The textile waste processing industry is no longer debating whether the technology is viable, but rather facing a more vexing question—whether these technologies can become profitable, scalable industrial businesses. According to the Textile Recycling Status Report (H1 2026) jointly published by Circular Fashion News and Fashion for Good, commercialization has become the core issue in the industry's evolution.

Market Size and Europe's Position

According to Valuates Reports, the global apparel and textile recycling market is projected to grow from $13.6 billion in 2024 to $20.2 billion in 2031, a CAGR of 5.9%; the report further notes that Europe's expected growth rate is higher, at 10.5% per year. But growth does not necessarily equal profitability.

Investment Gap and the High-Cost Dilemma

ReHubs, the European textile recycling alliance, estimates that building the required industrial capacity in Europe would require €8 billion to €11 billion in initial investment alone, plus €5 billion to €6.5 billion in ongoing annual expenditure. There is resistance at both ends of the value chain: recyclers need sufficient, properly sorted textile waste, while brands must commit to purchasing recycled fibers. The core financial challenge in between is that recycled fibers remain, in many cases, more expensive than virgin materials. Without long-term offtake agreements, new operators struggle to convince investors to fund commercial plants; without those plants, supply remains scarce and expensive. This is a hard-to-break cycle: no demand means no scale, and without scale and cost competitiveness, demand cannot be generated.

New Capacity Coming Online, but Still Insufficient

Despite the difficulties, 2026 has seen several important developments: Circulose resumed commercial production in Sweden after completing its restructuring; Reju secured €135 million in investment to advance its Dutch polyester recycling plant. The map compiled by Circular Fashion News and Fashion for Good has registered more than fifty textile-to-textile recycling facilities globally that are operational, demonstration-stage, or under construction. Yet the reality is that recycled textile waste currently accounts for less than 1% of global fiber production.

Supply chain players are also coordinating. Fashion for Good is working with Adidas, Bestseller, and Inditex on the Feedstock Activation Europe project, aimed at improving the sorting and pre-processing of post-consumer waste needed for recycling technologies. Re&Up has launched Fiber Club, with the goal of aggregating brand demand and facilitating procurement of next-generation fibers.

Spain: From Collection Rates to Industrial Conversion

Spain is still in the phase of building industrial capacity. The country generates approximately 900,000 tonnes of textile waste annually, but only about 12% is separately collected for reuse or recycling. Meanwhile, new projects are taking shape: Althenia will build a 4,000-square-meter plant in Antequera with a €4 million investment; The Post Fiber's facility in Sabadell continues to advance; ShareTex is partnering with Ence to build a chemical recycling pilot plant in As Pontes, planned to start production in 2027. Spain's challenge goes beyond raising collection rates—it also includes converting waste into industrial feedstock and ensuring sufficient brand demand. Recover is extending its business from fibers to yarns, fabrics, and end products, while The Post Fiber and other new chemical recycling projects are attempting to scale multiple technologies to commercial level.

Regulation Outpaces Capacity, Market Yet to Form

The expansion of Europe's Extended Producer Responsibility (EPR) schemes has accelerated waste collection, but the new challenge is ensuring these increased volumes have genuine industrial and commercial outlets. At the European level, textile waste amounts to approximately 6.9 million tonnes annually, with a separate collection rate below 15%. The paradox is clear: regulation has accelerated feedstock supply before the industry has built sufficient processing capacity. The discussion is therefore shifting from "collection" to "market creation." Collecting more clothes alone cannot solve the problem—if sorting facilities are insufficient, if technologies to separate and process mixed materials are lacking, and especially if there are no buyers willing to adopt recycled fibers at competitive costs.

It is estimated that producing a T-shirt in Europe using textile-to-textile recycling processes costs approximately €9 to €14 per piece (FOB/CMT), depending on production volume, unit weight, and complexity—15% to 35% more expensive than producing a comparable product in Europe using virgin fibers, due to the immaturity of the circular supply chain and the inputs required to separate mixed materials. A technical study by Finland's VTT Technical Research Centre provides more granular data: collection and sorting costs about €0.43 per kilogram, mechanical recycling €0.50 to €0.60 per kilogram, and chemical recycling about €0.85 per kilogram. In other words, the fiber material needed to recycle a vest of about 150 grams costs about 8 euro cents, compared to about 4 euro cents for virgin fiber. It should be noted that these 8 euro cents are only a cost reference for fiber recycling and do not equate to the full-process cost of turning an old T-shirt into a new garment—the complete industrial process also includes collection, transport, sorting, material separation, shredding, fiber extraction, spinning, weaving, dyeing, garment manufacturing, and distribution.

Pressure on the Used Clothing Export End

Reuse will remain the primary destination for textile waste in the coming years, but this market also faces challenges: declining value of used clothing in some international markets, an increase in very low-value garments, and export restrictions are all squeezing the profitability of specialized operators.

The industry already has technologies, industrial projects, and new plants at various stages. What it truly lacks is the ability to convert this potential supply into economically sustainable value chains—connecting waste, sorting, recycling, fibers, yarns, fabrics, and ultimately brands willing to pay for the final material. Textile recycling thus finds itself in a paradox: it has never received so much regulatory attention, and never have so many industrial projects been under construction, but as the report reveals, collecting waste is only the starting point of this business.

Source: Textile Recycling Expands Capacity as Investment Rises, but Market Demand Stays Weak - Modaes Global · Originally published on 2026-09-28