Development Prospects of China's Carbon Fiber Industry in 2011
By Li Shun, CNCIC

Development Status in 2010

1. Both supply and demand were vigorous. The industry may enter a "balanced" era

In the wave of the global financial crisis happening two years ago, the carbon fiber industry was not spared. When the 2009 global economy fell into a downturn, a lot of carbon fiber manufacturers slowed down their paces, taking measures to suspend the expansion of their capacity. Since early 2010, the economic situation has gradually improved, and the global carbon fiber market has also quickly recovered. As the production of carbon fiber is gradually marching toward low costs and its downstream demand grows rapidly, the current oversupply will gradually disappear in the next few years.
   There are a total of nine polyacrylonitrile-based carbon fiber (PAN-CF) producers in the world outside the Chinese mainland, including: Japan's Toray Group (17 900 t/a. Note: total capacity, hereafter the same), Toho Tenax Group (13 500 t/a), Mitsubishi Rayon Group (8 100 t/a), the United States' Hexcel (7 000t/a), Cytec (4 000 t/a), ZOLTEK Group (17 000 t/a), Germany's SGL Group (7 000 t/a), Chinese Taiwan's Formosa Plastics Group (7 450 t/a) and Turkey's AKSA (1 500 t/a). In the Chinese mainland, as of the end of 2010, there were more than 30 PAN-CF units that had been built or were under construction, including 4-5 kiloton-level units that have been built. Among them, the largest producers are Lianyungang-based Zhongfu Shenying Carbon Fiber Co., Ltd. and Weihai-based Tuozhan Fiber Co., Ltd., each having a capacity of 2 000 t/a.
   In the first 11 months of 2010, China's import and export volumes of carbon fiber (Customs Code: 68159920) reached 2 230.2 tons and 344 tons, up 93.5% and 67.6% year on year, respectively; and China's import and export volumes of carbon cloth (Customs code: 68159931) were 2 051.0 tons and 178.9 tons, up 70.8% and 70.9%, respectively, showing a rapid growth trend.

2. Emerging industries have good development opportunities due to the needs of the national strategy

In October 2010, "The State Council's Decision on Accelerating the Cultivation and Development of Strategic New Industries" (hereafter referred to as "the Decision") was formally released. The new materials industry is listed as one of the strategic new industries. The Decision clearly points out that in the future, China should "vigorously enhance its development level in high-performance fibers and composites, such as carbon fiber, aramid fiber and ultra-high molecular weight polyethylene fiber". For the first time from the national strategic level, it gives a clear development direction and a high status to high-performance fiber and composite materials industries. In addition, as a new material, carbon fiber can provide basic support to the development of new energy and other new industries. So, in the future, this area will certainly get more policy support.

3. Local governments actively promote the development of the carbon fiber industry, and new carbon fiber technologies and products emerge frequently

In the favorable macro-policy context, many have seen huge business opportunities in the carbon fiber industry and have planned and built carbon fiber and composite materials industrial parks.
   Relying on its inherent advantages in developing the carbon fiber industry, Jilin City has successfully won the title of "National Carbon Fiber Industrial Base". This base has worked out a "three-step" plan, trying to create China's first "Carbon Valley" that covers protofilament, carbon filament and carbon fiber composite materials and their applications. Driven by this rather symbolic event, people in many other places, such as Danyang in Jiangsu Province, Baotou in Inner Mongolia, Fushun in Liaoning Province and Lianyungang in Jiangsu Province, have set up industrial bases mainly for the development and production of carbon fiber and composite materials. As a result, new materials industrial bases have emerged everywhere in China.
   In the aspect of the research and development (R & D) of carbon fiber technology and products, the high-performance PAN-CF protofilament polymerization process developed by Harbin Tianshun Chemical Technology Development Co., Ltd. has passed the evaluation of experts. It will further break the bottleneck that restricts the production of carbon fiber.
   In 2010, Dongguan, Xiamen and Weihai cities further strengthened their status as China's PAN-CF downstream product manufacturing centers. In addition to traditional sports and leisure products, new PNA-CF products are also emerging constantly: China's first high-strength carbon fiber ship was successfully developed by Qingdao Beihai Shipbuilding Heavy Industry Co., Ltd. (BSIC) in early 2010; China's first carbon fiber light-type sports aircraft with completely independent intellectual property rights came off an assembly line in Zhuhai in November; a carbon fiber electric vehicle, CAS-CFEV, developed by the Chinese Academy of Sciences (CAS) independently debuted at the China International Industry Fair in November; the carbon fiber bicycle frame developed by Lianyungang-based Zhongfu Shenying Carbon Fiber Co., Ltd. successfully passed the testing and certification of TUV European standards, and the company's one-million-bicycle production project is being actively promoted; and Harbin Fiber Reinforced Plastic Institute has successful developed a carbon composite lens hood, which has been successfully applied to aerospace remote sensing camera ...


Become Mature in 2011

1. Policy will shift to support the R&D of carbon fiber technology and products

During the Eleventh Five-Year Period (2006-2010), in order to promote the industrialization of domestic carbon fiber technologies and products, the National Development and Reform Commission (NDRC) supported some carbon fiber production projects with national funding. As carbon fiber production projects have now been built everywhere in China and state-owned and private capital are constantly invested in the industry, during the Twelfth Five-Year Period (2011-2015) NDRC will shift to support carbon fiber R&D projects instead of production projects. By guiding the development of downstream industries, the Chinese government tries to lead the industry into a healthy development cycle.

2. Large state-owned enterprises enter the carbon fiber industry, and the competition situation of the industry will become clearer

It is undeniable that along with the development of the carbon fiber industry, many state-owned and private enterprises have invested and been involved in this field. As this industry is technology-intensive and has a high investment threshold and its market development is still immature, even if it has considerable market potential, most carbon fiber producers have constantly been losing money in recent years, making their capital chain strained. In order to survive, on the one hand, they try to get financial support from their parent companies or other businesses, and on the other hand, they continue to develop downstream carbon fiber composite materials to expand their market shares. If they stop production, they will be unable to improve their technology and their previous huge investment will be wasted. In this context, some large companies are looking for strategic investors, but small and medium enterprises (SMEs) which lack technology and capital are about to usher in a freezing winter.
   On May 31, 2010, it was reported that AVIC General Aircraft Company intends to invest capital in Weihai Tuozhan Fiber Co., Ltd. and obtains the controlling stake of the latter company. Both sides have si