Lyocell Fibre Market Size, Share and Growth Analysis Report - Forecast Trends and Outlook (2025-2034)

The global lyocell fibre market value reached around USD 1.42 billion in 2024 due to the increasing demand for sustainable and eco-friendly textile material. Lyocell fibres, made from sustainably sourced wood pulp, are biodegradable, and their production process uses non-toxic solvents, making them a suitable alternative to cotton and polyester. Major brands like H&M and Zara have started incorporating lyocell into their collections, aligning with the sustainability trend. As a result, the industry is expected to grow at a CAGR of 19.70% during the forecast period of 2025-2034 to attain a value of USD 8.59 billion by 2034. Additionally, the rise in demand for high-quality, breathable, and comfortable fabrics is further boosting the adoption of lyocell fibres across various applications.

Lyocell Fibre Market Growth

Lyocell fibres are known for its characteristics such as being strong but soft, wrinkle-resistant, highly absorbent, and capable of replicating an array of textures like suede, leather, and silk. The global market is driven by the extensive use of the product in the apparel and home textile industries. This can be attributed to the fact that they have tenacity and absorption efficiency, which is why these are preferred over other types of fibres, like cotton and rayon. In addition to this, due to the increasing demand for eco-friendly and biodegradable cellulose fibres, the use of lyocell fibre has gained popularity among manufacturers.

The growth of the lyocell fibre industry is further aided by several factors, such as being easily disposable by landfilling, sewage digestion, or burning after usage. Moreover, as lyocell fibres does not contain any toxic compounds, they are ideal for the manufacture of medical-grade non-woven products.

Key Trends and Developments

Growing medical and hygiene applications, rising trend of sustainability, and market’s expansion in apparel applications are the key trends propelling the market growth.

July 2024

The Lenzing Group, a provider of regenerated cellulose fibers, announced that they are working with the non-profit organisation RTDS Group and 13 other partners from R&D to promote the expansion of lyocell filaments as part of the CELLFIL project. This initiative, co-financed by the European Union with €6.9 million in funding, aims to reform the textile value chain by enhancing sustainable production methods and replacing synthetic fibers with biodegradable lyocell options. The project highlights the importance of alternative raw materials and fostering a circular economy within the textile industry.

May 2024

India awarded a patent to the Australian textile innovator Nanollose for its Nullarbor lyocell fiber technology, which ferments organic waste from the food and beverage sectors to produce microbial cellulose that can be converted into fibers. This breakthrough highlights a growing trend towards using waste materials in fiber production, further enhancing the sustainability profile of lyocell fibers and contributing to a more circular economy in textiles.

April 2024

Researchers at the University of Alberta announced that they are making efforts to develop lyocell from Canadian-grown hemp. This research not only aims to diversify raw material sources for lyocell production but also supports local agricultural practices and promotes sustainable methods in fiber manufacturing.

January 2024

Lenzing announced that they have developed wood based Tencel Lyocell fibers, which offer enhanced recovery properties and superior comfort to users. These innovations respond to increasing consumer demand for high-quality, sustainable textile options, reinforcing Lenzing's commitment to eco-friendly practices in fiber production.

Growing Medical and Hygiene Applications

Lyocell fibre is gaining popularity in the medical and hygiene sectors due to its hypoallergenic and highly absorbent properties. The increased use of lyocell fibre for wound dressings, sanitary items, and medical apparel is expected to play a substantial role in its demand in the healthcare sector. The hospital sector in India stood at INR 7.94 trillion in 2021 in terms of revenue and is expected to reach INR 18.34 trillion by 2027. As per the lyocell fibre industry analysis, the country also has the world’s largest health insurance scheme known as Ayushman Bharat. These factors create a lucrative market for lyocell fibres. The growing emphasis on hygiene, particularly in the aftermath of the pandemic, has boosted the demand for medical grade lyocell in recent years. As per the WHO reports, 57% of the population used a safely managed sanitation service in 2022, which boosted the demand for lyocell that can be used in sanitary and hygiene products.

Rising Trend of Sustainability

A major factor propelling the growth of the lyocell fibre market is the rising global demand for sustainable and environmentally friendly textiles. As both consumers and industries place a higher emphasis on sustainability, lyocell fibre, which is derived from renewable wood sources, is gaining popularity in the textile sector. This trend is further supported by the sector's efforts to reduce carbon emissions. For instance, the EU Strategy for Sustainable and Circular Textiles, launched in 2022, is an important part of the European Green Deal and the Circular Economy Action Plan. This strategy establishes mandatory eco-design standards, encouraging textile manufacturers to produce products that are more durable, recyclable, and environmentally friendly. The Ecodesign for Sustainable Products Regulation was further set to be implemented in 2024 in the EU and extends the scope of eco-design requirements to encompass nearly all physical goods, textiles included. This regulation prioritises recyclability, reduced energy consumption, and the minimal use of harmful substances, thereby promoting circularity within the textile sector.

Expansion in Apparel Applications

The expansion in apparel applications of lyocell fibers is significantly impacting the fashion industry, driven by the material's desirable properties such as softness, breathability, and moisture-wicking capabilities. For example, brands like Lululemon and Eileen Fisher are incorporating lyocell into their collections to enhance comfort Lyocell is increasingly used in various clothing items, particularly in activewear and casual apparel. Tentree offers a Lyocell Juniper T-Shirt that combines TENCEL Lyocell with recycled polyester and organic cotton, providing comfort and style. Additionally, brands like Amour Vert feature the Zendaya Tencel Dress made from 100% TENCEL gauze, which is praised for its fit and comfort. Studies show that lyocell can absorb 50% more moisture than cotton, making it an ideal choice for warm climates and active lifestyles. This trend is expected to continue growing as consumers increasingly seek high-quality fabrics in their wardrobes.

Innovations in Production Techniques

The innovations in production techniques are reshaping the lyocell fibers market landscape. The closed-loop solvent spinning process reduces environmental impact by recycling solvents and significantly reducing water and energy consumption - up to 99% less water compared to traditional cotton production. This eco-friendly approach is crucial as consumers demand more sustainable textiles. For example, brands like Patagonia are committed to using recycled lyocell fibers sourced from cellulose waste streams instead of virgin materials. Additionally, advancements in manufacturing technologies allow for improved fiber strength and durability, making lyocell suitable for a broader range of applications beyond clothing. The versatility of lyocell enables it to be blended with other fibers such as cotton or wool, enhancing the performance characteristics of garments while maintaining sustainability.

Lyocell Fibre Market Trends

An emerging trend of lyocell fibre market is the growing use of lyocell fibre in automotive filtration systems. As the demand for eco-friendly materials rises, manufacturers are exploring lyocell fibres for automotive filters due to their biodegradable characteristics and enhanced strength. This trend is particularly noticeable in Europe and North America, where there are many stringent regulations promoting the use of sustainable materials. Moreover, the EU Circular Economy Action Plan (2020), which is part of the European Green Deal, aims to improve product sustainability across all sectors and can enhance lyocell fibre market expansion. In the automotive sector, it emphasises the significance of using recycled materials, adopting eco-friendly designs, and extending the lifespan of products.

The EU End-of-Life Vehicles (ELV) Directive encourages the recycling and reusing of automotive materials, requiring that 85% of a vehicle's components be reusable or recyclable, with a goal of achieving 95% recoverability by weight. This regulation supports the use of sustainable materials and aims to reduce the presence of hazardous substances in vehicle production.

Opportunities in Lyocell Fibre Market

Advancements in the manufacturing of lyocell fibres, especially in the production of cross-linked fibres for automotive filtration, are increasing the adaptability of this material. These innovations ensure that lyocell fibres maintain their durability and efficiency across a wide range of applications such as apparel and filtration systems, among others, increasing the lyocell fibre market value. Birla Cellulose, the pulp and fibre provider in India, successfully completed its first pilot-scale spinning of an eco-friendly next-generation lyocell fibre, which contains 20 per cent microbial cellulose sourced from Nanollose Limited. This pilot spin, which produced 250 kg of this sustainable lyocell fibre, marks a significant step in the company’s efforts to commercialise this technology that uses sustainable biomass derived from food industry waste fermentation.

VEOCEL™, a producer of biodegradable, plant-based fibres, introduced its improved lyocell shortcut fibres specifically designed for the flushable wipes market. These upgraded fibres can be easily processed and have high machine efficiency, significantly reducing the chances of mechanical blockages and product defects.

Lyocell Fibre Market Restraints

Lyocell fibre is produced from cellulose, which is obtained from wood pulp. However, the availability of sustainably sourced wood pulp is limited and the increasing demand for eco-friendly fibres increases pressure on these resources. This issue further becomes prominent with the demand for sustainable forestry practices, which can increase material costs and affect the lyocell fibre demand forecast. As per the Textile Exchange, global production of manmade cellulosic fibre (MMCF), including lyocell, increased from 7.4 million tonnes in 2022 to 7.9 million tonnes in 2023 but challenges persist in sustainably increasing this supply.

Additionally, the market faces higher production costs compared to other fibres such as polyester or cotton. The lyocell manufacturing process, which uses non-toxic solvents in a closed-loop system, is more costly than conventional methods and can hinder its widespread adoption, especially in markets that are sensitive to cost.

Lyocell Fibre Industry Segmentation

“Lyocell Fibre Market Report and Forecast 2025-2034” offers a detailed analysis of the market based on the following segments:

The market is segmented on the basis of product into:

• Staple Fibre
• Cross-Linked Fibre

On the basis of application, the market is divided into:

• Apparel
• Home Textiles
• Medical and Hygiene
• Automotive Filters
• Others

The report also covers the regional markets of the product like:

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Lyocell Fibre Market Share

Market Insights by Product

Among products, staple fibres are largely preferred due to their longer than average fibre length, which makes it easier to process and produce even yarns, contributing to the lyocell fibre market revenue. These fibres are commonly used in the fashion sector to produce fabrics that are soft, breathable, and durable. This fibre is often blended with other materials such as cotton to improve the texture and sustainability of clothing. It is popular in high-quality garments, including activewear, casual wear, and undergarments, due to its moisture-wicking and hypoallergenic properties.

The market is seeing growth in cross-linked fibres due to their enhanced strength, durability, and environmental benefits. These fibres are more resistant to stress and are used in textiles, automotive, and medical fabrics. Companies like Lenzing AG are leading innovations in this area. Government reports, including those from the European Commission and U.S. Department of Energy, support the shift to sustainable materials like cross-linked lyocell, highlighting its biodegradability and lower environmental impact. This trend aligns with global efforts to promote eco-friendly textile production, driven by regulatory policies aiming to reduce synthetic fibre use and promote circular economy practices.

Market Insights by Application

Out of these, apparel holds the majority of the lyocell fibre market share, demonstrating the largest segment. This can be ascribed to the wet strength, softness, and high absorbent properties of lyocell fibre. Lyocell fabric is ideal for garments that offer comfort such as casual wear, activewear, and undergarments as its silky smooth texture feels gentle against the skin. One of the prominent features of lyocell is its excellent moisture-wicking ability, which enhances its appeal in activewear and sportswear by efficiently absorbing and dispersing moisture, keeping the wearer dry and comfortable.

Lyocell fibres are used in home textiles like bedding, curtains, and upholstery due to their soft texture, moisture-wicking properties, and environmental benefits. Brands like IKEA have started incorporating lyocell into their home textile collections, aligning with the European Union’s sustainability goals. Lyocell is gaining traction in the medical and hygiene sectors due to its biodegradability and high absorbency.

It is used in wound dressings, diapers, and feminine hygiene products. Companies such as Lenzing AG have developed lyocell-based products for medical applications, benefiting from regulatory support under initiatives like the U.S. Food and Drug Administration (FDA) guidelines on sustainable medical materials. The World Health Organization (WHO) encourages the use of environmentally friendly materials in hygiene products to improve waste management globally. In the automotive industry, lyocell fibres are used in air and fuel filters due to their excellent filtration capabilities and strength.

Lyocell Fibre Market Regional Analysis

North America Lyocell Fibre Market Outlook

Lyocell fabric is renowned for its remarkable softness, making it ideal for clothing. The market in North America is driven by a growing demand for sustainable and eco-friendly textiles, particularly in the apparel and home textiles sectors. The United States is leading the way in adopting sustainable fashion trends, with both brands and consumers increasingly choosing biodegradable materials, which further boosts the demand of lyocell fibre market. Additionally, the rising awareness of the environmental impact of the textile sector has resulted in a significant increase in the demand for lyocell fibres throughout the region. In 2023, the demand for lyocell in sustainable fashion in the region saw a steady rise, owing to rising environmental concerns.

Europe Lyocell Fibre Market Drivers

Europe has adopted a leading role in sustainability regulations, especially through the EU’s Circular Economy Action Plan and the Sustainable Textile Strategy. These initiatives focus on minimising waste, enhancing recyclability, and encouraging the use of eco-friendly materials such as lyocell.

As per the lyocell fibre industry analysis, the European Commission's objective of achieving a carbon-neutral textile sector by 2050 has encouraged manufacturers to incorporate lyocell into their production processes. The upcoming Eco-Design for Sustainable Products Regulation, set to take effect in 2024, is expected to further increase the demand for lyocell by advocating for the use of recyclable and biodegradable materials.

Asia Pacific Lyocell Fibre Market Growth

The Asia Pacific is currently the leading market for lyocell fibre owing to the thriving textile industry and enhancing standards of living. The global lyocell fibre market is driven by the increasing demand for biodegradable cellulose fibre across the globe. With the increasing environmental concerns, the demand for the product is increasing across the world and consequently boosting the lyocell fibre demand.

China and India are key contributors to both the production and consumption of textiles, with rising demand for eco-friendly fibres as global brands shift their manufacturing to these countries. This region's significant role in the market makes it essential for the expansion of lyocell, especially as more manufacturers in Asia adopt sustainable practices.

Middle East and Africa Lyocell Fibre Market Overview

The Middle East and Africa are emerging markets for lyocell fibre, driven by growing urbanisation and industrial development. Furthermore, there is an increased awareness of sustainable textiles, especially in the home textiles and medical textiles sectors, which contributes to the lyocell fibre industry revenue. The National Renewable Energy Program focuses on energy while encouraging a shift towards sustainable energy sources in multiple sectors, including textiles, to reduce emissions. This initiative aligns with the Kingdom's goal of sourcing 50% of its energy from renewable sources by 2030, thereby indirectly impacting textile manufacturing practices.

Latin America Lyocell Fibre Market Dynamics

The lyocell fibre market in Latin America is growing as the region focuses on sustainable manufacturing practices. Countries such as Brazil and Argentina are experiencing an increase in the adoption of eco-friendly materials in the fashion and home textiles sectors, largely influenced by global export standards. Moreover, international brands operating in Latin America are increasingly seeking sustainable textile alternatives, which is further driving the demand for lyocell.

Innovative Startups in Lyocell Fibre Market

Several startups are increasingly relying on digital technologies, including blockchain and digital product passports, to enhance transparency in their sustainability claims. These innovations facilitate improved monitoring of the supply chain, from the sourcing of fibres to the final products, enabling consumers to confirm the environmental sustainability of their purchases, which can enhance lyocell fibre market opportunities. This approach aligns with regulatory frameworks such as the EU’s Circular Economy Action Plan, which encourages transparency and accountability.

Sateri Holdings Limited (China)

Sateri, headquartered in China, focuses on the production of sustainable fibres, such as lyocell, viscose, and other environmentally friendly options. The company has gained recognition for its innovative sourcing and manufacturing techniques, making itself an emerging competitor in the textile sector. The company is committed to increasing the application of lyocell across diverse sectors such as fashion, home textiles, and non-woven materials.

Lenzing AG's TENCEL™ Division (Austria)

Lenzing AG, though not a typical startup, has a division focused on the production and marketing of TENCEL™, a brand name which offers lyocell fibre. TENCEL™ has become one of the most highly regarded sustainable materials in the textile sector, widely adopted by brands in both fashion and home textiles.

Competitive Landscape

The report gives a detailed analysis of the following key players in the global lyocell fibre market, covering their competitive landscape, capacity, and latest developments like mergers, acquisitions, and investments, expansions of capacity, and plant turnarounds. Several companies are leading the way in the development of biodegradable and sustainable fibres. They are using eco-friendly materials such as SeaCell™ and plant-based alternatives, which help reduce reliance on synthetic fibres and boost lyocell fibre demand growth. These innovative companies are promoting more sustainable options, including biodegradable polymers, that can be applied in both the fashion sector and industrial textiles.

Denka Corporation Limited

Denka Corporation is a prominent Japanese chemical company that offers a wide range of products such as industrial materials, electronic goods, and healthcare solutions, among others.

Smartfiber AG

Located in Germany, Smartfiber AG is recognised for its production of high-performance natural and functional fibres tailored for the textile sector. The company offers eco-friendly materials, particularly its speciality fibres such as SeaCell™, which are derived from seaweed and lyocell.

Acegreen Eco-Material Technology Co., Ltd.

This China-based company focuses on the development of sustainable and eco-friendly materials. It also promotes the production of innovative, biodegradable, and recyclable fibres and polymers for multiple sectors, including textiles.

The comprehensive report provides an in-depth assessment of the lyocell fibre market based on the Porter's five forces model along with giving a SWOT analysis.