Graphene Market Development - The Promise and the Path (The Graphene Council Newsletter April 2014)
Of the numerous proposed applications for Graphene, opportunities for commercialisation have been looked at for both new market applications and pre-existing markets, with a focus on the latter. While time-to-market for new, niche, high-value/low-volume use of Graphene (and other nanomaterials) in itself presents a myriad of challenges for producers, targeting graphene as a replacement to existing material sectors in the near term also poses immense challenges.
Of the numerous proposed applications for Graphene, opportunities for commercialisation have been looked at for both new market applications and pre-existing markets, with a focus on the latter. While time-to-market for new, niche, high-value/low-volume use of Graphene (and other nanomaterials) in itself presents a myriad of challenges for producers, targeting graphene as a replacement to existing material sectors in the near term also poses immense challenges. In the context of existing material markets, these include for example proposing Graphene as an alternative to ITO in transparent conductive films, graphite in lithium ion batteries, amorphous carbon in supercapacitors or use of carbon black in polymer composites. In this article, we focus on these incumbent markets.
Assuming graphene can achieve a tipping point on performance to cost ratio that makes the material an attractive replacement, then it can be a sure fire competitive successor. However, there are as yet no examples of graphene’s widespread adoption by industry for such bulk applications, or indeed evidence of downstream user willingness to acknowledge substance beyond appeal to potential. Granted, this can be explained by the emerging status of the material. Currently therefore, the success stories for Graphene at the nano-scale are confined to novel applications in sports goods for example. Clearly much work needs to be done to realise the materials’ paradigm shifting potential.
Challenges
There are evidently some technical challenges not yet fully addressed in the value chain to enable the uptake of graphene by industry to be more widespread. One such problem can be highlighted in relation to polymers and the use of nanomaterials (including Graphene) in this area as performance additives. While there is a need for presenting a clear cost benefit in terms of greater functionality, there remain several key technical obstacles to overcome. Not least of these obstacles relates to a requiremennt to achieve cost effective, homogenous dispersions of these materials that do not agglomerate. In order to achieve this, a number of essential factors need to come together.
These include;
Distributive mixing machines designed specifically for nanomaterial dispersion need to be deployed, materials need to be produced at a competitive price and often functional end groups need to be attached to prevent agglomeration after mixing and ensure proper binding to the polymer matrix. Neither the producer base nor industry currently has the ability to bring these elements together effectively. One can only conclude given this inhibiting factor, that only when nano-composites (fabricated using Graphene and/or other nanomaterials) can be produced in large scale batch manufacture at the speed, cost and volume that industry demands will they be able to compete against their more traditional counterparts.
Another difficulty relates to the fact that many existing incumbent material solutions are too well entrenched in their markets (according to some), so that many nanomaterial (NM) producers have retreated to niche applications, thus sidelining the potential role that NMs such as graphene hold for widespread industrial use. By 'entrenched' we mean that not only are entire manufacturing processes built around these materials, but also the fact these markets have well established and well organised supply chains.
Why though should any of this matter?
Supply certainty and consistency to specification are important considerations any downstream user will first consider following on from discovering a new material potential. A manufacturer, if they are to use any material, needs to be able to establish commercial variables such as price, supply availability, material standard and indemnification. In the case of emerging nanomaterials, only as an organised supply chain working together as an industry can producers deliver these variables of supply to the market so that graphene (and other nanomaterials) can seriously compete with other, more-established materials. The fact this collaborative organisation has yet to take place can explain why many potential downstream users are left with confusion, not only in regard to graphene, but nanomaterials generally.
Price discovery remains a key consideration to establish to assess commercial sustainability and in the absence of an effective mechanism to establish price tolerances as producers operate insular to one another means in effect that downstream users are often unable to accurately gauge price or establish redundant sources of supply, thus compounding hesitation to adopt nanomaterials for bulk application. In addition, very often downstream users are not in a position technically to incorporate use of nanomaterials into their existing material conversion processes, clearly posing a dispersion and functionality obstacle for many NM producers that requires their collective action to overcome. While there are other obstacles of course, the market for nanomaterials remains heavily fragmented.
Fragmentation
Fragmentation would be common of any emerging raw materials suite, as past material innovations bear witness. It takes time for a materials base to organise itself effectively and while this needs to occur in the case of nanomaterials on a material specific basis, lessons from past experience can stand to benefit NM producers. However, to progress industrial uptake there are many issues graphene producers must concede to address through organising effective material associations as opposed to broad “catch-all” trade associations as hitherto has proven the case, so that producers can come together and pool process technology and capital resource where warranted to deliver supply certainty, consistency, price transparency and the raft of other commercial essentials such as insurability and regulatory compliance.
INSCX™ exchange
One such mechanism created to assist NM producers achieve this collaborative organisation more effectively has been the launch of INSCX™ exchange, http://inscx.com a specialist physical delivery exchange system created specific to nanomaterials and complimentary traditional materials.
The Exchange, working alongside NM specific forums such as the Graphene Council can lead to a push among producers to agree on material standards, secure access to evolving industrial-scale process technology, NM producer access to capital pools to finance upscale and a drive towards presenting a market-driven as opposed to a top-down institutional approach to regulation.
The Exchange since lauch has operated behind-the-scenes to work with insurers, regulation agencies, trade financing pools and enabled access to industrial-scale dispersion technology to provide its registered NM producers with the necessary tools to grow organically. While many other NM producers continue to operate in isolation to one another outside of the Exchange system, it is therefore of no surprise that the biggest examples of the push to commercialise graphene of late has come from major companies like Samsung, who are resorting to developing their own internal supply chains.
Avoiding Insularity
While it is critical for any NM producer to stay relevant in a rapidly changing landscape, it is important we suggest that individual producers avoid falling into the trap of marketing their material as a differentiator to the point where not only is it unavailable anywhere else, as industrial uptake will necessitate multiple supply sources as opposed to a single source. Exclusivity, while working well for low-volume, niche applications, will only work against wider bulk uptake. Producers should resist attempts to market their materials exclusively to single-end users in their own interests as such a strategy will only handicap wider industrial uptake, thus reducing the potential profitabiliity of individual producers themselves.
Individual NM producers would do better to use the Exchange mechanism created through INSCX™ exchange to agree means to license the most effective fabrication technology to provide downstream users with nano-solutions they can quickly integrate into their existing conversion processes. This in turn will create a mood to embrace integration of new, innovative materials by industry more quickly, confident in the knowledge the NM producer base can perform to deliver a clear cost benefit. Equally, knowing the price tolerance of the potential buyer using the same mechanism can avoid a situation where individual producers effectively price themselves out of the market. Knowing the worth of a material from the perspective of the buyer can greatly aid producers assess the worth of their own business. Ultimately in a transparent and efficient market, a single producer is not the only influence on the price or the best model to adopt to encourage wider uptake. Semi-synthetic materials such as graphene will generally always trend lower in value for a given grade of the material as process technology continually improves.
Dual Strategy
The key task for individual producers we suggest remains for producers to follow a dual approach targetting low-volume/high-value niche applications alongside pursuing high-volume bulk applications to build a case for wider indusrial-scale uptake of Graphene (and other NMs) thus driving dual revenue flows for individual producers. While of course larger volumes lead not only to greater economies of scale, producer focus we suggest should remain on margin retention as oppposed to a pure focus on price.
Some industry observers have suggested the real commercial impact that graphene will have will come not from replacing existing materials but in finding entirely new uses unique to graphene itself. Others have suggested that individual producers use a variety of different fabrication techniques and specifications of Graphene are unique to a particular end application. The conclusion being that Graphene, particularly at the nano-scale can never become a standardised material.
This latter argument, while true at present, follows a purely specialist, single supply model, the limitations we have already alluded to. Clearly, wider industrial scale uptake will warrant an inevitable standardisation of key Graphene grades following on from wider producer adoption of industrial-scale fabrication techniques. The example of the fledgling steel industry during the 1800s prior to the adoption of the Bessemer process compares to the emerging Graphene industry of today. Prior to the adoption of the Bessemer process steel fabrication was foundry specific and largely regarded as a low volume/high price niche application. However, following on from the adoption of the Bessemer process, came large scale industrial uptake paving the way towrds the creation of household names such as US Steel. We can only draw a comparable with Graphene today and wonder how ludicrous it would have been for US Steel to grant use exclusivity to Ford Motor Company to use steel in auto manufacture as opposed to permiting use in construction and other sectors. Equally, would Ford have agreed to rely exclusively on supply from US Steel?
Consider one difficulty;
How could a capital investor or lender commit funds to a new venture whose business model relied on the supply of a material that its users could not establish an open market value for or guarantee supply certainty?
How too would an insular, niche market strategy lead to a case where current equity valuations for recently stock exchange listed Graphene producers can be sustained, as insularity argues against larger revenue streams?
Regulation
Regulation of nanomaterials continues to evolve in the absence of a collective producer voice with a myraid of “consultants” increasingly clouding the landscape risking unmanageable cost burdens for NM producers. We suggest producers themselves must become the prominent voice regulation agencies hear. While issues surrounding the functioning of the Substance Information Exchange Forum (SIEF) in the European Union (EU), adopted for established material sectors, pose problems for emerging material producers, a colllective producer appproach can dovetail to make existing regulatory frameworks function better. As cited earlier, behind-the-scenes efforts by INSCX™ have created a trade reporting system individual NM producers can easily adopt without cost. The system referred to as Downstream Audit Sequencing (DAS) creates a basis for specific toxicology analysis through enabling confidential track-trace of Exchange supplied NMs and a means for the insurance industry to broaden EHS and product liability coverage of NMs generally.
It is proposed by the Exchange that official regulation agencies, insurers and regognised toxicology institutes be granted access to trade information pertaining to nanomaterials collated through the DAS framework. Beyond these disclosures individual producer trade information will remain confidential. This contrasts with calls for such information to be made public and proposals for a series of NM registers. The DAS mechanic itself was first recommended to Lloyds of London, the global insurance market when the Exchange was commissioned to provide a template for insurance underwriters by Lloyds in 2010. DAS is now being assessed by regulation agencies in the United Kingdom: http://www.nanotech-now.com/news.cgi?story_id=49354
Substance Information Exchange Forum (SIEF)
As regards SIEF the Exchange in the next edition of the influential journal; Nanotechnology Perceptions, outlines how using the Exchange, NM producers can act to pool resources to comply with SIEF thus removing the significant cost burden individual lead-registrant status imposes on producers. The proposal, if adopted by NM producers, offers a level playing field allowing for IP licensing of process technology while removing an obligation on rival producers to make trade diisclosures to a potential competitor as is currently the case under SIEF.
The Graphene Council
It is hoped by the authors that the Graphene Council can evolve to become a collective producer voice and a point of contact for INSCX™, regulation agencies, insurers and the buy-side to overcome obstacles to progress and that use of Graphene follows a steady path to wider industrial uptake as its potential deserves.
This article was submitted by Fullerex Limited, merchant members, INSCX™ exchange, United Kingdom
The views expressed are those of the authors.