Toray in global carbon fiber push; receives Japanese government support

Toray Industries, Inc. (Tokyo) has announced plans for a significant boost in production capacity for carbon fiber. Facilities will be added at four of the company's global locations, boosting capacity by 6000 tonnes annually to 27,100 tonnes/yr by March 2015.

Japan, the U.S, France and South Korea are in line for production boosts. The Toray Group currently has an annual production capacity of 17,900 tonnes of carbon fibers globally, and will increase this to 21,100 tonnes per year by January 2013 with two new lines currently under construction. Further, the Group's overall production capacity will rise to 27,100 tonnes by March 2015, which would ensure a stable supply structure for industries such as automotive and aerospace.

About 50% of the total investment will be made in Japan to build an integrated production facility for precursor (raw material fiber for carbon fiber) and high-performance small-tow carbon fiber, mainly used in aircraft and premium automobiles, at its Ehime Plant. The line will have a production capacity of 1000 tonnes/yr and Toray aims to start operation in March 2015.

While Toray has already been carrying out construction work to increase its Ehime Plant's production capacity of high-performance small-tow carbon fiber by 1000 tonnes for a September 2012 start of operations, demand from the market has been increasing and the proposed additional expansion is expected to fulfill this demand. The project will receive Japanese government support under the Subsidy for Domestic Location Promotion Projects for fiscal year 2011 of the Ministry of Economy, Trade and Industry (METI; Tokyo).

While Toray has positioned the domestic production bases as "global mother plants" and pursued a core strategy of maintaining and strengthening them as production centers for advanced materials and high value-added products as well as the base for development of new technologies and new products, approximately 90% of the demand for carbon fibers is from outside Japan, and the persistently strong yen has created a tough business environment for exports from Japan. Toray, however, intends to continue with this basic strategy to maintain and strengthen domestic production bases by leveraging government policy for improving the domestic business environment including the aforementioned subsidy.

In the case of Toray's three overseas bases, because share of production for aircraft applications at existing lines has been increasing due to full-scale production launch of the Boeing 787 aircraft, the company will bolster production capability for high-strength standard modulus fiber, which has become the de-facto standard for industrial and sporting goods applications, to ensure stable supply to those markets.

France's Toray Carbon Fibers Europe S.A. (CFE; Abidos) will build a production facility for precursor. The facility will be the third globally for the Group after the plants in Japan and the U.S. CFE is currently importing precursor from Japan but will switch to its own precursor once the facility becomes operational and also plans to supply the fiber to Toray Advanced Materials Korea Inc. (TAK; Seoul).

In addition, Toray Carbon Fibers America Inc. (CFA; Decatur, AL) will add a new carbonization line with an annual capacity of 2500 tonnes, which will start operations in September 2014. The move is aimed at catering steadily to the expanding market for environmental and energy-related applications, including the growing market for natural gas pressure vessels reflecting utilization of shale gas in the U.S. The Toray Group also plans to further expand the business for the Latin American market, mainly Brazil, where the market is expected to grow rapidly in the future.

TAK in South Korea will also be constructing a new carbonization line with the same specifications as CFA, with an annual capacity of 2500 tonnes at its Gumi Plant (Gyeongsangbuk-do), which is expected to start operations in March 2014. TAK is currently installing a production facility for high-strength and standard modulus fiber with annual capacity of 2200 tonnes to start operating in January 2013, and is in the process of enhancing its structure to address the growing market for industrial and sporting goods applications in South Korea, where the government is strategically nurturing green technology industry, as well as exports China.

Global demand for PAN-based carbon fibers was estimated to have expanded to 37,000 tonnes in 2011 and it is expected to grow at a rate exceeding 15% a year. —[email protected]