Thursday, August 23, 2007

0 Stronger than Steel, Lighter than Aluminium - and in Short Supply

Here's an interesting article from Financial Times about the rise of carbon fibre costs. It reminds me of the famous article "Guns, money and cell phones" in the Industry Standard Magazine, without all the blood and violence ofcourse. And on the side, also about cheese. Pizza is getting expensive nowadays, no doubt about it!

This makes you get an idea why all those high end bicycles costs 5 grand and more. Demand is sky rocketing, and not everyone makes the damn thing. Suppliers are few and neither are they willing to sell CF cheap.

Stronger than steel, lighter than aluminium - and in short supply
By Gerrit Wiesmann in Frankfurt for Financial Times
Published: August 7 2007 03:00 Last updated: August 7 2007 03:00

The roll-out of Boeing's Dreamliner has offered weighty proof that carbon fibre is at last being used to make big things in large quantities.

But the commercial aerospace industry's entry into the market has a cost: it makes it much harder for traditional buyers of the precious lightweight material to secure their supply.
"The big-time entry of the aircraft makers has made it more difficult to get hold of material," says Robert Marte, who leads the racket sports division at Head in Austria. "At $35 per pound, we're paying three times what we paid two years ago."

Depending on its grade, carbon fibre is 10 to 25 times the price of aluminium. It has mainly been used for small quantities of large things, such as racing cars, or a lot of small things, such as tennis rackets.

But as pressure to cut emissions grows, aircraft makers and even carmakers are drawn to the material, which is lighter than aluminium yet stronger than steel. Prices have risen sharply in the past twoyears and demand is outstripping supply.

Seeking lower prices in a market with so few suppliers is futile. Head has had to accept lower margins because tough competition makes raising racket prices impossible, says Mr Marte.
In other potential markets, too, companies find the economics of carbon fibre hard to justify.Hariolf Kottmann, head of advanced materials at SGL Group, a German carbon fibre maker, has turned away carmakers.

"We're not prepared to supply carbon fibre at the prices some [car] manufacturers want," he says. "Demand means we can do that." The material, he thinks, will creep into top-of-the-range models in the next four years or so.

One option for buyers is to lock suppliers into long-term agreements, as Boeing did three years ago. One of the biggest manufacturers, Toray of Japan, has agreed to supply material beyond 2020.

This route is a must for any company that requires big volumes, says Robert Köhler, SGL chief executive. "Once, you could buy fibres from various manufacturers. But it's not that easy any more. Anyone without a long-term deal is going to have trouble."

Airbus, too, hopes to make more use of carbon fibre in its A350XWB passenger jet. Like Boeing, it wants the proportion of carbon fibre in the aircraft to rise to 50 per cent, from about 10 per cent. SGL expects aircraft makers to double carbon fibre use to 10,000 tonnes by 2010.

The A350 is five years behind the Dreamliner, and carbon fibre makers are waiting to see if Airbus can secure a similar supply deal. The company is negotiating with manufacturers.
There is hope for less powerful buyers. SGL plans to raise output fivefold to 10,000 tonnes by 2012, mainly to satisfy demand from makers of wind turbines.

By 2010, the company believes, the eight producers will raise global output two-thirds to 45,000 tonnes. But supply could again lag behind demand, especially if sectors such as machine-tool making turn to carbon fibre.

SGL could sell more but is held back by a shortage of qualified employees to staff new factories, it says. One of its plants can produce 1,500 tonnes of carbon fibre a year, but technicians are hard to come by in an industry that jealously guards its know-how.

Carbon fibre is fiendishly difficult to make. It is formed by repeatedly heating polyacrylonitrile to form tightly interlocking carbon atoms. Strands are woven and reinforced with resin to make solid sheets.

Chinese and Saudi chemical companies have tried and failed to make it, so production is in the hands of a club of Japanese, American and European companies. Since carbon fibre has a crucial role in missile production, governments are likely to block any moves to share the technology with outsiders.

"Supply is becoming an increasing problem and increasingly politicised," Mr Köhler says. "We're talking about defence, aerospace and energy - and it will soon help decide the future of carmakers."

The prospect that more sectors will discover carbon fibre does not cheer Head. Recent price increases may have eased, Mr Marte says, but the advent of theDreamliner and the A350 "make supply and pricing uncertain again beyond the medium term".


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