The South Korean petrochemical industry is ramping up the production of carbon fiber, a part of its focus on high value-added businesses to develop mid- to long-term growth engines amid a prolonged slump in the market.

According to multiple industry sources on Tuesday, Hyosung Advanced Materials Corp. plans to expand its carbon fiber production capacity, which currently stands at 9,000 tons per year, to 16,500 in 2024, 21,500 tons in 2025, and 24,000 tons by 2028. The company has also decided to establish a new carbon fiber production entity, Hyosung Vina Core Materials Co., in Ba Ria-Vung Tau Province in southern Vietnam.

Toray Advanced Materials Korea Inc. also recently held a groundbreaking ceremony for the expansion of its carbon fiber unit 3 in Gumi City, North Gyeongsang Province. The company plans to expand its annual carbon fiber production capacity to 8,000 tons by 2025 from 4,700 tons.

Carbon fiber is called “super fiber” as it weighs one-fourth of iron but is over 10 times stronger. Demand is growing in many areas, including compressed natural gas (CNG), compressed hydrogen storage, automotive parts, and wind blades. The market for carbon fiber, also dubbed the “rice of the future,” is expected to grow at nearly 10 percent on average annually.

Global demand for polyacrylonitrile (PAN) carbon fiber is expected to increase to 327,000 tons in 2035 from 112,000 tons in 2023, according to Japanese market research firm Fuji Keizai Co.

The recent decisions by petrochemical companies to enter the carbon fiber business come as they seek growth engines with high value-added products amid a sluggish market. Hyosung Advanced Materials, whose flagship product is tire reinforcement materials, posted sales of 783.3 billion won ($597.03 million) in the third quarter, down 20 percent from a year ago, and an operating profit of 35.7 billion won, down 46 percent. Sales of tire reinforcements and seat belts and airbags fell 29 percent and 15 percent respectively from a year earlier to 426.5 billion won and 141.3 billion won each. The decline is likely due to the slowdown in the automotive industry.

Meanwhile, the carbon and aramid fiber segments saw solid demand and posted an 11 percent increase in sales that hit 90.7 billion won during the period. The securities industry forecasts that Hyosung Advanced Materials’ operating profit from the carbon fiber segment will outperform that of the tire reinforcement business from the second half of 2024.

Increased solar power generation is also driving demand for carbon fiber. Recently, carbon fiber has been in demand for insulation materials used to produce polysilicon and ingots, which are key value chains in the solar industry. Ceramic was used for insulation previously but is being replaced by carbon fiber for its short replacement cycle.

Carbon fiber can be used to lighten the weight of vehicles and aircraft, which contributes to reducing carbon emissions. For a car weighing around 1,380 kilograms, using carbon fiber from the body to the interior can reduce the total weight by about 400 kilograms, or 30 percent.

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]