CHEManager: How are chemical companies responding to new trade conflicts and tariffs?

Jan Haemer: Capital exports have always been a proven strategy in the chemical industry to be closer to the market and customers. Local production ensures market access, strengthens customer relationships, and enhances competitiveness as a local supplier.

A prime example is BASF in China: The company’s $10 billion investment in the Zhanjiang Verbund site secures not only growth but also protection against trade barriers. Companies with local production are more resilient to tariffs and geopolitical risks.

James Hogan: Moreover, this trend can be observed worldwide – companies invest not just due to regulatory pressure but to secure local value creation and strategic independence.

How does raw material availability play into this?

J. Haemer: European chemical companies are often processors rather than raw material producers, making them highly dependent on imports and vulnerable to price fluctuations. Circular economy can help: using more recycled raw materials means lower reliance on global supply chains and greater resilience.

J. Hogan: In the U.S., companies increasingly rely on circular economy to secure their raw material base locally.

Can you give examples?

J. Hogan: Aurubis is investing in Georgia in metal recycling to replace primary raw materials and close local loops. This secures not only resources but also trade resilience.

J. Haemer: Similarly, Eastman in France is investing €1 billion in chemical recycling of plastics—located where waste is generated, not where fossil resources are extracted.

“Circular economy links local raw material availability with strategic independence.”

Is circular economy economically viable or driven by regulation?

J. Haemer: Lead markets accelerate adoption by creating demand through CO₂ pricing, recycling quotas, and green procurement criteria. Renewable energy costs fell due to demand—circular economy will become economically viable once economies of scale and rising CO₂ costs push it past the tipping point.

J. Hogan: The Inflation Reduction Act recently played a role in the US, but with political changes, the focus is now shifting toward private initiatives and programs like "Buy American" to strengthen sustainable value creation.

Does this indicate a new approach to raw material sourcing?

J. Haemer: Yes. Previously, raw materials were imported, but today, industrialized nations are becoming raw material sources through their own waste. Raw material security is becoming local, while processing remains global.

J. Hogan: Exactly. Circular economy links local raw material availability with strategic independence.

What conditions must be met for circular economy to be economically viable?

J. Haemer: Scalable technologies, such as chemical recycling for high-quality applications. Efficient collection and processing systems – well-established in metals but still underdeveloped for plastics. And regulatory incentives, such as CO₂ pricing and mandatory quotas for recycled materials.

J. Hogan: And early investments. Companies that adopt circular economy early gain advantages. Those that wait may later be constrained by supply chains or regulations.

Your conclusion?

J. Haemer: Circular economy is more than sustainability – it reduces raw material dependency, minimizes trade risks, and creates local value.

J. Hogan: Companies must decide: continue relying on global raw material markets or invest in closing local loops?