Teijin May Build U.S. Plant on Shale Gas Boom, Car Demand

Teijin Ltd. (3401), a supplier of carbon fiber used in the Airbus SAS superjumbo jet, is considering plans to expand output in the U.S. to meet demand for the lightweight material in cars and storage tanks for natural gas.

Teijin plans to increase its global output by about 36 percent to 18,900 metric tons a year by 2016, Executive Vice President Norio Kamei said in an interview in Tokyo. It may expand its Tennessee factory or build a plant with a 5,000-ton production capacity, he said, declining to give a cost.

Teijin and its larger domestic rival Toray Industries Inc. (3402) are pushing sales in North America where the boom in extracting natural gas from shale rock is jacking up demand for the fiber used to wrap storage tanks to increase strength. It’s used in Toyota Motor Corp.’s Lexus LFA sports car and Teijin is working with General Motors Co. (GM) on technology that cuts carbon fiber molding time and costs to enable mass production, Kamei said.

“Carbon fiber will play a bigger role in manufacturing to cut weight and conserve energy as we move toward a low-carbon society,” Kamei said in the Dec. 10 interview. “We expect the auto industry to be a bigger customer from 2015 onward.”

Toray, the world’s top supplier of carbon fiber, will use its South Korean plant, slated to open next year, as a base to ship the material to the U.S., President Akihiro Nikkaku told reporters in Tokyo on Nov. 21. It holds an 80 percent share of the market for strengthening gas tanks, he said.

Share Decline

Shares in Teijin, which supplies fibers and materials in products ranging from bulletproof vests and Airbus’ A380s to solar battery panels, have fallen 20 percent this year as Europe’s debt crisis and China’s slowing growth eroded earnings. It slashed its full year profit outlook by 75 percent on Nov. 2, the second revision in three months.

In Tokyo trading yesterday, the stock rose 1 percent to 190 yen.

Teijin, which operates carbon fiber plants in Japan and Germany, has a 20 percent share of the 40,000 ton-a-year global market, the biggest after Toray.

Last week, it opened a pilot plant to produce carbon fiber composite parts at its Matsuyama plant in southwestern Japan. The plant uses technology that cuts the manufacturing process from carbon fiber to molded composites to within one minute, a speed that meets the need of vehicle mass-production lines, according to a Dec. 4 statement.

Carbon fiber makers are competing against steel and aluminum producers to boost supply to automakers, highlighting lower weight that leads to increased fuel-efficiency.

The material is about 10 times stronger and 75 percent lighter than steel, according to a Toray presentation.

Carbon vs. Steel

Nikkaku said last month high-end fiber typically costs as much as 5,000 yen per ton, more than 50 times the price of steel. Because of the cost, use of carbon fiber is currently limited to as many as 5,000 super cars and luxury vehicles sold each year, Kamei said.

“While there’s limited room to cut a vehicle’s weight when steel and aluminum is used, cars can be much lighter when using carbon fiber,” Kamei said. “The key is how much we can minimize processing costs.”

Teijin aims to boost annual sales from carbon fiber composites to as much as 200 billion yen ($2.4 billion) by 2020, he said. Its advanced fiber and composites division expects sales of 120 billion yen, or 16 percent of its total revenue in the year through March 2013.

Toray unveiled a plan in March to spend 45 billion yen to boost annual production capacity by half to 27,100 metric tons over three years through 2015.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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