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Adhesive Market Report of Mainland China

Michael Yang

Secretary General of CNAIA

Oct. 28, 2011, The Lalu

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1. Current Status

2. Application Market Situation

3. Existing Problems

4. Future Development Focus

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1. Current Status

The output of A & S in Mainland China in 2010

was 4.628 million tons, while the sales volume

reached 58.73 billion RMB, increasing 14.27%

and 11.65% respectively comparing with those

of 2009 (not inclusive of UF, PF and MF).

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2.94

3.3253.57

4.05

4.628

0

1

2

3

4

5

2006 2007 2008 2009 2010

(million tons)

(Year)

14.27%

Output of A & S in Mainland China During 2006-2010

Oct. 28, 2011, The Lalu

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34.8

42

48.552.6

58.73

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 (Year)

(billion RMB)11.65%

Sales Volume of A & S in Mainland China During 2006-2010

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Output and Sales Volume of UF, PF and MF in Mainland China in 2010

UF PF MF Total

Output (1,000 tons)

7,800 493 288 8,581

Sales Volume (billion RMB)

50.7 5.43 2.88 59.01

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Type ofAdhesive Name of Adhesive

Year of 2010

Output(1,000 tons)

Sales Volume (billion RMB)

Water-based

Adhesive

PAE Emulsion 1,690

PVAc Emulsion 720

VAE Emulsion 360

PU Emulsion 28

CR Emulsion 2

Total 2,800 20.56

Solvent-based

Adhesive

SBS Resin 187

CR 165

PA 152

Total 504 8.37

Classification of A & S in Mainland China in 2010

Oct. 28, 2011, The Lalu

Type ofAdhesive

Name of Adhesive

Year of 2010

Output(1,000 tons)

Sales Volume (billion RMB)

Hot Melt Adhesive

EVA Resin 216

Synthetic Rubber 154

Others 60

Total 430 7.35

Reactive Adhesive

PU 476

Epoxy 105

Cyanoacrylate 19.8

Modified Acrylate 8.0

Anaerobic 2.8

Total 612 15.08

Others

Silicone 261

Polysulfide 21

Total 282 7.37

Classification of A & S in Mainland China in 2010

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60.5%

10.9%

9.3%

13.2%

6.1%

Water-basedAdhesive

Solvent-basedAdhesive

Hot MeltAdhesive

ReactiveAdhesive

Others

Output Proportion of A & S in Mainland China in 2010

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10.3

11.512.5

13.6

-1

1

3

5

7

9

11

13

15

2007 2008 2009 2010

(billion M 2 )

(Year)

8.8%

Output of PSA Products in Mainland China During 2007-2010

Oct. 28, 2011, The Lalu

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19

2223.7

27

0

5

10

15

20

25

30

2007 2008 2009 2010 (Year)

(billion RMB) 13.9%

Sales Volume of PSA Products in Mainland China During 2007-2010

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183.1202.5

164.7186.3194.8

271.1

326.4

274.4

134

196.5

0

50

100

150

200

250

300

350

2006 2007 2008 2009 2010

ImportExport

Adhesives I & E Volume by Mainland China During 2006-2010

(1,000 tons)

(Year)

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0.748

0.983

1.1681.167

1.696

1.026

0.7830.752

0.457

0.284

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2006 2007 2008 2009 2010

ImportExport

Adhesives I & E Value by Mainland China During 2006-2010

(Year)

(billion USD)

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2. Application Market Situation

The largest consumption of A & S in Mainland China was for construction, building and decoration industries, accounting for 27%.

Packaging & label and wood works rank the second.

The fastest growth was in assembly and transportation, increasing 36.63% and 32.38%, respectively.

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27.23%

19.55%

15.34%

8.60%

8.04%

7.58% 6.98%

5.08%

1.60%

Construction, Building and Decoration Packaging & LabelWood Works Paper and Book BindingShoes and Leather FibersTransportation AssemblyDIY

Adhesives Market Share in Mainland China in 2010

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3. Existing Problems

1. Low grade and poor quality stability of products

2. Inadequate innovation ability

3. Shortage of high-skilled talents

4. Outstanding environmental problems

5. Relatively low industry concentration

6. Low degree of internationalization

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4. Future Development Focus

1. Emerging industries are still booming.

Wind power, solar energy, aviation and space, new energyautomobile, high-speed railway and rail traffic, etc.

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Examples

Adhesive for wind power generation

Adhesive for solar energy generation

Adhesive for aviation and space industries

Adhesive for light-weight autos

Adhesive for composite plastic packaging materials

Adhesive for energy-saving building

Adhesive for water-treatment equipment

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2. Vigorously promote energy-saving and environmental protection products.

Water-borne CR, PU and epoxy adhesive

High solid content, solvent-free, one-component, UV curing adhesive

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3. Focus on the development of HMA and HMPSA.

4. Develop urgently high quality and high performance adhesives (e.g. modified, reactive, nano-type, specialty and multi-functions).

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China National Adhesives Industry Association (CNAIA)

Address: Room C-204, No. 19, Dongsanhuan South Road, Beijing 100021Phone: +86-10-8766 7165Fax: +86-10-8766 3015E-mail: yang@cnaia.orghttp: // www.cnaia.org

Thank Youfor Your Attention

Oct. 28, 2011, The Lalu