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

Conclusion2

10/28/2011

Market Sale Volumes of Taiwan Adhesives

347,755

368,698

341,524

330,772

368,618

2006 2007 2008 2009 2010

20,805

23,92825,173

21,824

26,458

2006 2007 2008 2009 2010

3

Sales (Unit in ton) Sales ( Million NT$)

(↑11.4%) (↑21.2%)

10/28/2011

Material Tonnage Sales % (As of Total Taiwanese Adhesives)

4.3%

4.8%

1.9%

6.9%

9.1%18.2%

4.8%10.4%

1.1%

1.6%

14.8%

22.0%

Phenolic-formaldehydeUrea-formaldehydeMelamine-formaldehydePolyvinyl Acetate EmulsionEVA EmulsionAcrylatePolyurethaneEpoxyCRHot-meltCyanoacrylateSealant

4

Adhesive type 2009 2010ratio

of 2010

growth

Phenolic-formalde

12,800 15,710 4.3%22.73

%

Urea-formaldehyde

15,956 17,870 4.8%12.00

%

Melamine-formalde

6,140 7,070 1.9%15.15

%

Polyvinyl Acetate Emulsion

27,340 25,300 6.9%-

7.46%

EVA Emulsion 42,500 54,440 14.8%28.09

%

Acrylate 30,745 33,650 9.1% 9.45%

Polyurethane 65,735 67,230 18.2% 2.27%

Epoxy 67,930 81,250 22.0%19.61

%

CR 15,686 17,860 4.8%13.86

%

Hot-melt 37,160 38,240 10.4% 2.91%

Cyanoacrylate 3,580 4,173 1.1%16.56

%

Sealant 5,200 5,825 1.6%12.02

%

Total330,77

2368,61

8100.0

%11.44

%

10/28/2011

Major Applications of Different Adhesives in Taiwan

Adhesive types Applications/ industries

Phenolic-formaldehyde Plywood, Construction …

Urea-formaldehyde Plywood, Woodworking, Fiber…

Melamine-formaldehyde Plywood, Fiber...

Polyvinyl Acetate Emulsion Paper, Woodworking, Packaging...

EVA Emulsion Packaging, Construction, Cement mixing …

Acrylate Paper, Construction, Pressure Sensitive Adhesive…

Polyurethane Fiber, Footwear, Construction…

Epoxy Construction, Civil, Electronics…

CRWoodworking, 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)

112/04/19

Import & Export Sale Data of Taiwan Adhesive Industry

2009

Item Import Export

TonsThousand

NT$NT$/kg Tons

Thousand NT$

NT$/kg

Hot-Melt 2,016 380,549 189 24,735 2,343,285 95

EVA 3,379 114,898 34 30,009 955,863 32

Other Adhesives

19,036 8,454,622 444 88,964 8,114,969 91

Total 24,431 8,950,069 366 143,708 11,414,117 79

2010

Item Import Export

TonsThousand

NT$NT$/kg Tons

Thousand NT$

NT$/kg

Hot-Melt 2,578 529,885 206 25,758 2,725,204 106

EVA 4,062 149,659 37 40,485 1,159,983 29

Other Adhesives

30,235 11,584,483 383 114,573 12,440,196 109

Total 36,875 12,264,027 333 180,816 16,325,383 906

(↑50.7%) (↑37%)

112/04/19

Quick Glance of Recent Market Taiwan adhesive industry:

Produce 368 Thousand Tons in 2010. (↑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 2010.

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 FuturePast

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 VOCWater base resin　 - VOC<5(v/v)%　 - Residue monomer<500ppmUV Curable resin　 - Solvent freeHigh BRC (Bio-Renewable Carbon)

ResinFormaldehyde<0.2% or Formaldehyde freeHeavy Metal freeBPA free

Reduce toxic materials in adhesives

Develop green adhesives

VO

C

To

xic

ity

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 productsDevelopment of high performance / value- added products More globalization to enhance market sizeMore globalization to enhance market size

PresentPresent FutureFuture

Fu

nctio

nF

un

ction

Pric

Pric

ee

˙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

PastPast

Application

9

New Adhesive Product Development in Taiwan

Underlining Technology

10/28/2011 10

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 Update New Laws and Regulations on Environmental Regulations on Environmental Protection & Plant Safety in Protection & Plant Safety in TaiwanTaiwan

11

10/28/2011

New Environmental New Environmental Regulation-1Regulation-1

No Regulation Description 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 New Environmental Regulation-2Regulation-2No Regulation Description 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 New Environmental Regulation-3Regulation-3

No Regulation Description 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 New Environmental Regulation-4Regulation-4

No Regulation Description 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 New Environmental Regulation-5Regulation-5

No Regulation Description 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 Safety and Health Regulations-1Regulations-1

No regulations Descriptions

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 Safety and Health Regulations-2Regulations-2

No regulations Descriptions

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 Safety and Health Regulations-3Regulations-3

No regulations Descriptions

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.

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10/28/2011

Safety and Health Safety and Health Regulations-4Regulations-4

No regulations Descriptions

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.

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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.

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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:886-2-29998788 Fax: 886-2-29990380 E-mail: adhesive@ms39.hinet.net

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Appendices

Regulations update in Taiwan