Speaker 1: Hi everyone. Today we're going to talk about composites, specifically
Speaker 1: an insight titled Advanced Materials Primer Series Carbon and Glass
Speaker 1: Fiber Composites by Leilang Zhang and Julia Atwood published on
Speaker 1: March nineteenth. You can find it through a quick search
Speaker 1: on beanef dot com, the benef mobile app or on
Speaker 1: beanof gu on terminal. So what is a composite? According
Speaker 1: to the report, it's a material composed of at least
Speaker 1: two distinct components that work together to provide superior performance
Speaker 1: than either of them individually. Typically, the primary component is
Speaker 1: the feedstock or matrix, which provides support, while the secondary
Speaker 1: component is a reinforcement, which provides strength and stiffness. Okay,
Speaker 1: so when I read this, I thought of two things,
Speaker 1: The Ten Commandments and Star Wars, you know, the movies.
Speaker 1: In the nineteen fifty six epic paroh a k a
Speaker 1: eule Brenner commands that no straw can be used to
Speaker 1: make bricks. The reply to that was, how can people
Speaker 1: make bricks without straw? The combination of mud and straw
Speaker 1: to make bricks is actually the first known composite in
Speaker 1: Star Wars. That's obviously when Han Solo was frozen in
Speaker 1: carbonite in the Empire strikes back. Okay, well I got
Speaker 1: that one wrong. Carbonite isn't actually a composite but a
Speaker 1: flash frozen carbon gas. But it's not real either, so
Speaker 1: maybe I wasn't wrong. Um Anyway, Today we're going to
Speaker 1: talk with Dr Julia Atwood, who leads BENFS cover to
Speaker 1: Advanced Materials. She's going to introduce us to composites, which
Speaker 1: seem to be growing in importance as they make their
Speaker 1: way into more and more areas of industry. We'll go
Speaker 1: over the uses for composites, which ones you'd use for
Speaker 1: a given job, their advantages and limitations, costs, and future demand.
Speaker 1: We'll also talk about what's next for BENF and this
Speaker 1: new research channel. Please note that BENIF does not provide
Speaker 1: investment or strategy advice, and you can hear a full
Speaker 1: disclaimer at the end of the show. I'm Mark Taylor,
Speaker 1: out of product for BENF and you're listening to switch
Speaker 1: on the BENF Client Podcast. Hi, Julia, how you doing good? Thanks? Mark?
Speaker 1: How are you good? Good? Thanks for coming in. Can
Speaker 1: you start us off today by telling us a bit
Speaker 1: about the Advanced materials coverage? Absolutely so, advanced Materials is
Speaker 1: a new topic for BENU because we're really interested in
Speaker 1: what's going on in the world of materials. There's broadly
Speaker 1: three things that we want to cover. The first is composites,
Speaker 1: which we're going to be talking about today. The second
Speaker 1: is cool new forms of manufacturing like three D printing
Speaker 1: or how we can make the whole indistinct greener. And
Speaker 1: then the last is around sustainable materials in the circular economy.
Speaker 1: That's driving a lot of change in materials for companies,
Speaker 1: so that's why we're really interested in it. How did
Speaker 1: you get into this? I have been in materials for
Speaker 1: a long time, so I'm an engineer by training, but
Speaker 1: I always loved chemistry. So when I was studying engineering,
Speaker 1: I decided I wanted to specialize in materials because it
Speaker 1: gave me the best of both worlds. I could be
Speaker 1: a chemistry nerd one day and be talking to you
Speaker 1: about a turbine engine next. You're based here in London. Yes,
Speaker 1: I don't know why I asked as a question. I
Speaker 1: sit near you, m so how do you How do
Speaker 1: you get to work? I'm really lucky. I concycle to
Speaker 1: work and I have this gorgeous along the river, so
Speaker 1: I get to kind of see the sun rising every
Speaker 1: morning over the buildings of London. Okay, that was also
Speaker 1: a loaded question. Everybody Julius cycles to work and I
Speaker 1: wanted to talk about her bike. Is your bike carbon fiber?
Speaker 1: Is it made out of carbon fiber? It is not.
Speaker 1: I'm sad to say that's the topic of today's conversation.
Speaker 1: We're gonna be talking about Compositi, as we said, and
Speaker 1: we're gonna frame it in terms of Julia's bicycle. Would
Speaker 1: you want a carbon fiber bicycle? I absolutely would. The
Speaker 1: only reason I don't have one is because I have
Speaker 1: this emotional connection to my bike right now because I
Speaker 1: got it for fifteen pounds from one of the technicians
Speaker 1: in my old lab at university. Okay, but why would
Speaker 1: you want a carbon fiber bible? Because they're just so cool. Mark,
Speaker 1: They're cool because they have this gorgeous shape. Carbon fiber
Speaker 1: you often see as a woven material, so it's got
Speaker 1: this beautiful like um basket weave on the materials. And
Speaker 1: the other thing is like, I'm not a big person.
Speaker 1: It's pretty hard for me to lift my massive steal
Speaker 1: commuter bicycle that I have right now. Whereas a carbon
Speaker 1: fiber frame super light. One of our colleagues, Yonus, he
Speaker 1: is very much into his bicycles, and he was telling
Speaker 1: me that the frame of his racing bike was less
Speaker 1: than a kilo and even I could lift that. Yeah,
Speaker 1: that's pretty impressive. So weight is one advantage of carbon fiber,
Speaker 1: what's a what's another. While the other great thing about
Speaker 1: it is because it's primarily plastic, you can leave it
Speaker 1: outside and it's not going to rest. I saw a
Speaker 1: lot of bikes at university just deteriorating because they had
Speaker 1: to be left outside because none of us had garages exactly.
Speaker 1: So it's it's much more durable. So that's a big
Speaker 1: advantage if you're going through the daily wear and tear,
Speaker 1: you're leaving your bike out in the rain. And then
Speaker 1: the other thing is that it feels much stiffer um
Speaker 1: So a lot of people don't notice because they ride
Speaker 1: the same bike all the time, but if you change
Speaker 1: too a much stiffer bike, everything just feels better. You
Speaker 1: can turn corner is more easily, it doesn't feel as wobbly.
Speaker 1: So in the in the note in the primer, you
Speaker 1: talk about weight, you talk about mechanical properties, stiffness, the durability.
Speaker 1: One thing we're not going to talk about in relation
Speaker 1: to bicycles is the electrical and thermal properties. Could you
Speaker 1: touch on those just a little bit, Yeah, for sure.
Speaker 1: So carbon fiber is it can be a lot of
Speaker 1: things as a material. It's very easily tailored to one
Speaker 1: thing or the other, and different applications want different things. So,
Speaker 1: for example, in an aircraft, you do not want your
Speaker 1: material to be electrically conductive. So that's why carbon fiber
Speaker 1: is great because it can be an insulator. Now in
Speaker 1: some cases if you manufacture the material in a certain way,
Speaker 1: then because carbon in the same way as graphite can
Speaker 1: use as an electrode, it can be electrically conductive. So
Speaker 1: that's That's another one of the benefits of composites is
Speaker 1: that you can kind of make them what you want
Speaker 1: by changing how you're manufacturing them. And designers love that
Speaker 1: because it means they don't have to have access material.
Speaker 1: They can just to have what they need in the
Speaker 1: place where they need it. So it's efficient, which every
Speaker 1: engineer loves. Actually. Okay, so what would we use the
Speaker 1: term carbon fiber loosely? But but what would a carbon
Speaker 1: fiber quote unquote bicycle be made of and why composite
Speaker 1: would you choose. You would definitely choose a carbon fiber,
Speaker 1: so you could. Right now, most bicycles are made from
Speaker 1: either steel or aluminum or carbon fiber. So steel is
Speaker 1: your like retro super heavy, I don't care about weight
Speaker 1: kind of bike. Um, it's cheap, it's cheerful, it'll do
Speaker 1: the job. Aluminum is in the seventies and eighties, when
Speaker 1: people thought they were fancy, they would get an aluminum bike.
Speaker 1: It's a bit lighter, still the same basic manufacturing techniques,
Speaker 1: so nothing big had to change for the people making it.
Speaker 1: Or you have carbon fiber, and that's very specialized, pretty expensive.
Speaker 1: You're talking about like five or six thousand dollars for
Speaker 1: a bike rather than my fifteen pounds, which is about um.
Speaker 1: But it's much more difficult to manufacturer. You have to
Speaker 1: do it by hand. And what's in there is really
Speaker 1: interesting because there are a few different ways that you
Speaker 1: can use composites to make something. The basic constituent materials
Speaker 1: are carbon fibers, which just basically look like threads, and
Speaker 1: you can weave them. You can place them next to
Speaker 1: each other in the same way as you would deal
Speaker 1: with like a fabric. So when you're making something with
Speaker 1: a composite, what they do is they take these fibers
Speaker 1: which are the strong bit, and then they coat them
Speaker 1: in a plastic and normally for carbon fiber that's in epoxy.
Speaker 1: And so when you combine these two, the fibers and
Speaker 1: the polymer, then you get a prepreg and then you've
Speaker 1: got like a sheet of something that you then want
Speaker 1: to place in a mold. Most of this is done
Speaker 1: by hand and it's incredibly t idious. Basically, what you
Speaker 1: do is you put the preprag in the mold and
Speaker 1: then you get a big roller and then you roll
Speaker 1: more of the polymer resin. That's the matrix on top
Speaker 1: of it. It's like putting up wallpaper, but you have
Speaker 1: to put up layer upon layer upon layer. It's like
Speaker 1: wallpaper that you have to put up fifty times in
Speaker 1: order to get the pattern that you want. Is that
Speaker 1: why it's so expensive. Yes, that's one of the big reasons.
Speaker 1: The other one is scale um and that's just about
Speaker 1: getting more people using carbon fibers so that we make
Speaker 1: more of it so that it gets cheaper. What are
Speaker 1: the what other limitations are there besides cost? I mean,
Speaker 1: cost is the big one because it's just such a difference.
Speaker 1: Like carbon fiber cost kilogram. Steel is like less than
Speaker 1: a dollar, and then aluminum is around two and a
Speaker 1: half dollars a kilogram. So cost is what the whole
Speaker 1: industry is focusing on. The manufacturing is important as well,
Speaker 1: because if you have to make something by hand that's expensive,
Speaker 1: you normally make big things out of carbon fiber, so
Speaker 1: you'll make a wing for an airplane, or you'll make
Speaker 1: the body frame of a car. Because if you're going
Speaker 1: to go to the trouble of making this mold, you
Speaker 1: want to be able to use it multiple times and
Speaker 1: have it be a big proportion of what you're making.
Speaker 1: But the one of the other problems is that everybody
Speaker 1: knows how to deal with metal. You have design standards,
Speaker 1: you know what's going to happen to it as it ages,
Speaker 1: you know how to recycle it. One of the big
Speaker 1: big problems with carbon fibers that there's not much recycling capacity.
Speaker 1: And I'm sure you've seen all this stuff around plastic waste.
Speaker 1: Nobody wants to be creating any more plastic waste these days.
Speaker 1: That's pretty bad for pr. So when you come to
Speaker 1: the industry and say I want to use this material
Speaker 1: that's made from petro chemicals and we don't recycle a
Speaker 1: lot of it. Everyone's like, whoa hold the phone? Is
Speaker 1: this the environmentally friendly thing that we want to be doing.
Speaker 1: My answer to that is two fold. One is when
Speaker 1: you're thinking about cars and airplanes, super light high performance
Speaker 1: materials like composites, it's going to help you in the
Speaker 1: short term to reduce your emissions. And that's kind of
Speaker 1: like a problem number one. At the end of the day,
Speaker 1: Even if you have to collect up and store all
Speaker 1: the carbon fiber waste in the world, there's not that
Speaker 1: much of it because we've only been using it in
Speaker 1: serious quantities since the eighties or nineties, and a lot
Speaker 1: of it is in things that we're still using, like airplanes.
Speaker 1: These were specialty, high performance goods that nobody wants to
Speaker 1: throw away. You have a chart in there that shows
Speaker 1: like when carbon fibers started to appear somewhere around the eighties,
Speaker 1: and that that was mostly in airplanes. Yes, the aerospace
Speaker 1: industry has been one of the first people to adopt it,
Speaker 1: partly because you don't make that many planes a year.
Speaker 1: You know, it's a few thousand um so it's reasonable
Speaker 1: to spend a lot of money on your materials and
Speaker 1: your manufacturing. And also because fuel is such a huge
Speaker 1: cost for them, so they can cut their costs by
Speaker 1: using this light material plant can go the same distance
Speaker 1: less fuel. You mentioned the pets are the feed stock
Speaker 1: for these carbon fibers. What about for the end composite
Speaker 1: UM But in the note you had a single few
Speaker 1: words in there they talked about bio based feed stocks.
Speaker 1: Where is that and what might goes be? So the
Speaker 1: bio based feedstocks can be used for both the fiber
Speaker 1: and the polymer that goes in the matrix, the polymer matrix.
Speaker 1: That's a more developed area for biofeed stocks, and we're
Speaker 1: actually writing a note on that as we speak, So
Speaker 1: look out for the bioplastics word people. UM. For the
Speaker 1: fibers themselves, that's much earlier stage. It's either made from
Speaker 1: oil products to get what we call a pan fiber,
Speaker 1: or from coal to get what we call it pitch fiber.
Speaker 1: Pitch is a little bit better. It's a slightly stronger material,
Speaker 1: so it is coming from these oil products. But at
Speaker 1: the end of the day, all you need is carbon
Speaker 1: in some form, and carbon isn't everything. So I've heard
Speaker 1: of some people trying to make carbon fibers from coconut residue. Um,
Speaker 1: but any kind of biomass could in theory be used.
Speaker 1: It's just a question of figuring out the processing route
Speaker 1: and convincing enough people to build the factories. So we've
Speaker 1: talked about the manufacturing a little bit. We've talked about
Speaker 1: the choices you have in making a carbon fiber or
Speaker 1: an f RP is that what you call it, fiber
Speaker 1: reinforced plasta. There you go, what applications are there out
Speaker 1: there besides aerospace and what else? We say cars? So
Speaker 1: the big one that really bicycles. Naturally, the bicycles thing
Speaker 1: kind of leads into what sort of nurtured the composite
Speaker 1: industry when it first came out, and that was really
Speaker 1: sporting goods, so like tennis, rackets, golf clubs, bicycles. So
Speaker 1: the applications you have aerospace, you have sporting goods, you
Speaker 1: have automotive. What else we have, Well, there are a
Speaker 1: bunch of companies that are trying to combine composite and
Speaker 1: three D printing because they think that what that is
Speaker 1: going to do is to allow carbon fiber to move
Speaker 1: into a bunch of sectors that it never could before.
Speaker 1: So an example would be a robotic arm. A robotic
Speaker 1: arm has a ton of small, awkward pieces because the
Speaker 1: manufacturing is so difficult and specific for carbon fiber, you
Speaker 1: wouldn't really want a guy there trying to like lay
Speaker 1: up teeny weeny bits of carbon fiber in order to
Speaker 1: make a gear. But what you could do is three
Speaker 1: D printed. So that's how we think carbon fiber is
Speaker 1: going to move into other sectors is by improving the
Speaker 1: way it's manufactured um and by using a lot more automation.
Speaker 1: Another one you mentioned in the in the report was wind.
Speaker 1: Can you comment a little bit on that. Yeah, so
Speaker 1: the wind industry has been a pretty big user of composites.
Speaker 1: The differences we've been talking mostly about carbon fiber composites,
Speaker 1: whereas what the wind industry uses is mostly glass fiber composites.
Speaker 1: Big difference is that it's much cheaper, So carbon i
Speaker 1: was like twenty, glass fibers like four. It's still pretty light,
Speaker 1: it's just not quite as strong and not quite as stiff.
Speaker 1: But it's been serving the wind industry pretty well, and
Speaker 1: even as their blades have been getting longer, and longer
Speaker 1: and longer. The glass fiber manufacturers have just been adapting
Speaker 1: and they've been using all of these sort of properties
Speaker 1: that you can change by changing the direction of the
Speaker 1: fibers to make it work. So people have been talking
Speaker 1: about when is the industry you're going to move to
Speaker 1: carbon fiber for a long time and the answer is
Speaker 1: they only will once the glass fiber people put their
Speaker 1: hands up and say, this is a limit of what
Speaker 1: we can do. This is kind of the fundamental end
Speaker 1: of the road. Can't squeeze anymore from this material. And
Speaker 1: if I were the glass industry, I would say never.
Speaker 1: I would never say that. Yeah, and that's what they
Speaker 1: do say. So what they've started to say now is Okay,
Speaker 1: maybe you need carbon fiber at this one bit close
Speaker 1: to the base of the wind turbine where it's going
Speaker 1: to connect. Um, Yeah, where the blade connects to the hub.
Speaker 1: But most of it you're good with glass fiber. And
Speaker 1: was a similar thing, you know, when when they were
Speaker 1: moving from say wood to glass fiber. It was like
Speaker 1: replace things iteratively. That happens so much in materials. I
Speaker 1: always talk about materials. It's like the performance enhancement of
Speaker 1: last resort because it means you have to change your supplier,
Speaker 1: you have to change your manufacturing technique. But what it
Speaker 1: gives you is a step change in performance, and that's
Speaker 1: why people change that or sustainability. Yeah, the landscape, though
Speaker 1: you mentioned you kind of alluded to it. You have
Speaker 1: to change your supplier, you have to change your whole
Speaker 1: way of doing things. I think we might have saved
Speaker 1: this for another day. But the supply chain for carbon
Speaker 1: fiber can't be that deep, can it. It's very much consolidated,
Speaker 1: so the biggest producers of carbon fiber are really a
Speaker 1: few Japanese is in US companies. The interesting thing is
Speaker 1: that China has actually designated carbon fiber is a strategic industry.
Speaker 1: So while most of the oh I think it was
Speaker 1: in there made plans, so it was a few years
Speaker 1: ago and that's really when we started to see a
Speaker 1: jump in capacity from the Chinese manufacturers. So they have
Speaker 1: big ambitions. Even though most carbon fiber is now made
Speaker 1: in either Japan or the US, if China meets the
Speaker 1: kind of targets that they have for installing new capacity,
Speaker 1: they'll leap frog the Japanese suppliers. That would be huge
Speaker 1: for the market. So right now capacity is about a
Speaker 1: hundred and fifty thousand metric tons per year, and China
Speaker 1: wants to install like one Chinese company wants to install
Speaker 1: sixty thousand metric tons of capacity, so big, big things
Speaker 1: could happen in carbon fiber. Yeah, two more questions. One,
Speaker 1: let's say I'm a benof client. What is the one
Speaker 1: thing that you want me to take away from this report?
Speaker 1: What I want you to take away is carbon fiber
Speaker 1: is the material of the future, and it's getting better
Speaker 1: in every way. The material of the future or a
Speaker 1: materially a material of the future. Then okay, because we
Speaker 1: can't make computer chips out of it. But yeah, it's
Speaker 1: like in every way I see in my job how
Speaker 1: it's getting better. Manufacturing is getting better. People are starting
Speaker 1: to recycle it in large quantities. Costs are coming down.
Speaker 1: As soon as cost comes down the rest of it,
Speaker 1: it's like a no brainer, right, And the cost will
Speaker 1: come down from more and more companies like this one
Speaker 1: in China building more of it or doing more of
Speaker 1: it exactly. And as much as you can standardize parts,
Speaker 1: that helps a lot. That's what the aerospace industry did.
Speaker 1: They said, we want this tube of this dimension make
Speaker 1: a lot of them for us, and they were able
Speaker 1: to bring costs down to like ten dollars a kill gram.
Speaker 1: So it's hugely important to standardize and make lots. Very cool,
Speaker 1: very cool. Final question, what's next in this, uh this
Speaker 1: research pipeline. So what we're going to be writing on
Speaker 1: next is around company and country strategy. We're going to
Speaker 1: write a note on China's plans for the composites industry,
Speaker 1: and we're going to release some company profiles. To your
Speaker 1: question about the supply chain, we're going to show where
Speaker 1: all the manufacturing capacity is, who's making it, and what
Speaker 1: they're going to do next. Excellent. Thanks for joining us, Julia,
Speaker 1: thanks for having me, and thanks everybody for listening. To
Speaker 1: switch on. Bloomberguin ea F is a service provided by
Speaker 1: Bloomberg Finance LP and its affiliates. This recording does not constitute,
Speaker 1: nor should it be construed as investment advice, investment recommendations,
Speaker 1: or a recommendation as to an investment or other strategy.
Speaker 1: Bloomberguin ea F should not be considered as information sufficient
Speaker 1: upon which to base an investment decision. Neither Bloomberg Finance
Speaker 1: LP nor any of its affiliates makes any representation or
Speaker 1: warranty as to the accuracy or completeness of the information
Speaker 1: contained in this recording, and any liability as a result
Speaker 1: of this recording is expressly disclaimed. H