Hyosung Advanced Materials accelerates its 5,000-ton carbon fiber expansion plan in China’s Jiangsu province

Researcher Yoon Jae-seong from Hana Financial Investment stated, “Hyosung Advanced Materials has accelerated its carbon fiber expansion plan, moving it up from 14,000 tons by 2025 to 14,000 tons by 2024, with production expected to reach 9,000 tons in the second quarter, 11,500 tons in the first quarter of 2024, and eventually reaching 14,000 tons in the second quarter of 2024.”

Yoon further explained, “The future plans for expansion are also being brought forward by one year, with targets of 9,000 tons in 2023, 14,000 tons in 2024, and 16,500 tons in 2025.” He mentioned, “There are no concerns regarding sales as this expansion is driven by increased customer demand and pre-sales contracts. The growing pre-orders for carbon fiber from customers prove that the demand for eco-friendly markets and carbon fiber are moving together.”

He added, “In particular, while Hyosung Advanced Materials’ carbon fiber has been experiencing steady growth in sales of high pressure containers such as hydrogen/CNG, recent sales of insulation materials for polysilicon/ingot growth furnaces have also increased significantly.”

He further stated, “Previously, ceramics were primarily used as insulation materials for polysilicon/ingot growth furnaces, but due to their short replacement cycles, carbon fiber has recently been replacing them. Moreover, carbon fiber is predominantly used in newly added expansion facilities.”

Yoon continued, “In other words, with the addition of replacement volumes and newly added expansion volumes, carbon fiber is rapidly increasing its penetration rate in the Chinese solar market.” He also mentioned, “For reference, China’s polysilicon production capacity is expected to increase significantly from 850,000 tons in 2022 to 1.34 million tons in 2023 and 1.91 million tons in 2024.”

He stated, “Within the solar value chain, the relative competition intensity is low for carbon fiber players compared to polysilicon, which is expected to result in high profitability. As a result, the operating profit for carbon fiber is projected to increase by about 2 times compared to 2022, and its share in the company’s total operating profit is expected to expand significantly from 8% in 2022 to 18% in 2024.”

Yoon speculated, “The growth potential of carbon fiber is expected to align with the government’s long-term roadmap for aerospace and defense technological advancements.”

He estimated, “Entering the market for T-1000 grade carbon fiber, where the minimum sales price is at least 10 times higher than the universal grade developed as a national project, is anticipated.”

He stated, “Furthermore, T-1000 grade carbon fiber can be extensively utilized in the aerospace and defense industries, including aircraft structures and components, as well as satellites.” He added, “Currently, there are very few companies that possess T-1000 grade technology, and most Chinese companies are limited to mass-producing universal grade products due to technological limitations. This puts Hyosung Advanced Materials in a favorable position, free from competition with Chinese companies.”

He further mentioned, “In particular, high-performance carbon fiber used in the defense sector is classified as a strategic material, subject to government restrictions on both exports and imports. In South Korea, Hyosung Advanced Materials is the only production company.”

Yoon concluded, “Considering the market’s growth potential and the company’s intent to expand its market share, it is not possible to exclude the possibility of additional expansion beyond the previously announced target of 24,000 tons per year by 2028.”