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To cater to the demands of a steadily growing market, driven in particular by the aeronautical and wind energy industries, the leading carbon fibre producers are forced to invest if they want to hold on to their market share. Competition is fierce on this market, which looks set to grow from a little over 30,000 tons in 2007 to more than 50,000 tons by 2012.
(Published on March - April 2008 – JEC Magazine #39)
Akey player on the carbon fibre market, Formosa Plastics Corp. has no intention of resting on its laurels and is investing incessantly in new production capacity.
Today, Formosa Plastics Corp. can lay claim to 10% of the small and regular tow market and is targeting 14% for 2009. According to Formosa Plastics Corp., the main players cornered the following market share in 2007: Toray 35%, Toho Tenax 20%, Mitsubishi 17% and the others 14%.
A group with global dimensions
The history of the Formosa Plastics Group goes back to 1954, the date of its creation. Formosa Plastics Corp., a producer – amongst other things – of carbon fibre, is one of the main companies of this group which, today, encompasses no less than 100 either wholly or partially owned companies.
In 1957, Formosa Plastics Group produced barely 4 tons of PVC resin per day and was the smallest PVC production unit in the world. 50 years later, the Group has become an integrated business, and its activities take in oil refinery, petrochemicals and a broad diversity of products, making it Taiwan’s number one industrial corporation. It employs over 86,000 people worldwide and has an operating revenue of over US$50 billion. With almost 3 million tons produced annually, the Group is also one of the world’s top producers of PVC resin. An important stage to highlight in the Group’s development is the creation from scratch of the Mailiao site. This site, on the western side of the island, is also known by the name: “No. 6 Naphtha Cracking Project.” It is the fruit of a colossal project run in the 1990s, which required the investment of US$17.5 billion and which accommodates on its 2,255 hectares over 60 various production sites.
JEC Composites Magazine: What is driving the carbon market today?
FORMOSA PLASTICS CORPORATION: Nowadays, the carbon fibre market is definitely driven by two industries: aerospace and wind energy. In 2007, the delivery of the first A-380 was a landmark for the composite industry. It not only showed how broadly composite materials are used in aerospace, but it also indicated their potential for wider applications in the future, such as being used to replace traditional metal materials or to achieve specific goals such as better energy efficiency. The superior properties of carbon fibre play an essential role in the composite industry. The success of carbon fibre in primary and secondary aircraft structures has given this material great visibility, thus inspiring various sectors to try it out in many new applications.
In 2008, the first B-787 flight will be another landmark for carbon fibrereinforced plastics. The many applications of carbon fibre in the aerospace industry are definitely driving its long-term development. Wind energy is also boosting the carbon fibre market. According to the Global Wind Energy Council, the new installed capacity reached 20,073 MW in 2007, for a global installed capacity of 94,112 MW. This is a 31% annual growth compared to 2006, and a 27% growth in the global installed capacity. Since 2003, the global installed capacity has been rising more than 20% every year. Furthermore, composite materials have been widely used in wind turbine and blade applications. To meet wind energy production objectives, the trend is to make longer blades and adopt a lighter yet strong enough material. This trend has also resulted in a durably strong demand for carbon fibre.
JCM: How is the carbon sector evolving in the Asia-Pacific region?
F.P.C.: The Chinese wind energy market has experienced a very fast, strong development in 2007. The new installed capacity reached 3,449 MW in 2007, i.e. a 156% growth over China’s existing installed capacity in 2006 (2,604 MW). China’s total installed capacity thus reached 6,050 MW in 2007. The wind energy sector is growing much faster in China than anywhere else in the world. And this growth is set to last: the capacity should hit 10,000 MW by 2010, and 50,000 MW by 2015.
This trend has attracted much attention worldwide. In 2007, many leading manufacturers and system integrators set up business and invested in China. The strong growth of the Chinese wind energy market is due to the strong power demand from the industry, in addition to support from the Chinese government. Thanks to this political support, there are more than 40 domestic companies involved in blade manufacturing in China, and there should be more in the future.
Another important event will influence the carbon fibre market in Asia: the Olympics, which will be held in Beijing in 2008. The Asian composite industry will surely benefit from economic spin-offs generated by the Olympic Games. We believe that the games will enhance the demand for composites, including in the sport goods industry. In fact, Asian manufacturers have expanded their locations to “welcome” this new trend in Asia.
JCM: Which sectors are to be explored in particular?
F.P.C: The Asian market has experienced very attractive growth in the wind energy industry. In 2007, the installed capacity in Asia grew at a faster pace than in the USA. According to the 2007 figures from the Global Wind Energy Council, the installed capacity grew by 8,554 MW in Europe, 5,630 MW in North America (5,244 MW in the USA), and 5,436 MW in Asia. The Asian wind energy capacity reached 16,091 MW, while the North American capacity totalled 18,664 MW (16,818 MW in the USA). This trend explains the growing demand for carbon fibre in Asia. Automotive applications might well be the next step for carbon fibre. Faster processing technologies are developing. Once this technology is fully developed, carbon fibre will not only be broadly used in luxury cars but also in common cars.
JCM: What is your development strategy for FPC?
F.P.C: To adapt to the rapidly growing industrial applications, FPC’s strategy consists in expanding both capacity and variety. An additional capacity of 2,200 MT will be developed in 2008 and another 2,600 MT in 2009, which will enable FPC to meet customer demand.
The rapid growth of the wind energy industry (especially in Asia) tells us to focus on the development of 24K carbon fibre, which is an excellent product for industrial applications.
It was in 1984, under licence from Hitco, that Formosa Plastics Corp. began producing carbon fibre on its Kaohsiung site, in southern Taiwan. In 1986, production levels stood at 100 tons. The following year, the company decided to develop its own PAN precursor. Production subsequently climbed from 100 tons in 1991 to over 700 tons in 1998. In 2002, production was transferred from Kaohsiung to Mailiao. The carbon fibre production capacity then went up, with the new plant, to 1,350 tons. The company had plenty of room still to expand and therefore continued to invest. In 2007, the Group was boosted by 1,100 tons of additional production capacity, with further increases in the pipeline: 2,200 tons in 2008; 2,600 for the start of 2009. This will take the total production capacity from 3,950 tons in 2007 to 6,150 tons in 2008 and 8,750 tons in 2009. The company is not for the moment disclosing details of its investments beyond 2009.
Aside from carbon fibre, the Group also produces 5 other types of fibre: polyester, acrylic, nylon, rayon and spandex. Most of the sales of Formosa Plastics Corp. are generated in the Asia zone, and in China in particular. As it strives to capture 14% of the market by 2009, there can be no doubt that the Group will be looking to extend its sphere of influence in order to achieve its objectives.