The growing demand for sustainable textiles will fuel a significant uptick in demand for lyocell fiber over the next few years, according to new data from Credence Research.
The global research firm estimates that the market for lyocell fibers—which are made with wood-derived cellulose—will see a projected compound annual growth rate (CAGR) of 10.2 percent by 2032. That’s a gain from its value of $1.3 billion in 2022 to $3.43 billion in 2032.
The use of lyocell in apparel and home textiles is one of the biggest drivers of growth, according to the report. Companies such as Lenzing, which has developed advanced production technologies for its Tencel lyocell fibers, and Birla Cellulose, which introduced its Nullarbor lyocell fiber, have helped lead the charge. Lenzing plans to increase its lyocell production capacity to more than 100,000 tons per year in 2025. These companies have leveraged the sustainability of lyocell production to gain traction in the apparel and footwear industries.
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“The rising awareness of environmental sustainability among consumers and industries is driving the demand for lyocell fiber,” the report said. “Made from cellulose derived from wood pulp, lyocell fiber is biodegradable and produced using eco-friendly processes, including a closed-loop system that minimizes water and chemical waste.”
Home textiles also have become a growing market for lyocell, with Credence Research noting, “the growing demand for luxurious yet sustainable home textiles, including bed linens, curtains, and upholstery, is driving the adoption of lyocell fiber in the home décor industry.”
The report also points to applications in healthcare and hygiene—particularly Lenzing’s Lyocell Dry, a hydrophobic fiber that enhances moisture management in hygiene applications—as drivers of growth. The fiber is suitable for healthcare use, providing properties previously only available from plastic fibers, while also espousing sustainable attributes like biodegradability.
Looking at growth regionally, Credence Research found the Asia-Pacific market is the largest and fastest-growing area for lyocell use, fueled by rapid industrialization, urbanization, and the expansion of the textile and apparel industries in countries like China, India, and Japan.
“China’s dominant textile manufacturing industry, coupled with India’s growing focus on eco-friendly materials, plays a critical role in driving market growth,” the report said.
The U.S. and Europe also rank as significant markets for lyocell fibers, driven by an increased demand for sustainable textiles and environmentally friendly practices. In Europe in particular, regulatory changes aimed at promoting sustainability and circularity have created favorable conditions for lyocell expansion.
“The region’s fashion industry, particularly in countries such as Germany, France, and Italy, is increasingly integrating eco-friendly materials into their production processes,” the report said. “Furthermore, the rising consumer preference for organic and biodegradable textiles supports the growth of lyocell fiber.”
The report identified Latin America, the Middle East and Africa as emerging markets for lyocell use, through textiles and hygiene products in countries such as Brazil and Mexico, and the textile and apparel industries in South Africa and the United Arab Emirates.
Credence Research found that rapid industrialization and urbanization in emerging markets, coupled with the rise of disposable income in regions such as Latin America and the Asia-Pacific, are driving the demand for eco-friendly textiles.
And as that demand for more sustainable solutions continues to grow globally, the report suggests that lyocell will become a major component in textile and apparel companies’ strategies to be more eco-friendly.
“Initiatives such as zero-waste production processes and carbon-neutral operations align with the growing preference for lyocell fiber, offering manufacturers a competitive edge in the global market,” the report said.
