Viscose fibre: Cycles
Cotton prices, Chinese capacity and Lenzing's losses
Cotton prices, Chinese capacity and Lenzing's losses What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.Viscose prices move with cotton, polyester and dissolving pulp. When cotton is dear, spinners blend more viscose; when Chinese capacity outruns demand, generic prices fall towards cash cost. Pulp cost squeezes margins when it rises faster than fibre, as Grasim saw in early 2025. Specialty fibres such as lyocell and modal earn a premium and are less cyclical. In 2025 Lenzing's fibre volumes fell 6% but prices rose 2.8% in dollars as it shifted to premium grades, while generic prices drifted lower.
The spread to watch VSF minus dissolving pulp (about 1.0-1.05 t per t)Not published as a standard index. Indicatively about $0.7-0.8/kg in 2024-2025 (basis: CSF about $1.64/kg less pulp about $0.85-0.95/kg, from Grasim and Lenzing figures).
Booms and busts
- 2023
Weak apparel demand and new Chinese capacity pushed generic prices down. Lenzing reported a large loss and launched a cost programme that has since saved over €200 million (Lenzing; loss size indicative).
international CSF $1.51/kg in October-December 2023 (Grasim)
- FY2025 (April 2024-March 2025)
Prices recovered but pulp costs rose. Grasim's cellulosic fibre revenue hit a record ₹15,897 crore, yet Q4 EBITDA fell 36% to ₹293 crore.
CSF $1.65/kg in July-September and October-December 2024; December exit $1.64/kg (Grasim)
- 2025
Lenzing's fibre sales fell to 904 kt; adjusted EBITDA rose 7.6% to €426 million on savings and €45.1 million of CO2 certificate sales. India revoked the VSF QCO in November.
Lenzing average fibre price $2.27/kg, up 2.8%; pulp €0.76/kg, down 11.6% (Lenzing)
- 2026
Chinese generic viscose held steady through the third quarter.
China VSF CNY 14,400-14,580/t in September 2026 (average about CNY 14,535), CNY 14,700/t on 23 October 2026 (Cbonds)
What drives the cycle
- Cotton and polyester prices. Viscose sits between them: cotton $1.76/kg and PSF $0.90/kg versus CSF $1.64/kg in December 2024 (Grasim).
- Dissolving pulp price. About half of cost; pulp supply from Brazil, Canada, Scandinavia and Indonesia sets it.
- Chinese capacity, including generic lyocell. Generic lyocell capacity more than doubled in three years, pressuring premiums (Lenzing).
- Trade and sustainability rules. India's QCO changes, EU deforestation rules and brand commitments via Canopy shift where fibre is bought.
Metrics to track
| Metric | Why it matters | Where to track it |
|---|---|---|
| China VSF price index | Generic benchmark | Cbonds, CCF, Mysteel |
| Grasim and Lenzing quarterly volumes and EBITDA | Margin signal | company results |
| Canopy Hot Button ranking | Sourcing risk by producer | Canopy |