From: Reuters
Published February 29, 2008 03:07 AM

Mitsubishi Chem, Teijin plan carbon fiber auto parts

TOKYO (Reuters) - Japanese carbon fiber makers Teijin Ltd and Mitsubishi Chemical Corp said on Friday that they each plan to start supplying fiber-made parts to carmakers by 2010.

The move is in response to growing demand from carmakers for light but strong parts to boost fuel efficiency as consumers grapple with soaring oil prices and have become more conscious of global warming when making a purchase.

The two firms aim to have their carbon fiber products used initially in high-end sport car and luxury vehicles and then expand to mass-market cars later.

While Japanese steelmakers such as Nippon Steel Corp and JFE Holdings Inc are responding to the needs of carmakers by developing strong but thin steel for vehicle exteriors and parts, carbon fiber is much lighter and stronger than steel.

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But the use of carbon fiber, which does not corrode or suffer metal fatigue and much more expensive than steel, has been limited so far to aircraft bodies, racing cars and sporting goods, among others.

The carbon fiber market is expected to produce 44,000 tons in 2010, double the output of 2005, a spokesman for Teijin said.

Major Japanese firms produce about 70 percent of the world's carbon fiber.

Carbon fiber makers are looking to tap the huge auto market by reducing production costs.

The world's No.1 carbon fiber producer, Toray Industries Inc, said in October it plans to spend about 20 billion yen ($191 million) to boost production of carbon fiber for auto parts.

Mitsubishi Chemical Corp, a unit of Mitsubishi Chemical Holdings Corp, said on Friday it plans to invest around 700 million yen to 800 million yen to build a new carbon fiber testing facility, a spokeswoman for the firm said.

The firm plans to produce 1,250 tons of carbon fiber by the 2009/2010 business year, a 25 percent increase from the current business year.

Shares of Mitsubishi Chemical Holdings dropped 0.6 percent to 710 yen, while Teijin fell 1.5 percent to 409 yen. The benchmark Nikkei average fell 2.3 percent.

(Reporting by Yoko Kubota; Editing by Eric Burroughs)

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