10/28/2011 Taiwan Adhesive Industry: Recent Market Trend and Technology Development Taiwan Synthetic Resins & Adhesive Industrial Association Chairman Jerry Liao

10/28/2011 Outline  Introduction  Overview of Taiwan adhesive market  Quick glance of Taiwan Market.  Market & Technology trends in Taiwan.  Laws & regulations update relevant to Taiwan adhesive Industry  Conclusion 2

10/28/2011 Market Sale Volumes of Taiwan Adhesives 3 Sales (Unit in ton) Sales ( Million NT$) (↑11.4%) (↑21.2%)

10/28/2011 Material Tonnage Sales % (As of Total Taiwanese Adhesives) 4 Adhesive type ratio of 2010 growth Phenolic-formalde12,80015,7104.3%22.73% Urea-formaldehyde15,95617,8704.8%12.00% Melamine-formalde6,1407,0701.9%15.15% Polyvinyl Acetate Emulsion 27,34025,3006.9%-7.46% EVA Emulsion42,50054, %28.09% Acrylate30,74533,6509.1%9.45% Polyurethane65,73567, %2.27% Epoxy67,93081, %19.61% CR15,68617,8604.8%13.86% Hot-melt37,16038, %2.91% Cyanoacrylate3,5804,1731.1%16.56% Sealant5,2005,8251.6%12.02% Total330,772368, %11.44%

10/28/2011 Major Applications of Different Adhesives in Taiwan Adhesive typesApplications/ industries Phenolic-formaldehydePlywood, Construction … Urea-formaldehydePlywood, Woodworking, Fiber… Melamine-formaldehydePlywood, Fiber... Polyvinyl Acetate EmulsionPaper, Woodworking, Packaging... EVA EmulsionPackaging, Construction, Cement mixing … AcrylatePaper, Construction, Pressure Sensitive Adhesive… PolyurethaneFiber, Footwear, Construction… Epoxy Construction, Civil, Electronics… CR Woodworking, Automobile, Electronics, Textile, Footwear… Hot-melt Packaging, Textile, Footwear… Cyanoacrylate Medical, Household… Sealant Construction, Automobile, Yacht, Container, Glass… Source: Taiwan Synthetic Resin & Adhesives Industrial Association (2010/05)

2015/9/2 Import & Export Sale Data of Taiwan Adhesive Industry 2009 Item Import Export TonsThousand NT$NT$/kgTonsThousand NT$NT$/kg Hot-Melt2,016380, ,7352,343,28595 EVA3,379114, ,009955,86332 Other Adhesives 19,0368,454, ,9648,114,96991 Total24,4318,950, ,70811,414, Item Import Export TonsThousand NT$NT$/kgTonsThousand NT$NT$/kg Hot-Melt2,578529, ,7582,725, EVA4,062149, ,4851,159,98329 Other Adhesives 30,23511,584, ,57312,440, Total36,87512,264, ,81616,325, (↑50.7%)(↑37%)

2015/9/2 Quick Glance of Recent Market  Taiwan adhesive industry: Produce 368 Thousand Tons in (↑11.4% compared with 09) Create sales of NT$ 26.4 billion in 2010 (↑21.2% compared with 09)  Traditional adhesives appear reaching maturity in Taiwan evidenced by flat growth rates and fluctuating sales-volumes coinciding with economic cycles.  In 2011, the market growth should continue but at a much lower rate as compared to that of  Taiwan imported 36.8 thousand tons of adhesives in 2010 (↑50.7% compared with 09), and most of items are high performance and high prices products.

10/28/2011 Present Future Past Solvent-borne Resin - Solvent content>50wt% - Tin, e.g. heavy metal content - Formaldehyde contented High solid Resin - Solid content>60wt% Water based resin - VOC<25 (v/v)% - Residue monomer<0.1(wt)% UV Curable resin - Solvent content <10% Formaldehyde<0.5% Tin free 100% Solid resin/Reactive hot melt - no VOC Water base resin - VOC<5(v/v)% - Residue monomer<500ppm UV Curable resin - Solvent free High BRC (Bio-Renewable Carbon) Resin Formaldehyde<0.2% or Formaldehyde free Heavy Metal free BPA free  Reduce toxic materials in adhesives  Develop green adhesives VOC Toxicity 8 Development of Environmental Friendly Products and Technologies in Taiwan

10/28/2011 Sources ： ITRI-TCSI(2007/12) ; ITRI-MCL(2008/01) Development of high performance / value- added products Development of high performance / value- added products More globalization to enhance market size More globalization to enhance market size Present Future FunctionPrice ˙Functional coating -IC packaging/LCD process materials -3C adhesive -IR Cut/conductive materials -Self-clean/anti-bacterial materials * Durable outdoor coating Food packaging ˙Hybrid materials ˙High purity/electronic grade materials ˙Functionalization ˙nano-materials/particles * Functionized bio-polymer ˙High performance coating -Industrial coating -Packaging ˙Two pack resins ˙Copolymer ˙Blend materials ˙Architecture coating ˙Homopolymer or copolymer technology Market oriented production ˙Tailor-made design ˙Innovative product Past Application 9 New Adhesive Product Development in Taiwan Underlining Technology

10/28/ Conclusion : Outlook of Taiwan Adhesive Market  ECFA has accelerated Taiwan adhesive and associated industries’ step toward globalization.  More adhesive companies are now focusing on green and high performance adhesives, such as waterborne PU, silicones, specialty epoxies and hybrid oriented products to compete in global market.  Development of carbon footprint adhesives based on renewable materials has started, but it is still in infancy.  With possible downturn of economic prospect in Euro Area & USA, Taiwan adhesive market prospect in 2012 seems gloomy, especially on 3C applications.

10/28/2011 Update New Laws and Regulations on Environmental Protection & Plant Safety in Taiwan 11

10/28/2011 New Environmental Regulation-1 NoRegulationDescription of Modification 1 "Stationary Pollution Source: Air Pollutant Emissions Standards" ( modified 2011/1/5) 1.The revision tightens SOx discharge standard of liquid fuel combustion process from 500 ppm to 300 ppm. 2.Currently, combustion processes generally use a low-sulfur liquid fuel to meet the standard. In the long run, to further decrease on SOx discharge, liquid fuel switching to Liquefied Petroleum Gas is preferred in the combustion process. 12

10/28/2011 New Environmental Regulation-2 No RegulationDescription of Modification 2 "VOC emission control and emission standard" (modified 2011/2/1) 1. Starting from 2011Q3, emission checks of VOC equipments need to be executed quarterly by a 3rd party inspection institute. 2. If the VOC was detected with values higher than 1000 ppm in one VOC equipment, it will be considered as one leakage violation. 3. Business should take immediate corrective actions to fix the leakage violation. 13

10/28/2011 New Environmental Regulation-3 NoRegulationDescription of Modification 3 "Methods of banking, offsetting or trading Air pollutant reduction quantity difference authorization for Stationary Pollution Source"( modified on 2011/7/1) To control the total emission quantity of Air pollutants, the new announced regulations would severely impact how business entities in carrying out their banking, offsetting and trading depending upon their emission performances. 14

10/28/2011 New Environmental Regulation-4 NoRegulationDescription of Modification 4 Management of Listed Toxic Chemical Substances regulation (modified on 2011/7/20) 1.Almost all phthalates that have not been listed before are now mandatory listed at least as Class 4 toxic chemical substances. 2.The obligated reporting frequency of Class 4 toxic material storage and handling by entities has been shorten from annually to monthly. 15

10/28/2011 New Environmental Regulation-5 NoRegulationDescription of Modification 5 "Environmental Impact Assessment regulations for development activities" (modified 2011/10/7) For development activities that might generate toxic chemical substances, the developing entities need to submit health/safety risk assessment in its environmental impact assessment. 16

10/28/2011 Safety and Health Regulations-1 NoregulationsDescriptions 1 Regulation of Labeling and Hazard Communication of Dangerous and Harmful Materials (modified 2011/1/7) 1. The first phase of GHS listed 1062 chemical substances that should be GHS complied for Labeling and MSDS format. 2. On 2011/1/7. The second phase of GHS implementation: published newly added 1089 chemical substances that should be GHS complied. 3. In total, now there are 2151 chemical substances should meet the GHS labeling system in Taiwan. 17

10/28/2011 Safety and Health Regulations-2 NoregulationsDescriptions 2 Announcement from Council of Labor affairs (modified 2011/1/1) 1. Council of Labor affairs (CLA) announced that all Explosion-proof equipments need to be certified by the exclusive designated institution: Industrial Technology Research Institute of Taiwan (ITRI). 2. From Jan, 2012, newly equipped lighting, electric motors, and switches in explosion- proof areas should be certified by ITRI before installation. 18

10/28/2011 Safety and Health Regulations-3 NoregulationsDescriptions 3 Employee health protection rules Article 3 (modified 2011/1/21) 1. The modification increases the safety and med care requirements in the workplaces. Workplaces should hire qualified health care personnel based on the numbers of employees hired. 2. It further requires all health care personnel should be “occupational medicine” certified or trained. 19

10/28/2011 Safety and Health Regulations-4 NoregulationsDescriptions 4 Employee health protection rules Article 8 (modified 2011/1/21) 1. The modification requires business entities to correlate employees' health and workplace risks. If a negative correlations found, business entities should take all necessary measures to lower workplace risks. 2. Business entities need to monitor the high- risked employees' health status and take improvement measures. 20

10/28/2011 Summary in Law & Regulations  EIA (Environmental Impact Assessment) process makes manufacturers more tedious to establish new adhesive production facilities in Taiwan than before.  New environmental regulations of manufacturing would raise the cost of products in Taiwan.  Stricter Control of all toxic materials reflects high public concerns on Health/Safety of workers & consumers. – also implies raising cost. 21

Thank You for Your Attention Taiwan Synthetic Resins & Adhesives Industrial Association Address: 3F.-6, No.14, Ln. 609, Sec. 5, Chongxin Rd., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.) Phone: Fax:

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