9th ARAC EXCO Meeting in Taiwan

Korea Adhesive Market Overview

October 28October 28thth, 2011, 2011

Korea Adhesives Industry AssociationKorea Adhesives Industry Association

Korea Adhesives Market - OverviewKorea Adhesives Market - Overview

♦ ♦ Domestic market in 2010Domestic 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.

Korea Adhesives Production by Product’s Type

Type2008 (MT)

2009(MT)

2010(MT)

Growth,

(%)

Formaldehyde Base

225,777

222,032

225,620

1.6

Solvent Base 29,023 25,241 24,966 -1.0

Water Base182,86

8186,03

4202,53

98.8

Hot Melt 30,502 26,575 27,542 3.8

2-Phase Reactive

34,187 28,693 30,564 6.5

Pressure Sensitive

48,560 54,379 54,153 0

Others 16,196 25,529 32,666 27.9

Total567,11

3568,48

3598,05

05.2

2-PhaseReactive

5%

Water Base33%

FormaldehydeBase37%

Hot Melt5%

Others5%

PressureSensitive

10%

SolventBase4%

KOREA ADHESIVE PRODUCTION & GROWTH RATE

Source : KAIA

0

50,000

100,000

150,000

200,000

250,000

FormaldehydeBase

Solvent Base

Water Base Hot Melt 2-PhaseReactive

PressureSensitive

Others

-30

-20

-10

0

10

20

30

40

50

60

70

Production (MT) Growth Rate (%)

Korea Adhesives Production by Application

Type2008 (MT)

2009 (MT)

2010(MT)

Grow (%)

Plywoods194,13

5187,32

8202,49

38.1

Wood Work. 41,767 39,277 25,611-

34.7

Civil & Const.

102,949

97,112112,82

316.1

Packaging 28,612 31,279 30,117 -3.7

Paper, Book 32,116 33,163 28,164-

15.1

Textiles 49,404 50,090 50,326 0.5

Transport. 33,255 41,403 42,042 1.5

Shoes. Leather

28,767 23,065 23,477 1.8

Elec & Elec 14,261 16,394 20,520 25.1

DIY 18,648 18,385 22,966 24.9

Other Ind. 23,199 30,987 39,511 27.5

Total567,11

3568,48

3598,05

05.2

Source : KAIA

Wood Working

7%

Textiles9%

Transportation7%

Packaging5%

Shoes. Leather & Rubbers

4%

Elec & Elec3%

DIY3%

OtherIndustrial

5%

Paper, Book Binding

6%Civil & Constuct

17%

Plywoods34%

KOREA ADHESIVE MARKET SEGMENTS & GROWTH RATE

Source : KAIA

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Plywoods Wood Working

Civil &Constuct

Packaging Paper, Book Binding

Textiles Transport Shoes. Leather &Rubbers

Elec & Elec DIY OtherIndustrial

-30

-20

-10

0

10

20

30

40

50

Production(MT) Growth Rate (%)

7

Korea Adhesives – ExportKorea Adhesives – Export

ItemItem(HS Code)(HS Code)

20092009 20102010$ Inc.$ Inc.(%)(%)Vol (MT)Vol (MT) AmountAmount

(US$, 1000)(US$, 1000) Vol (MT)Vol (MT) AmountAmount(US$,1000)(US$,1000)

35063506-10--10-

Rubber Rubber basebase 5151 1,9281,928 112112 802802 -58.4-58.4

Plastics Plastics basebase 6,1496,149 88,00188,001 7,2607,260 112,679112,679 12.812.8

OthersOthers 1,8561,856 15,06115,061 2,5482,548 22,99422,994 52.752.7

Adhesives based Adhesives based on polymers on polymers or rubberor rubber

(3506-91-0000)(3506-91-0000)

19,90519,905 66,92366,923 22,62122,621 87,68187,681 31.031.0

TotalTotal 27,96127,961 171,913171,913 32,54132,541 224,356224,356 30.530.5

Source : KNSO

8

Korea Adhesives – ImportsKorea Adhesives – Imports

ItemItem(HS Code)(HS Code)

20092009 20102010$ Inc$ Inc(%)(%)

Vol (MT)Vol (MT) Amount Amount (US$, 1000)(US$, 1000) Vol (MT)Vol (MT) Amount Amount

(US$, 1000)(US$, 1000)

35063506-10--10-

Rubber Rubber basebase 5555 1,0641,064 8181 1,2881,288 21.021.0

Plastics Plastics basebase 533533 87,91287,912 706706 104,551104,551 18.918.9

OthersOthers 731731 15,58915,589 896896 18,08118,081 16.016.0

Adhesives based Adhesives based on polymers or on polymers or

rubberrubber(3506-91-0000)(3506-91-0000)

19,95019,950 90,50790,507 21,84921,849 99,94099,940 10.410.4

TotalTotal 21,26921,269 195,072195,072 23,53223,532 223,860223,860 14.814.8

Source : KNSO

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

AppendixAppendix

PRODUCTION OF ADHESIVES IN KOREA. (1)

Type2008 (MT)

2009(MT)

2010 (MT)

Share (%)

Growth, (%)

Formalde-hyde resin

Urea-formaldehyde 175,244 171,008 174,061

Melamine-formaldehyde

24,881 23,147 24,818

Phenol-formaldehyde 23,147 23,555 26,741

Total 225,777 222,032 225,620 37 1.6

Solventbased

Vinyl acetate 6,294 7,687 8,075

Chloroprene rubber 10,167 6,858 6,691

Other resins 9,659 8,464 7,954

Synthesized rubber 1,442 1,005 953

Natural rubber 1,461 1,227 1,293

Total 29,023 25,241 24,966 4 -1.0

Reactive

Epoxy 17,842 12,130 12,203

Cyanoacrylate 310 301 281

Polyurethane 15,491 14,633 15,128

Modified acryl 264 355 1,382

Others 280 1,274 1,570

Total 34,187 28,693 30,564 6 6.5

PRODUCTION OF ADHESIVES IN

KOREA.(2) Type

2008 (MT)

2009 (MT)

20010(MT)

Share (%)

Growth

(%)

Hot melt

EVA 11,757 11,680 11,914

Rubber 12,262 8,758 10,225

Others 6,483 6,137 5,403

Total 30,502 26,575 27,542 5 3.8

Water-based

Vinyl acetate 32,004 24,004 26,944

Vinyl acetate copolymer

6,939 7,971 9,221

EVA emulsion 9,527 9,643 14,468

Acryl emulsion119,41

8128,108 137,160

Other emulsion 7,080 5,373 4,018

polymer isocyanate 1,066 532 600

Synthesized rubber 2,522 2,921 2,753

Others 4,312 7,482 7,375

Total182,86

8186,034 202,539 34 8.8

PSA

Acryl 40,476 45,662 44,782

Rubber 7,558 7,969 8,632

Others 526 748 739

Total 48,560 54,379 54,153 9 -

Miscellaneous 16,196 25,529 32,666 5 27.9

Total567,11

3568,483 598,050 100 5.2

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