Ribbon and String
1. Within the first 12-months, similar to the history of the carbon fiber market creation, target the markets that turn over the quickest and have a low level of “ease to entry”. These industries have low criticality, easy performance testing and low change over of manufacturing equipment. The products listed below have time-to-market of months. The best industries/applications for Carbon Nanotube (CNT) composites are the industries where carbon fiber composites are already accepted and used. These fields of use include:
Table 1: Initial Fields of Use Golf club Shafts Tennis Racquets Hockey sticks Bats Skateboards Skis Ski poles Ski boots Non-critical airplane components Non-critical auto components Sailboats and riggings Protective clothing (helmets, pads) Bicycle Frames Laptop cases Canoes Kayaks and Paddles Fishing poles Fishing line Surfboards Sails Skates
2. Enter the markets that will require a longer development timeline due to extensive testing, tighter cost parameters and manufacturing limits. A prime example is in the construction industry. Steel is cheap by the ton and certified in building codes, composites are neither. These markets include:
Table 2: Future Fields of Use Auto bodies Fiber reinforced concrete Gliders Auto frames Composite construction panels Satellite structures Airplane bodies and wings Specialized construction beams Airplane structures Military applications Rail systems Body armor/protective wear
Price Comparison One major consideration is the current and expected cost of carbon nanotubes, the basic raw material required in our technology. Historically, carbon nanotubes have been priced at anywhere from $50/gram to $1000/gram (about $1300/ounce to $27,000/ounce). This is too much for realistic commercialization. However, during the last decade production procedures have been developed that greatly reduce this cost. Mitsui Corporation in Japan is now producing carbon nanotubes and plans to sell them at $50/pound. The factory production rate is approximately 10 tons per month.
Table 9 : Competitive Fiber Cost Comparison Reinforcing Fiber Cost per kg Comment Carbon Nanotubes (CNT) < $100 200-300 GPa, elastic, thermally and electrically conductive E-glass $2 Insulator, low strength C-glass $2 Insulator, low strength S-glass $15 Insulator, low strength Carbon HS $55 High strength: 5 GPa, conductive Carbon IM $77 High strength: 7 GPa, conductive Carbon UHM $330 High strength, conductive Arimid LM $44 Insulator, good strength Arimid HM $55 Insulator, good strength Arimid UHM $66 Insulator, good strength
Table 10: Matrix Fiber Used with CNT to create a new Composite Matrix Cost per kg Comment Epoxy $4 High performance, good characteristics Polyester $4 Easy to use, health issues Vinylester $4 High performance, good characteristics Polyamide-imides $77 High performance, and good mechanical properties PEEK $99 High performance and easy to produce Polyethylene $15 High performance and easy to produce
Fig. III. 4: Percentage distribution of carbon fiber by market in terms of million lbs.
In terms of dollars, 45.4% of total carbon fiber shipment ($ Mil.) is consumed in industrial market, while Aerospace and sporting goods consumed 38.8% and 15.8% respectively as shown in figure III.5.
Fig. III.5: Percentage distribution of carbon fiber by market in terms of million $. Trends Figure III.6 shows the revenue generated by various types of carbon fiber in different years. The highest revenue generated by the total carbon fiber industry was $ 799.75 Mil in 1999. The revenue for 2003 was less, $766.47 million however it is a growth of 4.4% over 2002.
In 2003, the growth rate for PAN based carbon fiber was 13.2%. From 1996 to 2003 it grows on an average 10.1% annually. In terms of dollar shipment, in 2003 the growth rate for PAN based carbon fiber was 5.3%. From 1996 to 2003 it grows on an average 0.3% annually as shown in figures 1.16 and 1.17. In 2003, the growth rate for pitch based carbon fiber was 5.9%. From 1996 to 2003 it grew on an average of 8.1% annually. In terms of dollar shipments, the growth rate for pitch based carbon fiber was 1.5% in 2003. From 1996 to 2003 the growth rate was 1.4% as shown in figure III.6.
Fig. III.6: Trend in carbon fiber shipments in terms of million $.
The carbon fiber market grew from 27.5 million lbs in 1996 to 53.4 million lbs in 2003 as shown in figure III.7. The growth is about 2 times in last 7 years. In the last 3 years, the carbon fiber market grew from 40.71 million lbs in 2000 to 53.37 million lbs in 2003.
Fig. III.7: Trend in carbon fiber shipments in terms of million lbs.
Figure III.8 shows the growth trend and the demand by market in different years for carbon fiber. The highest average growth in last 7 years is found in industrial market (about 17% annually) and lowest growth is found in sporting goods (about 2.1% annually). The average annual growth rate in aerospace was 8.1% during last 7 years (1996 to 2003). Table 10 beautifully summarizes the trend in carbon fiber market in terms of market size as well as average price drop during 1996 to 2003.
Fig. III.8: Total carbon fiber demand by market (1996-2003) in terms of million lbs shipments. Table 10: Price ($ / lb) and market trend in carbon fiber market.
1996 2000 % Change between 1996 and 2000 2003 % Change between 2000 and 2003 Total Shipment ($ Mil.) 720.2 783.5 6.4% 766.6 -1.9% Shipment (Mil. lbs) 29.1 41.9 44.0% 53.4 27.4% Av. Price ($ / lb) 25.3 18.7 -26.1% 14.4 -23.0%
Industrial Shipment ($ Mil.) 223.0 259.4 16.3% 348.2 34.2% Shipment (Mil. lbs) 11.5 18.8 63.5% 29.7 58.0% Av. Price ($ / lb) 19.4 13.8 -28.9% 11.7 -15.2%
Aerospace Shipment ($ Mil.) 300.9 368.2 22.4% 297.6 -19.2% Shipment (Mil. lbs) 5.8 10.0 72.4% 10.0 0.0% Av. Price ($ / lb) 51.9 36.8 -29.1% 29.8 -19.0%
Sporting goods Shipment ($ Mil.) 196.4 145.4 -26.0% 120.7 -17.0% Shipment (Mil. lbs) 11.8 13.1 11.0% 13.7 4.6% Av. Price ($ / lb) 16.6 11.1 -33.1% 8.8 -20.7%
Forecasts Figures III.9 and III.10 show the forecast of carbon fiber for the next 6 years. Worldwide total carbon fiber annual shipments in million dollars is forecast at 3.58% for the next 6 years till 2010. Figure III.9 shows the forecast for different market till 2010. The growth rate in industrial, aerospace and sporting goods is expected 15.6%, 10.0% and 4.0% respectively. The highest growth is expected in industrial segments followed by aerospace and sporting goods. The growth in industrial is driven by fuel cell, CNG tank, roller, civil structures and compound. The growth in aerospace is driven by 7E7 and A380 which will consume 50% and 22% composites of their structural weight. Figure III.12 shows the percentage distribution and total shipment (million lbs) of carbon fiber by region in 2010. The growth rate in North America, Europe and Asia is expected at 11.6%, 14.3% and 11.3% respectively. The highest growth is expected in Europe due to the highest growth rate in industrial segments.
Fig. III.9: Forecast of carbon fiber in terms of million lbs shipments (2003-2010).
Fig. III.10: Forecast for carbon fiber shipments in terms of million $.
Fig. III.11: Distribution of carbon fiber in different market in 2003 & 2010 in terms of million lbs shipment.
Fig. III.12: Distribution of carbon fiber by region in 2003 and 2010 in terms of million lbs shipment.
Fig. III.13: Average percentage growth rate for important segment for next 6 years.
The following Table 11 summarizes the forecast trend in carbon fiber market in terms of price drop as well as in terms of market size.
Table 11: Price ($/lb) and market forecast for carbon fiber industry. 2003 2010 % Change over 2003 Total Shipment ($ Mil.) 766.6 980.4 27.9% Shipment (Mil. lbs) 53.4 119.4 126.8% Av. Price ($ / lb) 14.4 8.1 -43.8%
Industrial Shipment ($ Mil.) 348.2 502.2 44.2% Shipment (Mil. lbs) 29.7 83.7 181.8% Av. Price ($ / lb) 11.7 6 -48.7%
Aerospace Shipment ($ Mil.) 297.6 388 30.4% Shipment (Mil. lbs) 10.0 19.4 94.0% Av. Price ($ / lb) 29.8 20 -32.9%
Sporting goods Shipment ($ Mil.) 120.7 90.15 -25.3% Shipment (Mil. lbs) 13.7 18.03 31.6% Av. Price ($ / lb) 8.8 5 -43.2%
Some of the forecasts in key applications are summarized below. • Carbon fiber shipments will more than double in commercial aerospace market, roller and CNG tank market as shown in table 8.6. • Carbon fiber shipment will grow 4 times in wind energy market in next 6 years. The annual consumption in wind energy market would reach 4.1 million lbs in 2010 (growth rate 20%). The fuel cell market would consume more than 11 times of carbon fiber as shown in table 12.
Table 12: Growth opportunities in key applications. Application 2003 shipment (Mil lbs) 2010 shipment (Mil lbs)
Wind Fuel cell Roller CNG tank Commercial aerospace Golf 1 0.55 4.19 7 6.1 7.39 4.1 6.35 9.20 14.5 14.6 10.9
Carbon fiber market has huge potential for growth in the automotive industry. For large scale use of carbon fiber in automotive applications, carbon fiber price needs to drop to $2-$3 per lb. With the current pricing of $7-$10 per lb, carbon fiber is used in high performance and racing cars. About 600,000 lbs of carbon fiber were used in the automotive industry (high performance cars) in 2003 and this is expected to grow at a rate of about 8% annually till 2010. If one pound of carbon fiber is used per car in the global car market, then the volume for carbon fiber would be 35 million lbs in global automotive industry. On average, 21.5 lbs of thermoset composites (glass reinforced) are used per vehicle in the U.S., which is about 0.5-1% of the total weight of the vehicle.
Although the automotive application possibilities are numerous, the wind energy and fuel cell markets are expected to grow at rates of over 24% and 51% respectively till 2010. It is estimated that about 7500 lbs of carbon fiber will be used in a typical 4 MW turbine by 2010.
The jumbo jet A380 from Airbus is expected to enter the market in 2006 and the dream liner 7E7 from Boeing is expected to enter service in 2008. The production of the A380 will consume about 1.4 million lbs of carbon fiber in 2006 assuming 18 A380 aircrafts produced in 2006. The production of the 7E7 will consume 2.3 million lbs of carbon fiber in 2008 assuming 40 7E7 aircrafts made in 2008. These two airplane projects will be responsible for the growth rate of the commercial aerospace market projected to be more than 13.3% annually. In 2003, commercial aerospace market segment consumed 6.1 million lbs of carbon fiber and will consume about 14.6 million lbs in 2010. Figure III.14 below illustrates this growth trend.
Fig. III.14: Growth of Composites in Commercial Aviation.
CDI expects that there will be mergers and acquisitions in carbon fiber industry in next 10 years. The total number current 15 players may get reduced to about 10 as the industry become more mature. However, there may be emergence of carbon fiber manufacturer in China, the way it did for fiberglass. Currently in China, there are more than 100 glass fiber manufacturers. Global glass fiber industry is more than 75 times bigger than carbon fiber and has 7 major suppliers except in China.
Profitability of carbon fiber business There are several ways to ensure sustainable growth and profitability. A lot depends on how quick innovation takes place in the industry in the areas of process improvements, material cost reduction and reduction in the overall cost of the final product. The key drivers for a sustainable industry are price stability, newer and larger applications, access to newer markets, continuous material cost reduction without losing margin and proper capacity utilization. High volume industries like the automobile industry are driven by price and quality and this will in turn increase the carbon fiber consumption leading to acceptance in a wider variety of industries.
Carbon fiber industry can transform its fortunes by following three means. • Focusing on the mass production system. Economies of scale can benefit the carbon fiber industry. This can be achieved by finding applications with higher volume. Another possibility is by performing mergers / acquisitions. In the global carbon fiber industry, top 5 companies represent 70% of the market. Rest 30% (15 million lbs) is captured by 10 companies, which represent huge potential for mergers / acquisitions. Glass fiber industry is 75 times larger than carbon fiber industry and has 7 major manufacturers (except manufacturers in China).
• Process innovation and continuous material cost reduction without losing margin.
• Identification of large applications. If automotive industry uses 1 lb per car then the carbon fiber demand in global automotive industry would be 35 million lbs per year. Automotive industry is looking for a price of $2-$3 / lb for carbon fiber in order to compete with steel and other materials based on performance.
Profitability of the industry can only be guaranteed if the industry embraces innovation, continuous cost reduction and big leaps in process improvements. The long term viability of the industry can be maintained by working with the various segment leaders in the aerospace, automotive and sporting goods segments and introducing more and more applications and products. This will in turn increase the consumption and lead to lower prices and will spur the growth of other applications and products.
The potential for growth is rather unlimited as the carbon fiber can replace metals in applications where performance, lower weight and strength are required. The carbon fiber industry has been characterized by a lack luster growth for many years. The overall revenue generated by the companies is showing growth albeit at a much slower pace than the quantity in terms of million lbs. Steady price decline over the years (23% in last 3 years) has lead to declining profitability and lack of much needed investments to improve the affordability of the fibers.
The increasing adoption of carbon fiber in newer applications and the price attractiveness in certain industries insures the survivability of the industry. The entire industry provides a huge potential for growth considering the several different applications that carbon fiber can be used. Several new applications like wind energy, fuel cells, CNG tanks, new airplane designs show tremendous potential for growth. This can only happen when the price per lb goes down and process improvements take place. The good news however is that the industry is working hard to reduce costs and hence the average price/lb. The average price has come down by (76% drop in last 7 years) over the last few years. The price drops needs to be achieved without losing the margin to maintain the profitability of the business.
The dollar and gross margin flow chart in various nodes of value chain is shown in Fig. III.15 for 2003. Gross profit and gross margin is calculated as follows. Gross profit = Net sales – cost of sales Gross margin = Gross profit / Net sales The end market for carbon composite products is estimated at $7.67 billion as shown in following figure. Gross profit at various nodes of the value chain is shown in Figs.III.16 and III.17. In the overall value chain, carbon fiber material suppliers are creating only 3.4% of total gross profit.
Fig. III.15: Dollar ($) and gross margin flow chart in carbon fiber market in 2003.
Fig. III.16: Percentage distribution of gross profit in various nodes of value chain in 2003.
Fig. III.17: Percentage distribution of gross profit in various nodes of value chain in 2003.
Fig. III.17: Dollar ($) and gross margin flow chart in carbon fiber market in 2010.
Forecast of the NanoComposite Materials Industry
The U.S. market for nanocomposites is expected to increase to 345 million pounds by 2008 and approach eleven billion pounds by 2020, with a value of $37 billion. By that time, nanocomposites are expected to have partially supplanted traditional reinforced plastics in construction applications such as pipe and siding; in motor vehicle parts such as exterior body panels, engine components and interior accessories; in consumer goods such as appliances and sporting goods; in packaging materials for food, beverages and medical equipment; in electronic components; and in high performance applications such as spacecraft and military equipment. The nanoscale materials used in new composites are nearly as diverse as the resins to which they are added and the applications in which they are used. In the short term, most nanomaterials in composites will be smaller scale versions of conventional and well-established materials such as carbon black, silica and clay. However, one of our potential clients has a current program which develops and produces components for commercial aircrafts. In this design they need to go to a high-strength, low-mass material.
Composites are, besides aluminum, the most important materials for aerospace applications. Due to the opportunities they present for weight saving, their share has reached more than 15 % of the structural weight of civil aircraft, and more than 50% of the structural weight of helicopters and fighter aircraft over the last 40 years. In addition to their high mass specific stiffness and strength, the high potential of composites for additional functionality is another reason for their success. Defined anisotropic behavior, the possibility to integrate sensors or actuators, high structural damping, and superior fatigue performance are typical advantages. In addition to the airline manufactures having the highest interest in lightweight design, is of course the space industry. For space applications one kilogram saved can have a value of more than $12,000. Therefore, high modulus carbon fibres are the most important candidates for structural space materials. In addition to their mechanical performance, the low coefficient of thermal expansion of carbon fibre reinforced plastics is highly relevant for satellite applications. (1)