CMR

FlexPO2014

Shanghai

October 24, 2014

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GLOBAL PLASTOMERS & ELASTOMERSMARKETS & TRENDS

2014-2020October 24, 2014

Mr. Pranav Bhupathi

FlexPO - 2014

CHEMICAL MARKET RESOURCES, INC.1560 West Bay Area Blvd., Suite 195, Friendswood, TX 77546, USA

Tel. (281)-557-3320, www.CMRHouTex.com

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FlexPO2014

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October 24, 2014

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Introduction

mPOP and mPOE are essentially the same product differentiated mainly by theirapplication and density Elastomers: Elastomers are those ethylene-based, metallocene-catalyzed polymers

having densities less than 0.885 g/cm3. They are used in (1) polymer modification, especially TPOs, (2) wire & cable, (3) foams, and other applications.

Plastomers: Plastomers are ethylene-based polymers with densities between 0.885 g/cm3 and LLDPEs. They are used primarily in film applications for (1) food packaging, (2) non-food packaging, and (3) stretch film.

Metallocene elastomers and plastomers, since their introduction in the early 90swhen consumption was concentrated primarily in the developed Western world,have only recently proliferated in usage on a global scale

These metallocene resins, which were originally positioned as a replacement formost commodity polyethylenes ultimately settled for being “Value AddedDifferentiated Commodities”

The last decade has witnessed a strong spurt in demand in developing marketsin Asia, along with new producers developing proprietary technologies to boostsupply in this market.

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Highlights of Metallocene PE Development

1991 Exxon commercialized Exxpol 1991 – Exact® 1993 Dow commercialized Insite® – Affinity® and

Engage® Chevron Phillips, Total, developed their metallocenes 1997(circa) Dow started Elite® m-LLDPE and Exxon

started Exceed® m-LLDPE. Metallocenes, originally positioned as a replacement for

most commodity PEs ultimately settled to being “Value Added Differentiated Commodities”

Post metallocene era: single site catalyst, late transition metal catalyst;

The Z-N System is still active and provides lots of alternatives

Advanced ZN products offering similar performance to mPEs have also been developed – Nova & Westlake

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FlexPO2014

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Current Polyolefinic Product Positioning

HDPE

LLDPE

Z/N PlastmPOP/

POE

EP(D)M

hPP

RCP

ICP

mPOP/POE

100% C2 100% C3

Comonomer Increasing

Modulus

LDPESolution Platform &

metallocene technology is the key

Three Key Issues:

1) Reactor, 2) Catalyst, 3) Ability to handle amorphous material

Business of Olefin Polymerization

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FlexPO2014

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Plastomers & Elastomers Applications

EP(D)M

EB mPOP/POE

PB mPOP/POE

EXACT®AFFINITY®ENGAGE®TAFMER®

VISTAMAXX®VERSIFY®TAFMER®

VISTALON®NORDELL®TAFMER®OTHERS

Impact modification of PPAutomotive interior &

exterior applicationsAppliance marketsMost TPO markets except

Soft TPOs

Automotive interiorSingle Ply RoofingConsumption in TPVsOther impact modification

applications

Cling layer in stretch filmsImpact modification of PP in

Automotive interiorImpact modification for

Household containers

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FlexPO2014

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October 24, 2014

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Metallocene based Ethylene Polymers & Copolymers Have Been Most Important!

Over 90% of the metallocene based products consumed globally include Ethylene Based polymers & copolymers

mLLDPE comprises of nearly 70% of all metallocenes consumed globally

*Others include:m-HDPE/MDPE,EP Elastomers& Propylene based Plastomers/Elastomers

mLLDPE, 3,800, 71%

mPOP, 505, 9%

Others*, 350, 6%mPP, 230,

4%mPOE, 540,

10%

2014 Demand ~ 5,425 KTA

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FlexPO2014

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Product Market Applications Other

Materials Used

Comments

mPOE

Polymer Modification

Automotive, soft touch handles and others

EPDM, SEBS, PVC

ethylene elastomers are able to disperse better in PP matrix exhibiting better properties.Automotive sector increasingly using TPO replacing PVC and do compete with TPU in soft applications.Better than PVC due to migration of fogging TPO has a cost advantage over EPDM with less amount used for required properties Metallocene elastomers is a cleaner product and lighter then EPDMEPDM has better oil and heat resistance then metallocene elastomers a requirement in under the hood application

Wire & Cable

For non oil resistant jacketing application.

EVA, EPDM,LDPE

Ethylene elastomers improves flexibility in LSNH(low smoke non halogen compounds)Able to add filler tolerances Improves processability to EPDM based wire and cable applicationAble to accomodat higher filler loading for halogen free applications

Advantages of m-POE/m-POPs by Market/Applications- An Overview

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Product Market Applications Other

Materials Used

Comments

mPOE

Foam Toys EVA

Able to produce lighter foams with equivalent hardnessAble to have better resilience than EVA (return to original shape)Better abrasion resistance than EVA

FootwearMid-solesOuter soles

EVA, PVC, EPDM, Natural rubber, SBS

Able to produce better consistency resinBetter reliance than EVA based solesHigher tensile and tear properties than EVALower shrinkage than EVAGood low temperature flexibility compared to PVC and lighter weightFast recycle time

Medical Applications Medical tubes PVC

able to offer flexibility and clarityProcessability Halogen free and advantage where PVC free applicaition is required

Advantages of m-POE/m-POPs by Market/Applications- An Overview

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Product Market Typical Applications

Other Materials

UsedComments

mPOP FilmsPackaging (Similar to mLLDPE)

LDPE

Metallocene plastomers have very good processasability High seal strength for pouch applicationLower density with downgauging potential

Advantages of m-POE/m-POPs by Market/Applications- An Overview

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Global Market for Plastomers & Elastomers, 2014

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Market Characterization of mPOP– Growth Driver Tree Analysis, 2014

m-POP

Stretch Film

Food Packaging

Non-Food Packaging

Ice Bags

Frozen Foods

Fresh cut Produces Meat & Poultry

Others

Heavy Duty Bags & Sacks

Industrial Liners

Others

380 KTA

30 KTA

27 KTA

505 KTA 6.9 % AAGR

Cheese Pouches

HDPE Coextrudes

Wire and Cable

Polymer Modification

Others

Medical

21 KTA

30 KTA

10 KTA

8 KTA

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Global Market for Plastomers & Elastomers, 2014

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Market Characterization of mPOE– Growth Driver Tree Analysis, 2014

m-POE

Foam

Polymer Modification

Wire and Cable

TPE

Others

405 KTA

34 KTA

20 KTA540 KTA 6.8 % AAGR

Industrial And Construction

Footwear

Medical

Others

6 KTA

50 KTA

5 KTA

20 KTA

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Plastomers & Elastomers –Summary of Applications

Resin type Applications Competing Material

m-POP

Food Packaging EVA/LLDPE blends

Cling /Stretch Film LLDPE

Non Food Packaging Conventional LLDPE , LDPE

Polymer Modification EP(D)M, EPR

m-POE

Polymer Modification EP(D)M,EPR

Wire and Cable EP(D)M, EVA copolymers, LLDPE, and LDPE

Foam f-PVC, conventionalpolyethylene based foams

Industrial & Construction f-PVC, conventional polyethylenes

Footwear f-PVC, SBR, and TPU

Medical Applications PVC

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Global Market Penetration of mPOEs in TPE Market -Substituting EPDM, 2000 - 2004 - 2014

EPDM84%

mPOE16%

EPDM61%

mPOE39%

EPDM37%

mPOE63%

2000

2014

2004

mPOE’s have continued to replace EPDM in TPE compoundingIn NA and EU they have almost 100% replaced EPDM in automotive bumpers

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Factors Influencing Market Penetration of Metallocenes

Following criteria influence the growth of mPEs:

Processability – Need to further improve on this viacatalyst/process modification to address customer’s needs

Cost Issue – Need to optimize cost/performance and strategizefor more market penetration

Technical Services – Need to work with the customers indeveloping high-end products

Competition from advanced ZN - Need to further developapplications beyond Adv. ZN.

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Major Suppliers of Plastomersand Elastomers, 2014

Suppliers m-POP m-POE

Dow Chemical NA, EU NA, EU

Exxon Mobil Chemical Company (EMCC) NA,EU, SEA NA,SEA

Borealis EU -

Mitsui Chemicals - NEA, SEA

Japan Polyethylene Corp. NEA -Japan Polyethylene Co. NEA -

LG Chem - NEA

SK Chem - NEA

REGIONS: NA – North America SA - South America EU – Europe SEA – South East Asia NEA- North East Asia CN-China

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Metallocene Competitive LandscapeWe categorize producers in three groups In terms of Volume, Technology, and

Business Commitment First -Tier Players : Dow, ExxonMobil

Dow and ExxonMobil have the technology and first commercialization advantage

Dow and ExxonMobil are currently the market leaders Second Tier Players

Nova - mirror of Dow Chemical Company – explored Sclairtech System and BP Innovene via proprietary catalyst development

Chevron Phillips – initial successful grades set the stage for Chevron Phillips Total Petrochemical and LyondellBasell (via Equistar) developed few

grades, but the lack of R&D on metallocenes, subsequent financial situations have not helped them progress metallocene as well as they could

Westlake - Inherited the superior technology from Eastman – a combination of Eastman technology and BP Innovene-Eastman – Nova Catalyst system –Mxsten®

Mitsui is by far the most advanced – but limited to Japan and some Europe Borealis – A company that could not commercialize very well – still

positioned to commercialize soon. Other Emerging players

Korea – SK Energy, LG Chem, Daelim Thailand – SCG/Dow, Potentially PTT

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FlexPO2014

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Worldwide Metallocene Opportunities

U.S., Europe, Japan, and Korea will continue the production. Countries like China, ASEAN will develop metallocenes by themselves or

collaborate with U.S., Europe, Japan, or emerging technology developers likeKorea.

Converters will continue playing a big role in metallocene market penetration. Two Types of Opportunities:

Blending Opportunities Leapfrogging Opportunities

Western EuropeNorth America

South America

ME

Africa

China

Rest of Asia

Japan

Eastern Europe

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C4 versus C8 Grade Development

In order to effectively compete in mPOE and mPOP – presence of Octene (C8) grades in the product portfolio is critical End-user preference – shifting towards C8 due to better

compatibility and lower density grades Most competitors offer C8 grades

Significance of producing C4 based mPOE/mPOP China and Rest of Asia – Wide use of C4 grades due to price

sensitivity Availability and price of C8 comonomer Supply security – While the supply of C4 is possible through

on purpose production, C8 on-purpose production is limited to Sasol and Dow

Supply has always been tight for C8 in Asia

Any new facility should have the ability to produce both C4 and C8 based mPOE & mPOP grades

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FlexPO2014

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October 24, 2014

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Porter’s Five Forces for Plastomers and Elastomers

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Future Trends

There is significant opportunity to expand the production of mPOE and mPOP in Asia and globally Tight supply/demand Growth rates will continue to remain in the 8-10% in the next

5-10 years – Potentially higher depending on the level of penetration in the South & SE Asian markets

China & Rest of Asia will be the fastest growth markets and will contribute to the 25% of the mPOE/mPOP consumption by 2014 Potential to surpass 50% of the global demand by 2025 High Automotive growth Increasing demand in foam/footwear and polymer modification

markets

North America and Europe will continue to be the highest consumption regions in 2014 with moderate growth rates Slow growth in automotive market will be compensated by

increased EPDM replacement Demand will surpass the local supply – potential for new

entrants Portion of the new demand will be served by Asia

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FlexPO2014

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Discussion

Over T wo D ecades of B usiness R esearch Excellence

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