Seeing the Forest for the Trees: The Business Case for Next Gen Viscose

When feedstock choices are evaluated on a risk-adjusted basis, an illustrative yet representative China-based viscose producer supplying a high-volume apparel brand with meaningful EU retail sales could justify T2T shares as high as 30–50% by 2036 due to T2T’s ability to hedge against wood-pulp price volatility and price shocks, reduce brand exposure to circularity and waste-related public policies, and see declining production costs after scaling.

For T2T to reach its potential as 30–50% of a producer’s commercially optimal viscose feedstock mix by 2036, near-term adoption needs to reach meaningful levels soon enough for supplier readiness and cost declines to compound over time.

An early target of 5% T2T adoption by 2028 could be financially optimal through multiple pathways, even with varying risk appetites among producers. For example, if we assume T2T pulp prices vary half as much as wood pulp has on average,2 we see the 5% threshold crossed by 2028 in several sets of reasonably expected market conditions:

1. Producer risk aversion: When viscose producers are risk-averse and care about avoiding downside losses from wood-price volatility as much as they care about increasing expected profits.
2. Market risk: When producers are more risk-tolerant but face a 16% persistent shock to wood pulp prices, or a 4% shock to both wood price levels and volatility.
3. Policy risk: When producers do not care about risk, and brands also face modest EU policy costs of ~€0.38-0.50/kg of garment that T2T offsets. When producers are risk-averse, this drops to 0.08/kg of garment.

Crossing the 5% adoption threshold can unlock material long-term savings for brands as learning effects kick in: A brand buying around 50 million kilograms of viscose per annum could save ~$10-$40 million over the next 10 years by helping suppliers move to T2T before conventional viscose becomes more expensive to buy or use, whether due to wood market shocks, risk hedging by viscose producers or brand-facing policy costs. Given these findings, for brands, moving early is a low-regret step: procurement commitments, offtakes, or supplier partnerships can help secure T2T supply before these reasonable-to-expect market and policy conditions tighten access and raise costs.

This preliminary version of our analysis makes a simplifying assumption: producers have sufficient access to T2T pulp and are price takers who do not influence market prices. In practice, reaching a 30-50% T2T adoption among high-volume brands and producers would likely require a step change in textile waste collection, sorting, preprocessing, traceability, and supply chain logistics. As T2T scales, producers may also face growing competition for qualified textile waste from other uses. Supply and demand will influence T2T market prices.

China could present a strategic opportunity in this context. Its large volumes of textile waste, significant viscose production, and deep textile and apparel manufacturing base make it one of the few markets with the potential to build more integrated T2T supply chains at scale. A key medium- to long-term investment signpost will be whether China’s recycling policies are translating into progress in collection, sorting, and preprocessing, and in recycled fibre capacity, consistent with its 2030 goal of recycling 30% of waste textiles and producing three million tonnes of recycled fibre per year.