Carbon Fiber Industry Research

 

1. Industry review

Carbon fiber diameter is usually 10 microns, and 7-8 strands together are only as thick as a hair, but the tensile strength reaches 4800 MPa (7-9 times that of steel), and can be used at several thousand degrees high temperature. F22/F35 is widely used. Carbon fiber parts have poor repair performance.

 

1.1 Basic Concepts

Table 1: Basic concepts of the industry

CF, Carbon Fiber	Refer to	Carbon fiber (CF) is an inorganic fiber formed by carbonization of organic fiber (viscose-based, asphalt-based, polyacrylonitrile-based fiber, etc.) under high temperature to form a carbon main chain structure. It is an inorganic fiber with a carbon content of more than 90%.
Graphite Fiber	Refer to	Graphite fiber is obtained by graphitizing the corresponding organic precursor fiber at 2000-3000℃ after making carbon fiber. Fibers with a layered hexagonal lattice graphite structure with a graphitized molecular structure and a carbon content of more than 99%
PAN, Polyacrylonitrile	Refer to	Polyacrylonitrile is obtained by free radical polymerization of monomer acrylonitrile
Large Tow	Refer to	A bundle with more than 48,000 strands, i.e. 48K, is a large bundle. The price is relatively cheaper because it can use civilian polyacrylonitrile raw fibers that are freely circulated in the domestic and foreign markets. The civilian market is sufficient. Including 60K, 120K, 360K and 480K, etc.
Small Tow	Refer to	A bundle with less than 48,000 strands is a small bundle, which is more expensive. The reason is that special high-performance raw yarns with extremely high sensitive properties are needed. In the early days, aerospace-grade carbon fibers were mainly 1K, 3K, and 6K, and gradually developed into 12K and 24K.
Tensile Strength	Refer to	Tensile Strength, the stress at which the material produces the maximum uniform plastic deformation (in the tensile test, the maximum tensile stress to which the specimen is subjected until it breaks is the tensile strength, and the result is expressed in MPa)
Tensile Modulus	Refer to	Tensile modulus (TensileModulus) refers to the elasticity of the material when stretched. Its value is the ratio of the force required to stretch the material per unit length along the central axis to its cross-sectional area
T Value	Refer to	Indicates the tensile strength of carbon fiber, including T300, T700, T800, T1000, etc. The larger the number, the higher the strength
M Value	Refer to	Indicates carbon fiber with high modulus performance, such as M40, M60, etc
CV Value	Refer to	The coefficient of variation of fineness is a key indicator for measuring the stability of carbon fiber quality
Zhongjian Technology carbon fiber product brand	Refer to	“ZT7” indicates higher than T700 grade, “ZT8” indicates T800 grade, and “ZT9” indicates T1000/T1100 grade; M indicates “graphite fiber”, “40, 55, 60” indicates high and low tensile modulus; “3K, 6K, 12K” refers to the specifications of the product

 

Organic materials refer to hydrocarbons, which are composed of elements such as oxygen, carbon, hydrogen, and nitrogen. They include rubber, plastics, coatings, fibers, adhesives, and other fields, and can partially replace metal and non-metal materials such as wood and paint. Inorganic materials refer to materials made from mineral raw materials, including aluminates, silicates, borides, carbides, halides, and other raw materials.

 

Organic fiber. Fibers made from organic polymers or fibers made from natural polymers through chemical treatment. Such as viscose, nylon, polyester, and aramid.

 

1.2 Industrial Chain

 

1.2.1 Definition of Carbon Fiber

 

Carbon Fiber (CF) is an inorganic fiber formed by carbonization of organic fibers (viscose-based, asphalt-based, polyacrylonitrile-based fibers, etc.) under high temperature to form a carbon main chain structure. It is an inorganic fiber with a carbon content of more than 90%.

 

High-Performance Carbon Fiber has a series of excellent properties that cannot be replaced by other materials, such as light weight, high strength, high modulus, electrical conductivity, thermal conductivity, high temperature resistance, corrosion resistance, erosion and sputtering resistance, good designability, and composability. It is an indispensable strategic emerging material for cutting-edge weapons and equipment such as rockets, satellites, missiles, fighters and ships. Therefore, it has long been monopolized and embargoed by developed countries led by the United States and Japan.

 

The main performance characteristics of carbon fiber are as follows:

 

1.2.2 Carbon Fiber Classification

 

Carbon fiber can be classified according to different dimensions such as precursor type, morphology, and mechanical properties. The specific classification methods are as follows:

 

1. Classification by precursor type: Carbon fiber precursors mainly include polyacrylonitrile (PAN) precursor, asphalt fiber, and viscose fiber. The carbon fibers produced from these three types of precursors are called polyacrylonitrile (PAN)-based carbon fiber, asphalt-based carbon fiber, and viscose-based carbon fiber.

 

Among them, polyacrylonitrile (PAN)-based carbon fiber occupies the mainstream position, with an output accounting for more than 90% of the total carbon fiber, and viscose-based carbon fiber is less than 1%. The market share of each type of carbon fiber is as follows:

Figure 1: Market share of each type of carbon fiber

 

At present, PAN-based carbon fiber accounts for more than 90% of the total, and carbon fiber generally refers to PAN-based carbon fiber. Since polyacrylonitrile (PAN)-based carbon fiber is currently the mainstream of carbon fiber, the following focuses on the analysis of polyacrylonitrile (PAN)-based carbon fiber.

 

PAN-based carbon fiber precursor is the key technology for producing high-quality carbon fiber. The quality defects of the precursor, such as surface holes, deposition, scratches, and adhesion between single fibers, are difficult to eliminate in subsequent processing, resulting in a decrease in the mechanical properties of carbon fiber.

 

The production process of PAN-based carbon fiber precursor is to polymerize acrylonitrile monomer into spinning solution, and then spin it into shape. According to the selection of spinning solvent, the continuity of the polymerization process, the process method used for spinning, etc., the preparation of precursor can be divided into different process types: according to the spinning solvent, including DMSO (dimethyl sulfoxide), DMAc (N, N-dimethylacetamide), NaSCN (sodium thiocyanate) and other different solvent categories; according to the continuity of the polymerization process, it can be divided into one-step method and two-step method; according to the spinning process, it can be divided into wet method and dry-jet wet spinning method. Among them, the selection and control of spinning process are the key factors for the stable production of high-performance precursors.

 

The dry-jet wet spinning process effectively combines dry and wet methods, and has obvious advantages in spinning speed and precursor performance.

 

Compared with wet spinning, the dry-jet wet spinning spinneret is not directly immersed in the coagulation bath, and the nozzle temperature can be independently and accurately controlled. The spinning solution is ejected from the spinneret and passes through a few millimeters of air layer before entering the coagulation bath. The spinning solution undergoes a certain stretching flow in the air layer, which not only increases the spinning speed, but also facilitates the orientation of the macromolecular chain.

 

The precursor structure is more uniform and dense than directly entering the coagulation bath, and the cross-section is also easier to be round, thereby improving the mechanical properties.

 

Due to the high technical difficulty of dry-jet wet spinning, only a small number of companies have mastered the production technology and formed mature carbon fiber products. Zhongfu Shenying was the first in China to break through the key technology of dry-jet wet spinning in 2013. At present, most domestic carbon fiber manufacturers still mainly use wet spinning technology.

 

1. Carbon fiber can be divided into filaments, short fibers and chopped fibers according to its form. Filaments are used in industrial structural parts and aerospace structural parts, and short fibers are mainly used in the construction industry, such as short carbon fiber graphite low-frequency electromagnetic shielding concrete, industrial carbon fiber felt, etc.

 

1. Classification according to manufacturing conditions and methods: carbon fiber (800-1600°C), graphite fiber (2000-3000°C), oxidized fiber (pre-oxidized filament 200-300°C), activated carbon fiber, vapor-grown carbon fiber.

 

1. Carbon fiber is divided into general-purpose and high-performance types according to mechanical properties. General-purpose carbon fiber has a strength of 1000MPa and a modulus of about 100GPa. High-performance carbon fiber is further divided into high-strength type (strength 2000MPa, modulus 250GPa) and high model (modulus above 300GPa). Strength greater than 4000MPa is also called ultra-high strength type; modulus greater than 450GPa is called ultra-high model.

 

“Strong” refers to tensile strength, which is the maximum force used to stretch the material to damage it. The greater the tensile strength of carbon fiber, the less likely the material is to be damaged.

 

“Modulus” refers to tensile modulus, which is the force used to stretch the material to a certain length. The greater the tensile modulus of carbon fiber, the stronger its ability to resist deformation.

 

 

The main drafting unit of the national standards for polyacrylonitrile-based carbon fibers GB/T 26752-2020 and GB/T 26752-2011. According to the mechanical properties classification of the current national standard for polyacrylonitrile-based carbon fibers GB/T 26752-2020, PAN carbon fibers are divided into four categories: high-strength type, high-strength medium-model, high-model, and high-strength high-model. The specific classifications are as follows:

 

 

 

Carbon fiber is widely used as a reinforcing material due to its excellent mechanical properties, so the industry mainly uses mechanical properties for classification. The industry’s product classification mainly refers to the brand of Japan Toray, and determines the brand and level of its own products based on this. The mechanical performance indicators of Japan Toray’s main product brands are as follows:

 

Source: Japan Toray Carbon Fiber official website

 

(3) Japan Toray polyacrylonitrile (PAN) based carbon fiber brand classification:

 

Take T800S in the table above as an example to explain these mechanical performance indicators.

 

Tensile strength 5880MPa: 1MPa (megapascal) ≈ 10.2 kgf/cm2. It takes about 60 tons of force to break this type of carbon fiber with a cross section of 1 square centimeter. The higher the strength, the less likely it is to break.

 

Tensile modulus 294Gpa: 1Gpa (gigapascal) ≈ 10200 kgf/cm2. It takes 30 tons of force to stretch this type of carbon fiber with a cross section of 1 square centimeter by 1%. The higher the modulus, the less likely it is to deform.

 

Tensile fracture degree 2%: This type of carbon fiber will break if it is stretched 2% along the central axis of the material.

 

Bulk density 1.80g/cm³: It means that the mass per cubic centimeter is 1.80 grams. The mass of steel per cubic centimeter is 7.85 grams.

 

As can be seen from the above figure, Toray Corporation of Japan divides carbon fiber into two types: T grade and M grade.

 

T refers to tensile strength. The larger the number after T, the greater the strength of the product;

 

M refers to elastic modulus. The larger the number after M, the greater the modulus of the product.

 

The highest grade of T is T1100, which has been successfully developed by Zhongjian Technology.

 

The highest grade of M is M65J, which is under development by Guangwei Composites.

 

T-grade carbon fiber is widely used in aircraft, automobiles, high-end bicycles, wind turbine blades, pressure vessels, etc.

 

M-grade refers to graphite fiber, which is more difficult to produce and more expensive than T-grade. It is generally used in aerospace grade, such as rockets, spacecraft, satellites, etc.

 

1. Carbon fiber can be divided into aerospace grade and industrial grade according to its use, also known as small tow and large tow. Carbon fiber of 48K and above is usually called large tow carbon fiber, including 60K, 120K, 360K and 480K. In the early stage, aerospace-grade carbon fiber was mainly 1K, 3K, and 6K, and gradually developed into 12K and 24K, which were mainly used in the defense industry and high technology, as well as sports and leisure products (such as: aircraft, missiles, rockets, satellites and fishing rods, golf clubs, tennis rackets, etc.). Industrial-grade carbon fiber is used in different civilian industries, including: textiles, medicine and health, electromechanical, civil engineering, transportation and energy.

 

According to the number of monofilaments in each bundle of carbon fiber, carbon fiber can be divided into two categories: small tow and large tow. Generally, it is named according to the ratio of the number of monofilaments in the carbon fiber to 1,000. For example, 12K refers to carbon fiber with 12,000 monofilaments in a single bundle of carbon fiber.

 

In the early stage, small tow carbon fiber was mainly 1K, 3K, and 6K, and gradually developed into 12K and 24K. Small-tow carbon fiber has excellent performance but high price. It is generally used in high-tech fields such as aerospace and military industry, as well as product categories with high added value in sports goods. The main downstream products include aircraft, missiles, rockets, satellites, fishing rods, golf clubs, tennis rackets, etc.

 

It is generally believed that models above 40K are large-tow, including 48K, 50K, 60K, etc. Large-tow products have relatively low performance but low preparation costs, so they are often used in basic industrial fields, including civil engineering, transportation and energy. With the improvement of carbon fiber production technology and the decline in product prices, the application of small-tow in the industrial field has gradually expanded.

 

Classification by Manufacturing Method

 

In Japan and Western Europe, carbon fiber and graphite fiber are collectively referred to as carbon fiber, and China and the United States have made the above subdivision.

 

The carbon content of carbon fiber is more than 90%; high-strength and high-strength medium-model carbon fibers are graphitized at a temperature above 2,000°C in an inert atmosphere to increase the carbon content of the fiber to more than 99%, and then surface treated, sizing and dried to obtain graphite fiber. Graphite fiber is much more difficult to produce.

 

 

1.2.3 Key Application Areas of Carbon Fiber

 

Carbon fiber has high specific strength (strength to density) and high specific stiffness (modulus to density) performance that is unmatched by any other material at present. It also has corrosion resistance and fatigue resistance. It is widely used in the defense industry and high-performance civilian fields. Involving aerospace, marine engineering, new energy equipment, engineering machinery, transportation facilities, etc., it is a strategic new material that the country urgently needs and has broad application prospects.

 

Figure 3: Carbon Fiber by Application Field

 

Practice has proved that using carbon fiber composite materials instead of steel or aluminum can reduce weight by 20%-40%, so it is widely favored in the aerospace field. Aircraft structural materials account for about 30% of the total takeoff weight. Reducing the weight of structural materials can bring many benefits.

 

For military aircraft, weight reduction saves fuel while expanding the combat radius, improving battlefield survivability and combat effectiveness; for passenger aircraft, weight reduction saves fuel, increases range and payload capacity, and has significant economic benefits.

 

Figure 4: Economic Benefit Data Analysis Table of Weight Reduction of Various Aircraft

Data source: He Fu. Carbon fiber and graphite fiber. Chemical Industry Press. 2010.

 

1.2.4 Carbon Fiber Industry Chain

 

The complete carbon fiber industry chain includes the complete manufacturing process from primary energy to terminal application. Propylene can be obtained from petroleum, coal and natural gas. Under the current low oil price situation, the cost of crude oil to propylene is the best; propylene is obtained by ammoxidation to obtain acrylonitrile, and acrylonitrile is polymerized and spun to obtain polyacrylonitrile (PAN) precursor, which is then pre-oxidized, low-temperature and high-temperature carbonized to obtain carbon fiber, which can be made into carbon fiber fabric and carbon fiber prepreg as raw materials for the production of carbon fiber composite materials; carbon fiber is combined with resin, ceramic and other materials to form carbon fiber composite materials, and finally various molding processes are used to obtain the final product required for downstream applications.

 

Polyacrylonitrile (precursor)-fiberization (spinning)-acrylic material (precursor)-preoxidation-carbonization-graphitization-sizing-winding-carbon fiber-prepreg cloth-composite with other materials-recycling.

 

Figure 5: Schematic diagram of carbon fiber industry chain

 

Each Level of Deep Processing Will Increase the Gross Profit Margin, Indicating That There are Technical Barriers in Each Step.

 

Raw yarn: Shanghai Petrochemical.

 

1.2.5 Polyacrylonitrile (PAN)-based Carbon Fiber Preparation Process

 

The production of polyacrylonitrile (PAN)-based carbon fiber is mainly divided into two steps. The first step is to form carbon fiber raw yarn by polymerization and spinning of polyacrylonitrile. The second step is that after the raw yarn is sorted, it is sent to the oxidation furnace to obtain pre-oxidized fiber (commonly known as pre-oxidized yarn). The pre-oxidized yarn enters the carbonization furnace to obtain carbon fiber. The carbon fiber is surface treated and sizing to obtain carbon fiber products.

 

The whole process is carried out continuously. Any problem in any process will affect the stable production and the quality of carbon fiber products. The whole process is long, with many processes, and the technical and production barriers are very high.

 

Figure 6: Schematic diagram of polyacrylonitrile (PAN)-based carbon fiber production process

 

 

1.3 Market Structure

 

1.3.1 Global Market

 

From the perspective of the global carbon fiber market share, the international carbon fiber market is still monopolized by Japanese and American companies [Japan Toray (polyacrylonitrile), the United States UCC; Japan Toray is deeply bound with Boeing]. Japan is the world’s largest carbon fiber producer, and the world’s carbon fiber technology is mainly in the hands of Japanese companies. The carbon fiber it produces is in the world’s leading position in both quality and quantity. Japan Toray is the “leader” in the world’s high-performance carbon fiber research and production.

 

Data shows that in the small-tow carbon fiber market, the market share of Japanese companies accounts for 49% of the global production capacity; in the large-tow carbon fiber market, the market share of Japanese companies accounts for 52% of the global production capacity, and the market share of American companies accounts for 24% of the global production capacity. Japan and the United States together have 76% of the global large-tow carbon fiber production capacity, and are in a clear dominant position.

 

Figure 7: Global small-tow carbon fiber market share division chart Global large-tow carbon fiber market share division chart

 

 

(1) Analysis of Global Carbon Fiber Market Demand and Trends

Carbon fiber is rarely used directly. Most of it is processed into intermediate products or composite materials. Carbon fiber composite materials are now widely used in the three major fields of aerospace, industry and sports and leisure products as structural parts or functional parts. Carbon fiber was first used in the aerospace and defense fields due to its light weight, high strength, high modulus, high and low temperature resistance and corrosion resistance, such as large aircraft, military aircraft, drones and missiles, rockets, artificial satellites and radar covers, and the performance level of carbon fiber used in the aerospace field is relatively the highest.

 

In the industrial field, carbon fiber is widely used in automobiles, cables, wind power generation, pressure vessels, marine industry, electronic devices, industrial equipment and civil engineering; in the field of sports and leisure products, golf clubs and fishing rods were the first to be used. In recent years, more and more sports products such as bicycles, tennis rackets, badminton rackets, etc. are also using carbon fiber materials.

 

Generally, T300 grade carbon fiber can meet the demand, but in order to improve product performance, some parts have begun to use T700 grade or even higher performance carbon fiber.

 

With the continuous development of carbon fiber, the application scope of carbon fiber in the industrial and aerospace fields is constantly expanding, and the proportion is also on the rise. It is estimated that by 2021, the total demand for carbon fiber will reach 181,800 tons, and by 2025, the total demand in the world is expected to reach 262,300 tons, with a compound annual growth rate of 9.95%.

 

Among them, the fastest growing industrial field will have a compound growth rate of 12.38% in the next ten years, and the proportion of carbon fiber consumption in the industrial field will gradually increase from 67.42% in 2016 to 83.91%.

 

The demand in the aerospace field will enter a period of rapid development in the next five years, while the sports and leisure field is relatively mature in the world, and the demand is steadily increasing every year.

 

Figure 8: Global carbon fiber market demand forecast table (tons)

 

Data source: Composites Forecasts and Consulting LLC (CFC)

 

(B) Global Carbon Fiber Supply

 

At present, the global industrialized carbon fiber products are still represented by PAN-based carbon fiber, which has the highest mechanical properties and the widest application field, accounting for more than 90% of the global carbon fiber production.

 

In 2014, the global PAN-based carbon fiber production capacity was about 128,000 tons, of which small-tow carbon fiber was about 92,000 tons, accounting for 72%; large-tow carbon fiber was about 36,000 tons, accounting for 28%.

 

According to relevant forecasts, by 2020, the global small-tow carbon fiber production capacity will reach 115,000 tons, and the large-tow production capacity will reach 54,000 tons, totaling 169,000 tons, with a compound growth rate of 7%.

 

[Japan’s leading industry usually uses routines to increase prices by controlling production capacity] [There are still huge differences in production capacity structure]

 

Figure 9: Current status and forecast of global carbon fiber production capacity (tons)

 

 

At present, the global carbon fiber manufacturing leaders are Japan and their factories in Europe and the United States, followed by the US HEXCEL and CYTEC companies that rely on the healthy development of the European and American aerospace markets, and the German SGL company that relies on a strong industrial innovation system. As China’s investment in the field of carbon fiber continues to increase, China’s carbon fiber production share in the world is also increasing.

 

Figure 10: Global carbon fiber production share of various countries

 

 

1.3.2 Analysis Of The Domestic Carbon Fiber Industry

 

(1) Overview of the development of the domestic carbon fiber industry

 

In the past fifteen years, with the strong support of the state, the domestic carbon fiber industry has made major breakthroughs. The technical level and industrialization degree of carbon fiber and its application fields have shown an accelerated development momentum and entered an unprecedented new stage of development. In China, a carbon fiber industry cluster has been initially formed, mainly in Jiangsu, Shandong and Jilin.

 

According to statistics, from 2006 to 2017, the overall production capacity of carbon fiber in my country showed an upward trend. From 2006 to 2009, the growth rate of carbon fiber was relatively fast, with a compound growth rate of 73.41%. The growth rate slowed down significantly in 2010, and increased in 2011. By 2015, it reached 16,500 tons. According to relevant institutions, the theoretical production capacity in 2017 increased by 44% year-on-year to 26,000 tons.

 

At present, all carbon fiber produced in my country is small tow, of which 12K accounts for more than 90%, and 1K, 3K and 6K each have their own production.

 

Figure 11: Domestic carbon fiber production capacity map

 

In 2020, the domestic carbon fiber supply was 18,400 tons, accounting for only 38% of domestic demand. As many domestic carbon fiber companies have not yet achieved breakthroughs in key technologies, production line operation and product quality are unstable, the domestic carbon fiber industry has long been in a state of “capacity but no output”.

 

The theoretical capacity of domestic carbon fiber is large, but the actual output is small. At present, the carbon fiber market is still in a state of supply exceeding demand.

 

Table 2: China’s carbon fiber market gap

	2011	2012	2013	2014	2015	2016	2017	2022
China’s Carbon Fiber Production Capacity (Tons)	10,000.00	10,542.00	14,000.00	15,000.00	16,500.00	18,000.00	26,000.00
China’s Carbon Fiber Demand (Tons)	8,621.00	10,143.00	13,905.00	15,991.00	18,390.00	21,300.00	23,500.00	48,200.00
Gap (Tons)）				-991.00	-1,890.00	-3,300.00	2,500.00

 

(2) Analysis of the domestic carbon fiber market

 

According to statistics, since 2010, the domestic demand for carbon fiber has been on the rise, with the demand in 2017 being approximately 23,500 tons. With the development of my country’s national economy and the further enhancement of the strategic position of the national defense industry, my country’s demand for carbon fiber will enter a period of rapid growth in the next few years. It is estimated that by 2022, the domestic demand for carbon fiber will reach 48,200 tons.

 

Figure 12: Domestic carbon fiber market demand map

 

At present, among the three major fields of aerospace, sports and leisure, and industrial applications, sports and leisure account for the vast majority of domestic carbon fiber applications. Although the application in civil aviation, transportation, new energy equipment, engineering construction, etc. has begun, the application level is low, the design level of carbon fiber composite materials is insufficient, the supporting materials are lacking, and the relevant application standard system is not sound, resulting in a narrow application field.

 

In addition, there are few varieties and insufficient performance of supporting materials such as resins and sizing agents. The auxiliary raw materials for composite materials cannot be fully self-supplied, and some varieties still rely on imports, which not only restricts the application of carbon fiber composite materials in high-end products, but also seriously affects the market application of domestic carbon fiber. In the future, with the further development of my country’s basic industry, the application ratio of carbon fiber in aerospace and industrial fields will be improved, and the demand structure will be closer to foreign countries.

 

According to statistics, in the current domestic carbon fiber market, the self-sufficiency rate of domestic carbon fiber is only about 20%, and the external dependence rate reaches 80%. Foreign carbon fiber companies suppress domestic carbon fiber companies through technology and price advantages, making my country’s carbon fiber market subject to countries such as Europe, the United States and Japan for a long time.

 

As a sensitive new material for national defense strategy, the price of high-performance carbon fiber not only follows market laws, but also is related to the national defense policies of countries on both the supply and demand sides.

 

With the continuous development of domestic high-performance carbon fiber technology and industrialization, in order to ensure national defense security and avoid being subject to the long-term monopoly of the domestic market by people and foreign companies, the state has issued relevant policies to vigorously support the extensive application of domestic high-performance carbon fiber in defense fields such as aerospace.

 

In the future, with the continuous growth of demand for new defense equipment in my country and the continuous deepening of the national military-civilian integration policy, domestic high-performance carbon fiber will continue to maintain a good growth trend.

 

In 2020, my country’s demand for carbon fiber reached 48,800 tons, an increase of 29% over 2019. In 2020, the year-on-year growth rate of domestic carbon fiber demand was much higher than that of global carbon fiber demand. The main reason was that the global demand for carbon fiber for wind turbine blades increased significantly. At the same time, the international wind turbine blade OEM shifted from Europe to China, resulting in the domestic demand for carbon fiber in this field from 13,800 tons in 2019 to 20,000 tons in 2020, an increase of 45%; on the other hand, due to the large difference between the domestic demand structure and the global demand structure, the proportion of demand in the domestic civil aviation field is much smaller than that in the global civil aviation field. In 2020, the proportion of domestic demand was only about 3%, so the domestic demand for carbon fiber was relatively less affected by the epidemic.

 

In the domestic demand for carbon fiber in 2020, the supply of imported carbon fiber was 30,400 tons, accounting for 62% of the demand; the supply of domestic carbon fiber was 18,400 tons, accounting for 38% of the demand, and the domestic proportion increased by 6 percentage points compared with 32% in 2019, and the trend of domestic substitution was obvious.

 

The main reason is that on the one hand, due to the impact of the epidemic, it has become more difficult to import carbon fiber; on the other hand, major carbon fiber producing countries such as Japan and the United States have tightened the supply of domestic carbon fiber, resulting in an increase in the domestic demand gap. Affected by this, the supply of domestic carbon fiber in 2020 increased by 53% compared with the supply of 12,000 tons in 2019, and the domestic carbon fiber industry maintained rapid growth.

 

At present, the supply of imported carbon fiber is still significantly higher than the domestic supply, and there is huge room for domestic substitution.

 

Figure 13: China’s carbon fiber demand (unit: thousand tons)

Data source: “2020 Global Carbon Fiber Composite Material Market Report”

 

① The demand for wind turbine blades maintains rapid growth

As international wind turbine main engine manufacturers shift carbon fiber pultrusion board OEM from Europe to China, wind turbine blades have become one of the largest carbon fiber application fields in China.

 

In 2020, the demand for carbon fiber in the field of domestic wind turbine blades was 20,000 tons, accounting for 41% of the total domestic demand, an increase of 45% from 13,800 tons in 2019.

 

In 2021, the proportion of carbon fiber applications in the wind power field is expected to increase further. The market demand for wind turbine blades is mainly for foreign wind turbine main engine applications, and the domestic main engine usage is relatively small.

 

The products used are mainly domestic and foreign T300-grade 24K, 48K, 50K and other products, with large carbon fiber usage but high price sensitivity.

 

In recent years, the rapid growth in the demand for carbon fiber in wind turbine blades has brought rapid development opportunities for domestic carbon fiber companies.

 

② The sports and leisure products market maintains a high share

Nearly 90% of the global carbon fiber sports equipment processing is completed in mainland China and Taiwan, China. In 2020, the domestic demand for carbon fiber in the sports products field was 14,600 tons, accounting for 30% of the total domestic demand, an increase of 4% over 2019. The sports and leisure field has a wide range of product categories, and the demand for carbon fiber presents a situation of high-end and low-end coexistence. Domestic demand is mainly T300 and T700 grades, including a small amount of T800 and high modulus products.

The specifications are mainly small tows such as 3K and 12K, and there are many types of demand.

 

③ The demand for carbon/carbon composite materials is growing rapidly

In 2020, my country’s demand for carbon/carbon composite carbon fiber was 3,000 tons, accounting for 6%, an increase of 150% over 2019, a large increase.

Carbon/carbon composite materials are mainly used in brake discs, aerospace components, thermal field components and other fields. Due to the rapid growth of the domestic photovoltaic market in 2020, the market demand for single crystal silicon furnaces has increased rapidly. The single crystal silicon furnace mainly contains carbon felt functional materials and crucibles, insulation barrels, and protective discs. Carbon/carbon composite materials, therefore, the demand for carbon fiber in the field of domestic carbon/carbon composite materials grew rapidly in 2020.

 

④ There is room for further upgrading of product demand structure

Compared with the global carbon fiber usage structure, the domestic structure in high value-added fields such as aerospace and automobiles is far lower than the global level. In the future, there is room for further growth in the carbon fiber demand market in my country’s aerospace, automobile and other industries.

 

(3) Problems in the development of the domestic carbon fiber industry

 

1. The technical equipment and production processes of most carbon fiber enterprises are far behind those of international advanced enterprises, and the capacity realization rate is low

 

In November 1949, 17 developed countries led by the United States established the “Paris Coordinating Committee”, whose main purpose was to restrict member countries from exporting strategic materials and high technologies to socialist countries. The embargo list included more than 10,000 products in three categories, including military weapons and equipment, cutting-edge technology products and rare materials.

 

On April 1, 1994, the “Paris Coordinating Committee” was dissolved, but the list of embargoed items it formulated was inherited by the subsequent “Wassenaar Arrangement”, which included two control lists: one is a list of dual-use goods and technologies, covering 9 categories including advanced materials, material processing, electronic devices, computers, telecommunications and information security, sensors and lasers, navigation and avionics instruments, ships and maritime equipment, and propulsion systems; the other is a list of military products, covering 22 categories including various types of weapons, ammunition, equipment and combat platforms. China is still among the embargoed countries.

 

Up to now, high-end carbon fiber required for aerospace equipment has been unable to be imported as a strategic material for a long time, and the core technology and advanced facilities and equipment for producing carbon fiber cannot be introduced, which seriously restricts the development of my country’s national defense industry and carbon fiber industry.

 

At present, the equipment used by leading foreign carbon fiber companies is basically independently designed according to their own technical characteristics, and improved and upgraded on the basis of proprietary equipment, forming proprietary carbon fiber production equipment with independent intellectual property rights; while the foreign production equipment introduced in China is non-embargoed general-purpose carbon fiber production equipment, and the price is relatively high.

 

Although there are 3-4 domestic carbon fiber production companies with a design capacity of more than 1,000 tons, due to the lack of core technical teams, most carbon fiber production companies lack the ability to digest and absorb the technical parameters and performance indicators of imported production equipment, and the degree of automation of the production line and the matching of their own carbon fiber production technology are far behind their foreign counterparts, resulting in poor stability of the production process and consistency of process control, affecting the quality and stability of carbon fiber products, and the production cost is very high, resulting in idle equipment and operating losses, and unable to compete with international advanced companies.

 

In 2016, the actual output of domestic carbon fiber was 4,600 tons, and the output increased to 7,000 tons in 2017. From 2007 to 2017, the cumulative output of carbon fiber was only 27,600 tons, far below the designed capacity.

 

Figure 14: Actual output of carbon fiber in China (tons)

 

 

In 2007, China’s designed production capacity was 26,000 tons, the actual production capacity was 7,000 tons, and the actual utilization rate of production capacity was only 26.92%.

 

1. Most carbon fiber companies’ products are in the low-end field, and the industry concentration is not high

 

From the development of the global carbon fiber industry, it can be seen that the aerospace and defense industries are the most important application fields of carbon fiber, and the consumption accounts for about 30% of the world’s total consumption, but it contributes 50% of the global carbon fiber output value; compared with the development of foreign countries, my country’s carbon fiber market mainly revolves around the development of the sports and leisure industry, accounting for more than 65%, but this market segment belongs to the low-end field and faces very large price competition pressure.

 

At present, there are nearly 100 units in my country engaged in the research and production of carbon fiber composite materials, but there are only a handful of companies that can produce high-performance carbon fiber that meets aerospace standards. A large number of companies are concentrated in the sports and leisure field, and the vast majority of carbon fiber manufacturers are still in a loss-making state.

 

With the survival of the fittest in the market economy, the carbon fiber industry will face a reshuffle, and companies with independent intellectual property rights and continuous innovation capabilities will surely gain an advantage in future competition.

 

1. Domestic carbon fiber manufacturers lack core technology and talent accumulation, and it is difficult to meet the demand for high-performance carbon fiber in the aerospace and high-end civilian fields

 

The production technology of high-performance carbon fiber is complex, the process is long, there are many links, and there are many disciplines involved, which is closely related to equipment manufacturing capabilities.

 

Compared with the continuous technology accumulation of foreign carbon fiber giants for decades, most of my country’s carbon fiber production enterprises lack R&D and production personnel who master core technologies, the R&D industrialization team is unstable, the accumulation of early technology and data is insufficient, and there is a lack of full technical experience from laboratory technology research and development, pilot technology amplification, and engineering industrialization construction. Therefore, there is still a large gap with foreign countries in terms of preparation technology such as quality, cost and equipment.

 

The lack of a long-term and stable scientific research and technical team has become an important constraint on the core competitiveness and sustainable development capabilities of the carbon fiber industry.

 

1. my country’s carbon fiber industry chain needs to be further improved

 

At present, foreign countries have formed a carbon fiber composite material system with design, manufacturing, analysis and verification, and application traction system. For example, Japan’s Toray and the United States’ Hexel have intermediate moldings such as prepregs, fabrics, chopped fibers, and interlayer materials. At the same time, they directly provide customers with customized composite material solutions and products, which facilitates customers’ use and solves the problem of matching carbon fiber products with resins.

 

As the technology of most domestic carbon fiber composite materials companies is still immature and they lack corresponding R&D and process support, they have not been able to form a systematic and serialized carbon fiber industry chain development model.

 

(4) Development trend of domestic carbon fiber industry

 

The carbon fiber industry has huge development space, which is not only reflected in the urgent demand of the defense industry for the strategic emerging industry of carbon fiber, but also in the rapid expansion of its application in various fields of the national economy.

 

1. The rapid development of the aerospace industry and the continuous implementation of the policy of deep integration of military and civilian sectors have provided a good opportunity for the development of new materials industries represented by carbon fiber

 

For a long time, my country’s national defense construction has lagged behind economic construction, which is inconsistent with my country’s increasingly enhanced status as a major power and is not conducive to stabilizing the complex surrounding environment.

 

At present, building a national defense force commensurate with my country’s international status and integrating national defense and military reforms into the overall situation of deepening national reforms have become strategic measures at the national level. In recent years, military-civilian integration has become a grand strategy for coordinating economic construction and national defense construction, and an important strategic deployment for realizing the dream of a strong country and a strong army in the future.

 

As the material basis of the new generation of national defense equipment, accelerating the development of new material technology is an important prerequisite for maintaining military leadership. In recent years, the application fields of carbon fiber composite materials have been continuously broadened and developed extremely rapidly. Its usage has become an important indicator of the advancement of military equipment. In the future, with the deployment of new national defense equipment and the updating of existing equipment, the field of carbon fiber materials serving national defense construction will continue to expand.

 

In the aviation field, our military fighters are mainly second-generation and third-generation aircraft, and old fighters account for a high proportion. According to data from Flight International, about 60% of my country’s military aircraft are facing retirement and will be replaced by a new generation of air combat forces marked by third-generation and fourth-generation fighters. This will greatly promote the demand for military aircraft, provide a rare development opportunity for my country’s military aircraft manufacturing industry, and drive the demand for high-end carbon fiber composite materials.

 

In the field of conventional weapons and equipment, the replacement of my country’s weapons also urgently needs to adopt lightweight, high-strength and corrosion-resistant carbon fiber composite materials, which have attracted the attention of relevant customers and have huge market space in the future.

 

1. Compared with developed countries, my country’s demand for civil carbon fiber is huge, and the development structure will be further optimized

 

At present, sports and leisure applications in the field of domestic civil carbon fiber account for the vast majority, and although the application in civil aviation, wind power equipment, automobile manufacturing, rail transportation, engineering construction, etc. has begun, the application level is low.

 

With the continued rapid growth of the national economy and the strong demand for air transportation, the central and local governments have continuously increased their investment in the construction of civil airports, which has set off a new round of development climax, greatly promoting the rapid development of the domestic civil aviation industry and the surge in demand for passenger aircraft. According to Boeing, China will need 1,764 commercial aircraft by 2020, making it the largest market outside the United States; at the same time, the commercialization of domestic large passenger aircraft represented by C919 has provided greater development opportunities for carbon fiber in the field of civil aviation.

 

In the future, with the further development of my country’s basic industries, the proportion of carbon fiber applications in the industrial field will be improved, and important potential markets such as wind power equipment, automobile manufacturing, rail transportation and other fields have broad future development prospects.

 

1. With the strong support of the state, carbon fiber enterprises represented by Zhongjian Technology are accelerating the pace of research and development and industrialization, and the competitiveness of products and enterprises is constantly improving.

 

Since the 1970s, the Chinese government has strongly supported the development of domestic carbon fiber. The “7511” meeting organized by General Zhang Aiping laid the foundation for the state to support the development of domestic carbon fiber. Through the “10th Five-Year Plan”, “11th Five-Year Plan” and “12th Five-Year Plan”, the state strongly supported the technical research, engineering industrialization and application traction of domestic carbon fiber, making the development of domestic carbon fiber have made great progress.

 

At present, 4-5 carbon fiber companies have produced T300-grade carbon fiber that has been applied to the aerospace field, indicating that the engineering industrialization technology of T300 has basically passed the test; and Zhongjian Technology has made a breakthrough in the engineering industrialization technology of higher-grade carbon fiber than T700 through years of technical accumulation. The ZT7 series of high-performance carbon fiber produced has been applied in batches to the aerospace field, breaking the foreign blockade of high-end carbon fiber in the aerospace field. Zhongjian Technology is leading domestic carbon fiber companies to achieve higher performance carbon fiber industrialization, reducing production costs through technological improvement and equipment innovation, and improving the core competitiveness of enterprises.

 

1.3.3 Industry Business Characteristics and Competitive Landscape

 

1. Characteristics of the Carbon Fiber Industry

 

(1) The carbon fiber industry is a capital and technology intensive industry with high industry barriers

 

Carbon fiber is a high-tech intensive product, involving multiple disciplines such as distillation and purification, polymer synthesis, chemical fiber spinning, high temperature treatment, surface treatment and interface science. It has a long industrial chain, a wide range of products, and complex production technology. The industry development involves all aspects of production, learning, research and application. Especially in the aerospace field, due to the particularity of the application, the quality standards of carbon fiber products are high, the R&D cycle is long, the capital investment is large, the industry barriers are high, and there are very stringent requirements for stability.

 

(2) The application field is constantly expanding and the potential market is gradually maturing

 

The development of downstream application technology of carbon fiber is difficult. The process parameters between carbon fiber and materials such as resin and sizing agent must be systematically coordinated. The design and molding of composite materials need to be integrated. The application development in the downstream field requires a long R&D process.

 

In addition, the large R&D investment and high production costs have led to the long-term limitation of the application scope of carbon fiber in the aerospace and high-end civilian fields. In recent years, with the decline in the application cost of carbon fiber, the downstream application field of carbon fiber has gradually expanded to the general industrial field, and the application in wind power equipment, automobile manufacturing, rail transportation and other fields has been continuously expanded.

 

(3) Leading Japanese and European and American companies monopolize the global market

Due to the complex production process of carbon fiber, huge R&D investment and long R&D cycle, there are only a handful of carbon fiber companies in the world that truly have R&D and production capabilities. The United States focuses on original innovation, and Japan is good at refined production. They each have their own advantages in the development of the carbon fiber industry.

 

Japan’s Toray and the United States’ Hexel monopolize the aerospace high-performance carbon fiber market. Japan’s Toho and Japan’s Mitsubishi also occupy a place in the field of high-performance carbon fiber; other key companies also have their own characteristics and have their own advantages in terms of raw material diversification, synthesis system, spinning technology, and tow specifications.

 

With the gradual expansion of the application of T700-grade carbon fiber produced by Zhongjian Technology and T300-grade carbon fiber produced by domestic companies represented by Guangwei Composites and Hengshen Co., Ltd. in the aerospace field, the monopoly position of Japan, Europe and the United States in the field of high-performance carbon fiber has been weakened to a certain extent.

 

(4) Market and government play an important role in the development of the industry

Carbon fiber is inseparable from the defense industry, and the market and government play an important role in the development of the industry. The United States and Japan adopt a market-oriented model, relying mainly on large enterprises for research and development and production, while supplying both civilian and defense applications.

 

Japan supports the development of its own carbon fiber enterprises through various channels and regards it as one of the top ten strategic industries; the United States has sponsored and implemented the Aircraft Energy Efficiency (ACEE) program, the Advanced Composite Technology (ACT) program, and the Low-cost Composite Program since the 1970s, with the ultimate goal of providing manufacturing technology for composite wings and fuselages that are competitive in manufacturing costs.

 

In 1988, the U.S. Congress passed a decree that polyacrylonitrile precursor used in military carbon fiber should gradually achieve self-sufficiency, and important materials required by the defense industry must be based on domestic production. Boeing can use carbon fiber from Japan’s Toray, while the defense industry must use carbon fiber from the United States Hexel or the United States Cytec, and at the same time strictly control the export of high-end carbon fiber products and technical equipment.

 

Russia’s research and development and production are led by the state, and state-owned departments are responsible for development, research, production and manufacturing to ensure the needs of the defense industry and major projects.

 

2. Main Business Model of the Industry

 

At present, the global carbon fiber market is monopolized by a few companies such as Japan Toray, Japan Toho, Japan Mitsubishi Rayon and the United States Hexel. Japan Toray and the United States Hexel are the most successful carbon fiber production companies in the world. Their business models are as follows:

 

(1) Japan Toray’s operation and management adopts an internal governance model, which is mainly characterized by stable shareholders.

The shareholders include several bank shareholders. The shareholders hold shares in each other and do not participate in the management of each other’s companies. The company’s directors are all from within the company. The company’s managers and decision makers have rich professional knowledge of carbon fiber. Therefore, Japan Toray’s managers will not pursue shareholder interests alone, but will take the company’s long-term development as their goal. Through continuous investment, they will improve the company’s innovation capabilities. Technological innovation will continuously promote the development of the company’s carbon fiber industry, making Japan Toray the leader of the global carbon fiber industry.

 

(2) The development of the United States Hexel benefited from the carbon fiber localization policy formulated by the US Department of Defense.

In the 1980s, several carbon fiber companies in the United States adopted an external governance model. However, since carbon fiber is a special strategic material of the country, it was restricted by companies such as Japan Toray, and American carbon fiber companies were on the verge of bankruptcy. The U.S. Department of Defense launched a national strategy to localize key materials such as carbon fiber at the right time, thereby supporting the development of local carbon fiber companies such as Hexel and Cytec, and ultimately getting rid of dependence on Japanese carbon fiber.

 

3. Industry Competition Pattern and Marketization Degree

 

(1) My Country’s Carbon Fiber Industry has a large gap with foreign countries in technology

my country’s carbon fiber industry is still in its early stages. Since the carbon fiber industry involves multiple disciplines such as distillation and purification, polymer synthesis, chemical fiber spinning, high temperature treatment, surface treatment and interface science, and the process threshold of precision manufacturing is very high, there are few companies that have mastered the core technology of high-performance carbon fiber research and development and can achieve stable and cost-controlled large-scale production. The vast majority of companies cannot meet the large-scale application needs of high-end industries such as aerospace, and mainly focus on low-end fields such as sports and leisure; in terms of high-performance carbon fiber research and development and production, some domestic carbon fiber companies have basically achieved technical breakthroughs in T700 and T800 carbon fiber, but there is a certain gap between stability and product discreteness and foreign leading companies.

 

(2) Global carbon fiber production capacity is mainly concentrated in Japan and the United States

Japan is the world’s major carbon fiber manufacturer, with representative companies including Toray, Toho and Mitsubishi Rayon. Major manufacturers in other regions include Hexel and Zoltek in the United States and SGL in Germany.

 

According to CCeV statistics, Japan’s Toray is the only company in the world with a carbon fiber production capacity of more than 20,000 tons. It is the undisputed leader in the global carbon fiber field and has long been the main stable supplier of Boeing and Airbus. Other key companies also have their own characteristics and advantages, and are highly market-oriented.

 

From the perspective of the theoretical production capacity of carbon fiber in the world, the United States, Japan and China rank in the top three, and the three together account for more than 60% of the global production capacity distribution. According to statistics, in 2016, China’s theoretical carbon fiber production capacity was about 18,000 tons, but the actual output in 2016 was only 4,600 tons; in 2017, my country’s theoretical production capacity reached a record high of 26,000 tons, and the actual output was only about 7,000 tons, and it was mainly low-end carbon fiber, and the overall capacity utilization rate was low.

 

(3) The domestic carbon fiber market is showing a trend of structural differentiation.

At present, most of my country’s carbon fiber enterprises provide mainly low-end and medium-end carbon fibers. In addition, foreign leading enterprises rely on their own scale and low-cost advantages to dump low-end carbon fibers in China, which seriously restricts the survival and development of domestic low-end carbon fiber production enterprises, resulting in a serious overcapacity problem in my country’s low-end carbon fiber field. Enterprises that mainly produce low-end and medium-end carbon fibers are in fierce competition, and their gross profit margins are generally negative. Most domestic carbon fiber manufacturers are still in a loss-making state. In comparison, due to technological research and development restrictions, domestic carbon fiber enterprises are still unable to provide high-performance carbon fibers on a large scale, while foreign leading enterprises have taken embargoes or restricted the application of certain fields in China in terms of high-end carbon fibers; at the same time, the fields represented by aerospace and military industries have a strong demand for high-end carbon fibers. Taking all the above factors into consideration, domestic high-performance carbon fibers have been in a situation of supply exceeding demand for a long time, and the product sales price is relatively high.

 

 

4. Major Companies in the Industry

 

Globally, the core production technology of carbon fiber is mainly mastered by a few countries such as Japan and the United States, and production capacity and market demand are also mainly concentrated in the above regions. In terms of technical strength, production capacity and sales capacity, the representative overseas companies in the carbon fiber industry are TORAY, TOHO, MITSUBISHI, HEXCEL, ZOLTEK, SGL, CYTEC, and AKSA.

 

In recent years, as domestic companies continue to increase their investment in the field of carbon fiber, their R&D and production capabilities have been greatly improved, and companies represented by Zhongjian Technology, Guangwei Composites, Jiangsu Hengshen, and Zhongfu Shenying have emerged.

 

(1) Major Overseas Companies

1. TORAY

TORAY was founded in 1926 and mainly produced viscose rayon at the time. On January 1, 1970, it was officially renamed TORAY Corporation.

 

After the Japanese government signed the Plaza Accord in September 1985, the yen exchange rate soared. Taking advantage of the opportunity of the fiber textile industry and the entire Japanese industrial restructuring, Toray Japan reorganized various businesses and optimized the company structure to expand overseas production bases. After 90 years of development, Toray Japan has improved the entire industrial chain from upstream raw silk preparation to downstream composite product design and manufacturing, and has carried out business in 26 countries and regions around the world. It is currently mainly engaged in fiber and fabric, resin and chemical products, IT-related products, carbon fiber composite materials, environment and engineering. Toray Japan achieved operating income of 2204.90 billion yen and net profit of 95.9 billion yen in fiscal 2017.

 

In July 2002, Toray Group established Toray Industries (China) Co., Ltd. (TCH), which is mainly used to invest in and manage Chinese businesses. In addition, Toray also established Toray Fiber Research Institute (China) Co., Ltd. and its branches in Nantong and Shanghai, and established research bases centered on organic synthetic chemistry and polymer chemistry.

 

Japan’s Toray is in a leading position in the global carbon fiber industry, with advanced R&D level. In 2014, Japan’s Toray has developed TORAYCA®T1100G high tensile strength and high elastic modulus carbon fiber, while most Chinese companies have not yet been able to mass-produce T700-grade carbon fiber.

 

Due to Japan’s current R&D concept and large-scale production model, Japan’s Toray has a low-cost advantage in the production of carbon fiber of the same level, and has strong competitiveness in the domestic and foreign carbon fiber markets.

 

1. Japan’s Toho (TOHO)

 

Japan’s Toho was established in June 1934. The company consists of Toho Tenax and 6 subsidiaries. The parent company is Teijin Group (Teijin), which mainly involves carbon fiber composite materials business and textile fiber business. Japan’s Toho began mass production of polyacrylonitrile carbon fiber “TENAX” in 1975. In 2002, the Shanghai Representative Office of Toho Tenax Co., Ltd. was established in Shanghai, China.

 

Teijin was founded in 1918. After nearly a hundred years of development, the company’s business areas include high-performance fibers and composite materials, electronic materials and chemical products, pharmaceuticals and medical care, fiber products and circulation, and IT. It is one of the world’s leading manufacturers of carbon fiber and aramid fiber, and also one of the world’s leading manufacturers of polycarbonate resin. In fiscal 2017, it achieved a turnover of 835 billion yen and a net profit of 45.6 billion yen.

 

Toho is a leading global company with institutions and production plants in Japan, Germany and the United States, with an annual production capacity of more than 10,000 tons. Its products are widely used in aerospace, automobiles, engineering plastics, electronics, sports and leisure, etc.

 

1. MITSUBISHI

 

Mitsubishi Rayon was founded in August 1933. In October 1962, it began to produce polypropylene fibers, in 1975 it began to produce prepregs, and in 1983 it began to produce carbon fibers. Mitsubishi Rayon has achieved a one-stop production from the synthesis of acrylonitrile, the raw material of propylene fiber, to polymerization, precursor, carbon fiber, and products.

 

Mitsubishi Rayon Group owns both PAN-based carbon fiber and pitch-based carbon fiber, as well as intermediate materials and molded products produced with carbon fiber as the basic raw material. Through a complete product chain, it operates in a wide range of fields such as sports goods, industrial materials, aerospace, automobiles and the environment. According to its business plan, it will also integrate with Mitsubishi Chemical and Mitsubishi Resins from April 2017 to become a new comprehensive chemical manufacturer “Mitsubishi Chemical Corporation”. Through integration, a mechanism for creating high-growth and high-profit businesses will be established.

 

1. Hexcel Corporation

 

Hexcel Corporation, founded in 1946, is a global leading composite material company that develops and manufactures lightweight, high-performance composite materials, including carbon fiber, reinforced fabrics, prepregs, honeycomb cores, resin systems, adhesives and composite components. Its products are widely used in civil aircraft, aerospace, defense and general industry. In fiscal year 2017, Hexel’s total operating revenue was $1.973 billion and its net profit was $284 million; in fiscal year 2017, the composite materials business revenue was $1.597 billion.

 

1. Zoltek Companies, Inc.

 

Zoltek was founded in 1975. In 1988, Zoltek entered the carbon fiber field with the opportunity of NASA’s large transport aircraft and rocket nozzles. As the world’s leading large-tow carbon fiber manufacturer, Zoltek mainly produces carbon fiber prepreg, multiaxial cloth, short-cut carbon fiber for various engineering plastics, and pre-oxidized yarn. In 1992, the company was listed on NASDAQ and raised $4 million. It used the raised funds to improve the carbon fiber production line. In 1995, it used additional stock issuance to raise funds to further improve the European market layout and raw material supply system.

 

On September 27, 2013, Toray of Japan announced the acquisition of Zoltek of the United States, and completed all the acquisition procedures on February 28, 2014. After the acquisition, Zoltek of the United States was delisted from NASDAQ.

 

1. SGL Group – The Carbon Company

 

SGL of Germany was formed by the merger of SIGRI Co., Ltd. of Germany and Great Lakes Carbon Company of the United States in 1992. SGL of Germany is one of the world’s leading manufacturers of carbon graphite materials and related products. It has a complete production line from carbon graphite products to carbon fiber and carbon-carbon composite materials. Its products are widely used in steel, aluminum smelting, automobile manufacturing, chemicals, electronic semiconductors, photovoltaic and LED industries, lithium-ion batteries and other industries.

 

The application of carbon graphite materials and related products in wind energy, aerospace, defense industry and other fields is also on the rise. SGL Group has more than 40 production bases worldwide, and its market and service network covers more than 100 countries.

 

SGL entered China in 1998. The group’s Chinese business is mainly distributed in Shanghai, consisting of Shanghai SGL Donghai Carbon Co., Ltd., SGL Special Graphite (Shanghai) Co., Ltd., SGL Graphite Technology (Shanghai) Co., Ltd. and its production base. In fiscal 2017, SGL’s operating income was 860 million euros and net profit was 139 million euros.

 

1. CYTEC Solvay Group

 

CYTEC is one of the world’s leading companies engaged in specialty chemicals and material technologies. The company was formerly the Chemical Division of the American Cyanamid Company and was listed on the New York Stock Exchange in 1993. It is an innovative company of specialty chemicals and specialty materials, and is a global leader in research, development and production.

 

The company is committed to creating leading technology solutions to serve the global market, including: aerospace, coatings, mining, plastics and water treatment. Its products include: carbon fiber precursor production, carbon fiber production, carbon fiber fabric production, prepreg production, UV/EB energy curing resin, liquid coating resin, amino crosslinker, powder coating resin, coating additives, mining agent, phosphorus chemicals, polymer additives, surfactants and special monomers.

 

1. Akrilic Kimya Sanayii, Turkey

 

Aksa, Turkey is the world’s largest acrylic fiber manufacturer. The company began producing acrylic fiber in 1971, started trial production of carbon fiber in the second half of 2008, and started commercial production in the third quarter of 2009. In 2012, Dow Chemical (DOW) of the United States and AKSA of Turkey formed a joint venture company DowAksa, specializing in the production of carbon fiber and committed to the research and development of downstream products.

 

In recent years, the industrialization of Aksa, Turkey has developed rapidly, mainly in the field of civil industry. It entered the Chinese market in January 2010. After more than five years of development, its domestic market is mainly distributed in the fields of building reinforcement, sports equipment, thermal field materials, etc.

 

3. Comparison With The Same Industry

 

3.1 Major Companies

 

Zhongjian Technology, Guangwei Composites, Zhongfu Shenying, Jilin Carbon Valley, Jilin Chemical Fiber. Shanghai Petrochemical started construction of 24,000 tons/year raw silk and 12,000 tons/year 48K large tow projects in 2021 (total investment of 3.5 billion yuan), which are scheduled to be completed in 2024.

 

Table 3: Major companies in the industry

Securities Code	Securities Name	First Listing Date	Revenue [2018]	Revenue [2022]	YOY	Net Income [2018]	Net Income [2022]	YOY
300777.SZ	Zhongjian Technology	2019-05-16	2.13	7.97	68.74%	1.21	5.96	98.55%
300699.SZ	Guangwei Composite Materials	2017-09-01	13.64	25.11	21.04%	3.77	9.34	37.02%
688295.SH	Zhongfu Shenying	2022-04-06	3.08	19.95	136.94%	-0.24	6.05
836077.BJ	Jilin Carbon Valley	2021-08-31	2.28	20.84	203.04%	-0.83	6.30

 

Performance Differences in 2023:

 

Table 4: Performance in 2023

Securities Code	Securities Name	Revenue [2023 Q1]	Y0Y	Net Income [2023 Q1]	Y0Y
300777.SZ	Zhongjian Technology	2.07	19.58	1.48	63.68
300699.SZ	Guangwei Composite Materials	5.57	-5.77	1.71	-17.37
688295.SH	Zhongfu Shenying	5.68	23.68	1.31	11.28
836077.BJ	Jilin Carbon Valley	7.06	21.69	1.73	4.12

 

The Certainty of Guangwei Composite Materials is not Strong:

 

Table 5: Valuation Performance

Securities Code	Securities Name	Price-to-Earnings Ratio（PE，TTM）	PEG Value（LYR）	Forecast Net Profit（FY1）	A-share market value (including restricted shares）	Forecasted P/E Ratio
300777.SZ	Zhongjian Technology	31.71	0.18	7.66	207.17	27.03
300699.SZ	Guangwei Composite Materials	29.08	1.21	11.34	261.21	23.03
688295.SH	Zhongfu Shenying	53.72	0.47	9.29	332.19	35.75
836077.BJ	Jilin Carbon Valley	16.86	0.17	8.52	107.31	12.60

Figure 15: Comparison of Major Enterprise Products

 

 

Internationally, the classification of carbon fiber products mainly refers to the brand of Japan’s Toray, and each company determines the brand and grade of its own products based on this.

 

 

The product brands of Guangwei Composites use national standards, GQ represents high-strength type, QZ represents high-strength medium type;

 

Zhongjian Technology product brand, it is speculated that Z may be the first letter of the word “Zhong” in Zhongjian Technology, T represents T-grade products, and 7 refers to 700-grade carbon fiber;

 

Zhongfu Shenying product brand, it is speculated that SY may be the first letter of the pinyin of the two words “Shenying”, T represents T-grade products, and 45 represents the tensile strength of 4500Mpa.

 

Guangwei Composites, the main product is T300 grade, and now it has begun mass production of T700/T800;

 

Zhongfu Shenying and Zhongjian Technology, the main products are T700 grade; Zhongjian Technology’s ZT9 is at the leading level among T-grade products in my country, and it is expected to complete the installation of 100-ton ZT7+ZT9 production lines by the end of this year.

 

 

Among M-grade carbon fibers, the three companies have the ability to industrialize the product grades in the table above.

 

In 2021, Guangwei Composites’ M40J/M55J-grade carbon fiber 20-ton production line was put into production, making 2021 the first year of domestic high-strength and high-modulus carbon fiber. The company is building a 30-ton production line for QM4050 (M55J-grade) carbon fiber, which is expected to be completed this year. M55J high-strength and high-modulus basically represents the highest level of carbon fiber production in my country at present, and the estimated price may be at the level of 10,000 yuan per kilogram.

 

Zhongjian Technology’s research and development of M55J and M60J has made breakthrough progress.