In 1958, Roger Bacon, working at Union Carbide (USA), first developed carbon fibers based on rayon. In the early 1970s, Japan's Toray carried out mass production of polyacrylonitrile (PAN)-based carbon fibers to be used for fishing rods, golf clubs, tennis rackets and so on. In 1976, when oil prices soared, Boeing used carbon fibers in airplanes for the first time. Today, the materials reduce the weight of airplanes currently being produced by 30 percent. Demand for carbon fibers for airplanes is expected to continue growing.
Carbon fibers are a type of fiber with more than 90 percent carbon content that are made by heating precursors of organic fibers such as rayon, PAN and pitch. They're one-fifth the weight of steel but ten times stronger, so carbon fibers are appropriate for use in extreme environments. Therefore, the aerospace, defense, and many other industries are interested in them. Carbon fibers are basic composite materials that are strong and light and can play an important role in raising the competitiveness of Korea’s key industries.
Demand for the fibers is expanding now, 40 years after the first commercialization in the early 1970s. Today the fibers are used in various industries, such as wind power generation and automobiles. However, the market will be centered around supply rather than demand for a while, thanks to entry barriers caused by technological limitations.
The size of the global carbon fibers market grew from 8,600 tons in 1995 and 31,500 tons in 2010 to 40,700 tons in 2012. It is expected to reach 70,000 tons and 140,000 tons in 2015 and 2020, respectively. The share of aerospace is expected to increase steadily, and that of industry materials is predicted to rise more rapidly. However, with carbon fibers for the aerospace sector being mostly dominated by Japanese companies, market growth will be focused more on general industries.
Among general industries, the use of carbon fibers in the wind power generation industry is likely to grow most significantly. As a result, this market is expected to grow 4 to 5 times in size over the next decade. Carbon fibers will likely be used as materials for auto parts as well, so the automobile industry is paying close attention to them.
The biggest obstacle in adopting carbon fiber composites is their high prices. They are expensive because production is still a mostly manual, not automated, process. This means that once automation is achieved, carbon fiber composites will be used in not only high-end sports cars, but in a wider range of vehicles. Since the late 1970s, several carbon fiber companies in Europe, the United States and Japan have gone bankrupt or been acquired by their rivals. As a result, there are few survivors.
But with the growth potential of carbon fibers globally recognized recently, an increasing number of companies from emerging countries are attempting to enter the market. In Korea, Taekwang Industries started commercial production in March of 2012 for the first time. Taekwang Industries is the only local business equipped with vertical integration connecting propylene (main raw material for AN) → AN (main raw materials for precursors) → precursor processing (core technology of carbon fibers) → carbon fibers. The company has production facilities in Ulsan with an annual production capacity of 3,000 tons of precursors and 1,500 tons of carbon fibers and has a plan to increase the capacity two to three fold. Toray Advanced Materials Korea, an affiliate of a Japanese company, plans to produce 2,200 tons of carbon fibers in January in its factories in Gumi and export them to the United States and China. The company also has a plan to build a second factory with a production capacity of 2,500 tons, with the goal of beginning production in March of 2014. As a result, Toray will be the largest carbon fiber producer in Korea, with its capacity amounting to a total of 4,700 tons.
Hyosung will also invest KRW 1.2 trillion (USD 1.1 billion) by 2020 in constructing carbon fiber production facilities of 17,000- ton capacity, and the construction (May 2013) of factories in Jeonju with 2,000 tons of annual capacity will mark the beginning of this project. The company is now strengthening its marketing efforts in advanced markets for carbon fiber composites such as the United States and Europe. In December of 2012, SK Chemicals established a joint venture with Japan’s Mitsubishi Rayon to forge a strategic partnership for carbon fiber business (production of thick prepregs for wind turbine blades). Other local players including Kolon and POSCO have reportedly started research and development as well. As companies from India, Russia and the Middle East are expected to enter the carbon fiber market, global competition will also grow fiercer.
However, the competition is not yet balanced, as latecomers are specializing in wind power generation, civil engineering or sports, while top-tier counterparts are mostly specializing in the aerospace sector. To avoid excessive competition with top-tier players and identify niche markets, Korean companies are founding carbon valleys to develop application technologies and large tow carbon fibers for automobiles and carrying out joint civilian- military projects to develop high-performance composite fibers. In particular, the Ministry of Trade, Industry and Energy has recently been leading initiatives to access the high value added markets. As a part of these efforts, the Ministry selected a “project to develop ultra-high strength composite materials” as one subject to a government-funded preliminary feasibility test. It is currently under economic evaluation by the Ministry of Strategy and Finance.
Many global industries are paying attention to trends in the carbon fiber industry. Recent news about Samsung Petrochemical and Apple’s steps related to carbon fibers surprised the world. In June, Samsung Petrochemical unveiled its plan to launch a carbon fiber business by selling products made by SGL (Germany) based on a partnership with SGL. Apple plans to make its iPhone 6 lighter by using carbon fibers for its body. SGL is actively targeting the high value added market that is mostly dominated by Japanese players.
Japanese companies are producing the largest volume of carbon fibers in the world, but they lag behind their European or U.S. counterparts in terms of practicality. Large global automakers including GM, Honda and Toyota are developing materials and reservoirs for the storage of hydrogen, with the goal of commercializing hydrogen fuel cell vehicles by 2015. In Korea, Hyundai and Kia are reportedly monitoring 100 vehicles to produce 10,000 vehicles by 2015.
Carbon fibers are “dream materials” that definitely have a bright future. There are obstacles, including mass production difficulties and high prices. However, once these problems are addressed, the market will grow explosively and open a new chapter in the history of new materials.
