Carbon fiber manufacturers determined to carve out a niche

In early 2011, there was a rumor in the IT industry that Apple might hire Kestrel Bicycles CEO Kevin Kenney. The Philadelphia-based company was known for developing world’s first all-carbon frame in 1986.

The rumor turned out to be true. Apple hired Kenney in April 2011 as a senior composites engineer.

There was wide speculation of the imminent debut of a carbon fiber iPhone. Although that hasn’t happened yet, Apple acquired a patent for a carbon fiber molding process.

The Apple case is one example of the growing attention to carbon fiber. Because it is a fourth the weight of steel and 10 times stronger, carbon fiber has been widely seen as a material of the future.

With Japan’s Toray recently signing a 1 trillion yen ($8.23 billion) deal with Boeing to supply carbon fiber, questions arise about where Korean companies stands in the carbon fiber market.

Bang Yoon-hyuk, who heads Hyosung’s plant in Jeonju, North Jeolla, where 2,000 tons of carbon fiber are produced a year, says Korean companies should compete in the market.

“Hyosung plans to invest 1.2 trillion won [$1 billion] by 2020 and expand the capacity to 14,000 tons,” said Bang. “We can fully compete with Japanese and American companies.”

Although Korean companies have paid attention to carbon fibers since the 1980s, the 50-year-old, who has a doctorate from Pusan National University, laments the impact of the Asian financial crisis in late 1990s.

In the case of Hyosung, Bang said it was 2007 when he was given the order to form a team and develop high-strength carbon fibers. After four years of research, Hyosung became the first Korean company with its own technology for high quality carbon fibers. With cooperation from the provincial government, the company is building a carbon fiber industry cluster.

Lee In-ho, who leads Taekwang Industrial’s new business department, agrees that Korean companies can succeed in carbon fiber market. Taekwang Industrial was the first local company to commercially produce carbon fiber starting in March 2012. The company now produces 1,500 tons a year.

There are various types of carbon fibers, the most common being made from acrylonitrile that is extracted from propylene, a petrochemical product. The acrylonitrile is carbonized through 1,000-degree heating process that produces an intermediate material called “pre-preg.” Carbon fiber is made from this “pre-preg” after molding and heating.

Experts say Korean companies’ competitiveness is at a high level in terms of making intermediate materials to produce carbon fiber. SK Chemical, the affiliate of SK Group, entered this intermediate material market in the 1980s and has worked with Japan’s Mitsubishi Rayon since 2012.

“We produce intermediate materials in Ulsan and Qingdao, China,” said a company spokesman. “In particular, we have a 20 percent share of the sporting-leisure goods market in Asia.”

According to data from Jeonbuk Technopark, an industrial institution in Jeonju, North Jeolla, the global carbon fiber market is expected to grow to 5.3 trillion won by 2020. But the big three Japanese companies accounted for nearly 90 percent of the world’s carbon fiber supply as of 2013.

Japan’s Toray produces 18,900 tons, followed by Toho Tenax (13,900 tons) and Mitsubishi Rayon (10,850 tons). Korea’s Hyosung and Taekwang combined to produce 3,500 tons of carbon fiber a year.

Lee said that since carbon fiber in in the aviation market is supplied by Toray, there is not much space for local companies to enter, but that the automobile market is still worth a try. He claimed that the carbon fiber used in aircraft is of the highest quality, but the carbon fiber for automobiles can be produced using local technology.

Since Hyundai Motor and Kia Motors are based in Korea, carbon fiber produced in collaboration with these automakers could enlarge the market and improve technology. There are already successful signs. In March, Hyundai introduced its Intrado concept vehicle with a frame that uses carbon fiber produced by Hyosung.

“There is still enough room for local carbon fiber to enter the shipbuilding industry, as Korea is the No.1 country in the world in shipbuilding,” said Hyosung’s Bang.

While Korean carbon fiber producers are eager to work with other companies, market leader Toray is moving fast. In addition to securing the megadeal with Boeing, the Japanese company is eyeing North America. The company is trying to supply carbon fiber for construction of shale gas-related facilities.

In automobiles, Toray collaborated with Germany’s Daimler and last year its products were used in some Mercedes-Benz models.

Industry insiders said that for Korean companies, the Chinese market presents a huge opportunity with the two countries recently agreeing to a free trade agreement.

“If we can get no tariffs on sporting-leisure goods in high demand in China, I think Korean companies can secure enough competitiveness to compete.”

BY KIM HYUN-YE [kjoo@joongang.co.kr]