APPEC: Hormuz crisis 'critical moment' for circular chemicals amid feedstock woes

Circular cracker feedstock has emerged as a diversification strategy for producers facing feedstock constraints amid the Middle East conflict, Bilal Khan, chief development officer at Alterra, said Sept. 10 at APPEC 2026, hosted by S&P Global Energy in Singapore.

Khan described the current period of geopolitical volatility as a 'critical moment' for the circular feedstock industry, serving as a catalyst for its growth.

He said that circular alternatives were previously seen merely as a sustainability solution rather than a strategic option due to their high cost compared to virgin cracker feedstock.

However, after the outbreak of the Middle East conflict, producers faced challenges securing traditional feedstock due to soaring prices, tight global supply and shipping challenges.

Ravi Narayanaswamy, executive director and global head of petrochemical feedstocks at S&P Global Energy, said that Asian petrochemical units have cut run rates and temporarily shut amid high feedstock costs and supply tightness.

"Companies are also likely to diversify naphtha sources, even though it may be slightly costlier," Narayanaswamy said.

"Now the market is seeing it [circular feedstock] as more of a diversification solution rather than remaining a sustainability discussion, which was the case a few years ago," Khan added.

"We see it more as diversification, not as a replacement for virgin," Khan said, adding that the current global production capacity for pyrolysis oils is a mere fraction of the global demand.

While the market is still nascent, Khan is optimistic about its advancement as global demand grows.

Additionally, regulations continue to drive the progress of the circular feedstock market. Khan anticipates stronger demand following the EU's implementation of the Packaging and Packaging Waste Regulation in August this year.

Looking forward, Khan worries that once the geopolitical situation has been stabilized, circular feedstock may once again become an afterthought. "Most of them [market participants] have some short-term memory," Khan said.

"Hopefully this time round it will be different," he added.