CREATING TOMORROW'S SOLUTIONS KOREA ADHESIVE MARKET OVERVIEW Korea Adhesive Industry Association Sept. 26, 2013

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 1 KOREA ADHESIVES MARKET - OVERVIEW Key features of Korean market in 2012  Market size : 581,035 MT(4.5% ↓ from 608,765 MT in 2011)  Estimated Turnover value : 1,618 Mio. US$  Estimated Growth rate : 4.5% down vs  Export (11%↑) : 33,460 MT (352 Mio. US$)  Import (15%↑) : 23,532 MT (224 Mio. US$)

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 2 ADHESIVE MARKET TRENDS – KOREA (1) The Adhesives market is slow down by 4~5% in traditional adhesives market, such as building & construction, Packaging, woodworking, etc. On the other hand, high end application such as Automotive, Electronics and Electrical application showed higher growth. however it usually not classified as adhesive market segment. The majority of the demand in high performance/ high functional adhesives are not properly captured in the national statistics, because it is usually not classified as adhesive business. High Performance/Functional adhesives in Automotive and E/E used to be dominated by multinational adhesives players. However more and more local Korean companies or big Korean conglomerate entering into this market more aggressively. Sealant market is estimated to be about 200 Mio. US$.

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 3 ADHESIVE MARKET TRENDS – KOREA (2) Focus more on sustainability with Environmental Friendly drive. i.e. less & less solvent base. K-GHS regulation and K-REACH regulation are getting even more restrictive and the related laws already passed in congress, effective from July 2013, and Jan High performance value added products imported from Japan/Europe for mainly high-end applications. More and more local material is replacing those imported one. Material base shifting from traditional to new advanced material to meet the sophisticated market application in electronics or automotive market. Regardless, low cost formulation and low cost process still remain as key competitive factors. Korean gov’t supporting openly multinational corporation to develop new adhesive material for high end application locally in Korea.

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 4 KOREA ADHESIVES PRODUCTION BY PRODUCT’S TYPE Type 2010 (MT) 2011 (MT) 2012 (MT) Formaldehyde Base 225,620232,825195,155 Solvent Base24,96624,45226,096 Water Base202,539205,496210,388 Hot Melt27,54228,41628,437 Reactive30,56429,36735,493 Pressure Sensitive 54,15354,02152,156 Others32,66634,18833,310 Total598,050608,765581,035

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 5 KOREA ADHESIVES PRODUCTION IN APPLICATION Type 2010 (MT) 2011 (MT) 2012 (MT) Plywoods202,493208,709126,527 Wood Work.25,61123,69068,232 Civil & Const.112,823120,661119,143 Packaging30,11732,15732,262 Paper, Book28,16430,06830,718 Textiles50,32644,26051,254 Transport.42,04245,90748,581 Shoes. Leather23,47722,56220,540 Elec & Elec20,52017,37121,189 DIY22,96628,39923,622 Other Ind.39,51136,98138,967 Total598,050608,765581,035 Source : KAIA

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 6 6 KOREA ADHESIVES – EXPORT Item (HS Code) $ Inc. (%) Vol (MT) Amount (US$, 1000) Vol (MT) Amount(US$,1000) Rubber base 1372, ,34936,5 Plastics base 6,943118,0166,91487,893 △ 25.5 Others2,35422,4642,30526, Polymers & Rubber based ( )23,237173,39624,091234, Total Total32,671316,32933,460352, Source : KNSO

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 7 7 KOREA ADHESIVES – IMPORTS Item (HS Code) $ Inc (%) Vol (MT) Amount (US$, 1000) Vol (MT) Amount (US$, 1000) Rubber base 551,064811, Plastics base 53387, , Others73115, , Polymers & Rubber based ( )19,95090,50721,84999, Total21,269195,07223,532223, Source : KNSO

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 8 ITEMS2010(MT)2011(MT)2012(MT)(%) Formalde- hyde Urea174,061177,272139,177 Melamine24,81825,00625,023 Phenol26,74130,54730,955 Subtotal225,620232,825195, Solvent Based Vinyl acetate8,0757,5537,818 Other resins7,9549,32510,719 Chloroprene Rubber6,6915,7015,625 Synthesized Rubber Natural Rubber1,2931,3881,483 Subtotal24,96624,42526, Water Based Vinyl acetate26,94427,98128,917 Vinyl acetate copolymer9,2219,1299,528 EVA Emulsion14,46816,83217,269 Acryl Emulsion137,160132,765130,042 Other Emulsion4,0186,47112,250 Isocyanate6001, Synthesized Rubber2,7533,6283,857 Others7,3757,6847,599 Subtotal202,539205,496210, PRODUCTION BY ADHESIVES TYPE – KOREA (1)

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 9 ITEMS2010(MT)2011(MT)2012(MT)(%) Hot Melt EVA11,91411,89710,525 Rubber10,22511,58012,660 Others5,4034,9395,252 Subtotal27,54228,41628, Reactive Epoxy12,2038,31211,523 Cyanoacrylate Polyurethane15,12817,11219,737 Modified Acryl1,3822,0622,168 Others1,5701,5881,765 Subtotal30,56429,36735, PSA Acryl44,78246,04746,366 Rubber8,6327,2284,997 Others Subtotal54,15354,02152, Miscellaneous32,66634,18833, Total598,050608,765581, PRODUCTION BY ADHESIVES TYPE – KOREA (2)

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 10 Application fields2010(MT)2011(MT)2012(MT)Share(%) Plywood202, , Woodworking25,61123,69068, Construction112,823120,661119, Packaging / Lamination30,11732,15732, Paper Tubing5,0447,0359, Bookbinding23,12023,03321, Textiles50,32644,26051, Vehicles42,04245,90748, Footware / Rubbers23,47722,56220, Electronics20,52017,37121, Household Uses22,96626,39923, Other39,51136,98138, Total598,050608,765581, PRODUCTION BY APPLICATION - KOREA

Korea Adhesive Industry Association Jae-Won Kim, KAIA, Sept. 26 th 2013, Slide 11 LET’S TAKE ACTION TODAY TO SAVE THE EARTH THANK YOU FOR YOUR ATTENTION