Hi, Jewish historian here. I am not by any means an expert on the Holocaust, as it was not the focus of my degree, but I do have some very deep knowledge on this particular topic. Jewish hair, to put it simply, was used for two purposes-industry and dehumanization-by the Nazis. It was shaved even after death.
The long version, citing from a primary source (my Holocaust survivor grandmother, who participated in the Shoah project. I used this recording as a source as it was an objective interview and not a personal anecdote to younger me) as well as the Yad Vashem Holocaust Museum in Israel, the Torah, and the Talmud, is as follows.
Jewish hair was just one of many things taken from Jewish prisoners by the Nazis, both the living and the dead. Those sent to the gas chambers were shaved postmortem, particularly women. Those sent to labor were shorn on arrival, head and body, and the longer hair was used in everything. It would be sold in 20-kilogram bales for approximately 20 pfennig a kilogram. It was used for socks, ignition mechanisms, ship rope and cord, and a great deal of other uses as if it was wool.
The important part to discuss is the dehumanization aspect.
If it was not enough for the hair to be used in industry as if it was an animal’s wool, consider this: particularly among the orthodoxy, Jewish women’s hair was seen as both something to be treasured and covered; in a portion of the Talmud (Berakhot 24a to be exact), rabbis define hair as sexually erotic (ervah) and prohibit men from praying in view of a woman’s hair. The rabbis ostensibly base this on a verse in the Torah: “Your hair is like a flock of goats” (Song of Songs 4:1), suggesting that this reflects the sensual nature of women’s hair. While the Talmud is debated to this day, one must consider that it was not only a point of vanity for many women just as it is today, but a religiously important part of oneself. Shaving both men’s and women’s hair can be a direct violation of certain tenets of Judaism, and the Nazis absolutely knew this.
Now, ask yourself: if I was taken from my home, away from everything I cared for, and did not know if I would live out the next year, what would I do if my head and body were forcibly shaved?
Would you feel comfortable in your appearance?
Overwhelmingly, the use of Jewish hair as an industrial resource seemed to be much less of an actual resource as it was a tactic to demoralize and defeat the Jewish population of prisoners; remember that the Nazis frankly didn’t care if the Jews had lice, or if they were clean or even fed. Yet, for years, Jews in the labor camps as well as murdered Jews in the death camps had their hair shaved right up until the end of the war.
Hair wasn’t important on its own, but it was important to many of the Jews and therefore needed to be destroyed. Particularly in the case of Jewish women, it was a heavy blow to their femininity and sense of self. My grandmother had her head shaved in her camp; she once described it to me when I was young (and also spoke of it during the Shoah project) as the robbing of her identity. She was not allowed to control her own hair; nothing was in her control, she had no independence, no self-discipline, no license of decision.
She was roughly 15 when she was placed in a camp; most of her family did not survive save her mother and one sister. All had their heads shaved by the Nazis and kept that way.
I hope this answers your question, and that you might consider checking out the Yad Vashem website as well as the American Holocaust Museum.