The outlook for carbon fiber supply and demand

As I write this on Nov. 13, CompositesWorld’s 24^th annual Carbon Fiber conference has come to an end. Held in Salt Lake City, Utah, U.S., it was the first in-person Carbon Fiber since 2019 and represents another notable milestone for the composites industry as we return to face-to-face interactions. Indeed, the event was pervaded with a sense of relief that we could physically gather in one place again and easily share information and ideas.

Carbon Fiber, as usual, featured a mix of presentations covering carbon fiber (CF) supply and demand, new technologies and end market trends. We heard about the future of commercial aerostructures manufacturing from Spirit AeroSystems, the outlook for sustainable technologies from Airbus, the development of solutions for battery enclosures from HRC, trends in CF recycling from Carbon Conversions, the prospects for composites use in advanced air mobility from Blue Force Technologies and much more.

The pre-conference seminar each year typically focuses on the current supply and demand for CF and is developed and presented by consultants Tony Roberts and Dan Pichler. The picture they painted is one that shows a CF supply chain very much in flux and adjusting to a rapidly changing environment across almost all end markets. Tony and Dan’s report spans more than 200 slides, so I will cover the most notable information here.

Supply. The most uncertain situation is that of CF supply, made complicated by the Chinese manufacturing environment. Tony and Dan are confident of CF supply data for the U.S., EU, Japan and other non-Chinese locations and estimate real production (70% of nameplate capacity) from all non-Chinese locations to be 94,850 metric tonnes (MT) in 2021, rising to 101,500 MT by 2023 with further expansion in 2026 not known. In China, where real, local production is more difficult to gauge, Tony and Dan assumed actual domestic output to be 55% of nameplate capacity, which puts 2021 total supply from within China at 19,250 MT, rising to 23,650 MT by 2023, with further expansions through 2026 to be expected. Taken together, these numbers suggest 2021 total global CF supply at 114,100 MT, and by 2023 global CF supply at 125,150 MT. These estimates include recently announced expansions by Zoltek, Hyosung and DowAksa.

Demand. As might be expected, an already complicated CF supply situation is made doubly so when demand is factored in. There are three end markets in particular — wind, aerospace/defense and infrastructure/energy — that are expected to drive substantially increased use of CF over the next five years. In fact, the wind energy industry alone, already the largest consumer by volume of carbon fiber in the world, is expected to almost double its CF demand, from 28,000 MT in 2021 to 54,000 MT in 2026. This will be driven by rapidly increasing installations of onshore and offshore wind capacity, particularly in China. Similarly, aerospace/defense CF demand is expected to increase from 16,500 MT in 2021 to 29,100 MT in 2026, driven primarily by Boeing and Airbus. Tony and Dan admit, however, that this increase is somewhat uncertain given that demand for the composites-intensive Boeing 787 and Airbus A350 is not expected to return to pre-COVID-19 levels until 2025.

The carbon fiber supply chain is one that shows an in-flux, rapidly changing environment across almost all end markets.

What does all of this mean? Tony and Dan estimate that in 2021, global demand for all CF is 113,800 MT. By 2026 that figure is expected to increase to 180,400 MT. Recall that Tony and Dan estimate CF supply from existing facilities in 2026 reaching only 125,150 MT, which creates a potential CF shortfall of 55,250 MT by 2026, with signs of this supply deficit appearing as soon as 2023 or 2024.

Next steps. The question is whether or not this forecasted CF shortfall is an actual problem or just a potential problem. We have seen shortage estimates like this before in the last 15 years, and CF suppliers, seeing the same thing, have typically responded by adding capacity. The challenge, as always, is that it takes a lot of time — two years at least — and money to construct and commission a new carbon fiber line. In addition, two of the suppliers of the type of CF used in pultruded spar caps for wind blades, Zoltek and DowAksa, have already announced capacity expansions. Others, like Toray, Hexcel, Teijin and Solvay, primarily serve the high-performance market and might be reluctant to announce new capacity without a signal from Boeing or Airbus about the launch of a cleansheet aircraft program. In any case, the next few years promise to be interesting and challenging for producers and consumers of carbon fiber.