1. 9th ARAC EXCO Meeting in Taiwan Korea Adhesive Market Overview October 28 th, 2011 October 28 th, 2011 Korea Adhesives Industry Association Korea Adhesives Industry Association

2. Korea Adhesives Market - Overview ♦ Domestic market in 2010 ♦ Domestic market in 2010 * Estimated Market : 598,050 MT * Estimated Market : 598,050 MT Market Value : 1,220 Million US$ Market Value : 1,220 Million US$ Average Growth : 5.2% Average Growth : 5.2% * Export (16%↑) : 32,541 MT (224 Million US$) * Export (16%↑) : 32,541 MT (224 Million US$) * Import (15%↑) : 23,532 MT (223 Million US$) * Import (15%↑) : 23,532 MT (223 Million US$) ♦ The market showed healthy growth by increasing demand from automotive and E/E application but dominated by multinational adhesives companies. ♦ Expected growth rate will be down due to European economic turmoil, and increased cost of raw materials & energy, along with strengthened environmental laws & regulations.

3. Korea Adhesives Production by Product’s Type Type 2008 (MT) 2009 (MT) 2010 (MT) Growt h, (%) Formaldehyde Base 225,777222,032225,6201.6 Solvent Base29,02325,24124,966 Water Base182,868186,034202,5398.8 Hot Melt30,50226,57527,5423.8 2-Phase Reactive34,18728,69330,5646.5 Pressure Sensitive48,56054,37954,1530 Others16,19625,52932,66627.9 Total567,113568,483598,0505.2

4. KOREA ADHESIVE PRODUCTION & GROWTH RATE Source : KAIA

5. Korea Adhesives Production by Application Type 2008 (MT) 2009 (MT) 2010 (MT) Grow (%) Plywoods194,135187,328202,4938.1 Wood Work.41,76739,27725,611-34.7 Civil & Const.102,94997,112112,82316.1 Packaging28,61231,27930,117-3.7 Paper, Book32,11633,16328,164-15.1 Textiles49,40450,09050,3260.5 Transport.33,25541,40342,0421.5 Shoes. Leather 28,76723,06523,4771.8 Elec & Elec14,26116,39420,52025.1 DIY18,64818,38522,96624.9 Other Ind.23,19930,98739,51127.5 Total567,113568,483598,0505.2 Source : KAIA

6. KOREA ADHESIVE MARKET SEGMENTS & GROWTH RATE Source : KAIA

7. 7 Korea Adhesives – Export Item (HS Code) 20092010 $ Inc. (%) Vol (MT) Amount (US$, 1000) Vol (MT) Amount(US$,1000) 3506-10- Rubber base 511,928112802-58.4 Plastics base 6,14988,0017,260112,67912.8 Others1,85615,0612,54822,99452.7 Adhesives based on polymers or rubber (3506-91-0000)19,90566,92322,62187,68131.0 Total Total27,961171,91332,541224,35630.5 Source : KNSO

8. 8 Korea Adhesives – Imports Item (HS Code) 20092010 $ Inc (%) Vol (MT) Amount (US$, 1000) Vol (MT) Amount (US$, 1000) 3506-10- Rubber base 551,064811,28821.0 Plastics base 53387,912706104,55118.9 Others73115,58989618,08116.0 Adhesives based on polymers or rubber (3506-91-0000)19,95090,50721,84999,94010.4 Total21,269195,07223,532223,86014.8 Source : KNSO

9. MARKET TRENDS AND NEEDS ♦ ♦ Key success factors for adhesives are Environmentally Friendly and Higher Performance/Functional due to increasing demand of the markets ♦ Focus more on Environmentally Friendly Adhesives, i.e. Non-Solvent Based, Water Based Emulsion, Hot-Melts, and 1or 2 Phase Reactive ♦ High Performance/Functional adhesives demand are rapidly increasing from automotive and E/E markets but dominated by multinational adhesives players. Local Korean companies or big Korean conglomerate entering into this market recently. ♦ New innovative products in waterborne, hot-melt, photo-curable, room temperature or low temperature curing, non-solvent and high-solid content products will get the higher attention for technical development.

10. 10 Appendix

11. PRODUCTION OF ADHESIVES IN KOREA. (1) Type 2008 (MT) 2009 (MT) 2010 (MT) Share (%) Growth, (%) Formalde- hyde resin Urea-formaldehyde175,244171,008174,061 Melamine-formaldehyde24,88123,14724,818 Phenol-formaldehyde23,14723,55526,741 Total225,777222,032225,620371.6 Solvent based Vinyl acetate6,2947,6878,075 Chloroprene rubber10,1676,8586,691 Other resins9,6598,4647,954 Synthesized rubber1,4421,005953 Natural rubber1,4611,2271,293 Total29,02325,24124,9664 Reactive Epoxy17,84212,13012,203 Cyanoacrylate310301281 Polyurethane15,49114,63315,128 Modified acryl2643551,382 Others2801,2741,570 Total34,18728,69330,56466.5

12. PRODUCTION OF ADHESIVES IN KOREA.(2) Type 2008 (MT) 2009 (MT) 20010 (MT) Share (%) Growth (%) Hot melt EVA11,75711,68011,914 Rubber12,2628,75810,225 Others6,4836,1375,403 Total30,50226,57527,54253.8 Water- based Vinyl acetate32,00424,00426,944 Vinyl acetate copolymer6,9397,9719,221 EVA emulsion9,5279,64314,468 Acryl emulsion119,418128,108137,160 Other emulsion7,0805,3734,018 polymer isocyanate1,066532600 Synthesized rubber2,5222,9212,753 Others4,3127,4827,375 Total182,868186,034202,539348.8 PSA Acryl40,47645,66244,782 Rubber7,5587,9698,632 Others526748739 Total48,56054,37954,1539- Miscellaneous16,19625,52932,666527.9 Total567,113568,483598,0501005.2

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