Inditex Pledges to Purchase Renewcell’s Circulose

PARIS — Swedish textile recycler Renewcell has received a pledge of support from Zara parent company Inditex.

The Spanish fast-fashion behemoth said Friday it will acquire 2,000 tons of material blend made with Renewcell’s Circulose through Hong Kong-based fiber producer Tangshan Sanyou, which has an existing offtake agreement with Renewcell. Inditex will move the material through its supply chain and integrate products into its collections.

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Inditex did not indicate a price value on how much it will purchase.

The Inditex commitment is the first show of support under interim chief executive officer Magnus Håkansson since he stepped into the role Oct. 16.

Earlier this month, Renewcell reported in a trading update that sales were “slower than expected” and subsequently replaced its longtime CEO, Patrik Lundström, with the former McKinsey consultant and retail exec Håkansson until it picks a permanent replacement.

Renewcell said that while it had been increasing its production capacity and receiving strong interest from “a large number of consumer brands who want to use Circulose to fulfill their sustainability goals,” sales were not up to pace. “Sales volumes to fiber producers are behind the levels previously expected and are not likely to follow the volumes implied for 2023 by existing offtake agreements,” the company said in a statement.

The industry has long hailed textile-to-textile “circularity” as a solution to its landfill and waste problem, and a step in achieving sustainability targets, particularly in Europe with new textile collection and waste laws rolling out over the next few years. Renewcell’s tech has positioned it as pioneer, but it has suffered from low demand even as it has upped production and set up storage facilities in China to help shorten the delivery window.

Renewcell’s sales announcement caused concern in the industry that if the well-positioned company with a strong supplier network couldn’t successfully scale and sell, then it might not bode well for the long-term potential of recycling.

Sustainable fashion advocates such as Fashion for Good put out a plea in an open letter to brands. “Step in with orders to drive the economies of scale and enable widespread adoption,” wrote managing director Katrin Ley.

Inditex’s commitment should help stabilize those sales numbers.

Renewcell has long been supported by H&M, which has incorporated the textile into its Conscious Collection lines. The Swedish fast-fashion group holds about an 11.5 percent stake in the company.

Renewcell operates the world’s first commercial-scale textile waste pulp mill — meaning it breaks down used cotton and transforms it into its’ own Circulose raw material. Textile producers buy it and turn it into new viscose or lyocell.

The Swedish plant came online in November with a capacity to produce about 60,000 tons of pulp, with the target of 360,000 tons by 2030.

It’s also the second visible textile buy for Inditex this week. Wednesday the company pledged to buy 70 million euros worth of Ambercycle’s recycled polyester Cycora over the next three years.

Renewcell’s third-quarter results will be released Nov. 7.

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