan Sanyou, Aditya Birla and Jilin Chemicals, agreeing on fibre pricing structures in advance. The company also worked directly with brands to prevent rise in marginal costs up the supply chain — as the material travels from fiber makers to spinners then to fabric mills and finally to manufacturers to make a garment — a regular process which previously inflated end costs for an innovative recycled material to be integrated into products.

In addition, Circulose has introduced a split pricing model that separates the physical pulp cost from a licensing and service component, positioning itself less as a commodity supplier and more as a solutions partner helping brands integrate recycled inputs into existing supply chains.

“The main premium should be the innovation premium,” Janmark said, rather than cumulative mark-ups along the value chain.

The restart arrives amid mixed signals for sustainability in fashion. Regulatory momentum in Europe has softened in recent months, while climate action in the US is increasingly fraught, and brands face ongoing economic pressure raising questions about their appetite for higher-cost materials.

Still, several global retailers have publicly reaffirmed targets to increase the share of next-generation fibres in their assortments. Circulose said some brand partners formalised new man-made cellulosic fibre targets during negotiations this year.

For the broader textile recycling industry, where multiple start-ups have struggled to convert pilot projects into sustained commercial production, the outcome of this relaunch will be a potential signal on demand and growth if successful, given the bankruptcy was a largely instructive event for the sector.

“These haven’t been the easiest market conditions,” said Janmark. “But us reaching the point of restarting the factory is a testament to the fact that although there are headwinds around sustainability, there’s also a strong determination from parts of the industry to move in the right direction and we are proving that it’s possible – that, with enough collaboration, circular materials can scale.”

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