THE POLYAMIDE MARKET IN EUROPE

Emerging from the turmoil and prospects for future growth and profitability

A multi-client study proposal from AWJ Consulting

Report to be published: September 2010

TABLE OF CONTENTS

INTRODUCTION .................................................................................... 3 OBJECTIVES ......................................................................................... 6 CONTENTS OF THE REPORT ............................................................ 10 SCOPE ................................................................................................. 11 APPROACH AND METHODOLOGY .................................................... 13 SCHEDULE .......................................................................................... 15 COSTS AND PAYMENT TERMS ......................................................... 15 ABOUT AWJ CONSULTING ............................................................... 16

The Polyamide Market in Europe

INTRODUCTION The European market for Polyamide in plastics applications reached a historical high in 2007, when demand reached approximately 850,000 tonnes. Annual growth rates during the preceding 3 years had averaged just under 4%, outperforming GDP growth, and whilst automotive production had remained pretty flat during that period, polyamide had made gains over metal in certain existing automotive applications and been established in several new ones (NB the automotive market has typically accounted for approximately 30% of all polyamide demand). The global financial turmoil that was triggered in September 2008 has, however, led to an undermining and decline of polyamide market growth in most European countries. Polyamide demand in 2008 across Europe as a whole fell by about 6%, with the situation in 2009 significantly impacted on by dramatically falling vehicle production of 20%. On the supply side, several leading Polyamide producers have responded to the difficult demand conditions of the last 2 years by restructuring their European production with the aim of improving their cost base and competitiveness in the market. Most notably, BASF has decided to restructure its PA6 production by focussing manufacture at the Verbund sites in Antwerp and Ludwigshafen, with the 40,000 tonne p.a. capacity plant at Rudolstadt in Eastern Germany closing later this year. Rhodia has already closed (March, 2009) its PA66 polymerisation and compounding plant at Ceriano Laghetto in Italy, transferring capacity to France (standard compounds) and Poland (specialities). The Polish PA6 producer, Zaklady Azotowe Tarnow (ZAT) is also imminently expected to take over the German PA6 producer Unylon Polymers (48,000 tonne p.a. capacity), following recent approval of the creditors. Although the European PA market is currently characterised by a relatively small number of PA polymer producers, there are approximately 60 independent compounders also supplying the PA processing sector, with their share (volume tonnage) estimated at approximately 30%. Several of the PA polymer producers have also been improving their routes to market by strengthening their distributor activity (NB distributors probably account for 15-18% of all PA sales). Whilst there has been some concentration of the PA processing sector in recent years, more can be anticipated in the short term and is likely to
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take place across all PA end use markets, whether they be automotive, electrical / electronic or other industrial / consumer applications.

Given the different PA market conditions evident as we enter a new decade, a changing supply structure is likely to emerge over the next few years. Interestingly, current (March 2010) supply in the PA66 market is increasingly tight, with BASF reporting limited availability of certain compounded PA66 grades, due to an ongoing tight feedstock situation and livelier demand. Rhodia is also experiencing difficulties in its PA66 supply chain, and like BASF, reeling under the effects of the tight butadiene situation. As the overall PA industry slowly recovers from the recent turmoil of the last 18 months, it faces major questions relating to market drivers, application dynamics and competitive strategies. To assist companies in this area, AWJ Consulting is launching a major new study to address and answer these questions. The study is entitled: The Polyamide Market in Europe Emerging from the turmoil and prospects for future growth and profitability Among the issues to be analysed and commented on within the report are: The level of industry profitability The strategies of the main PA producers The product and application positioning of the major PA polymer producers and independent PA compounders The size and growth of the market, by PA polymer and compound product type, and by end use market application The supply of PA polymer and raw material feedstock to the independent compounding sector, including an appraisal of secondary feedstock sources (including any waste streams from the PA fibre market). Specific questions to be answered include:
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By what % did the PA market really fall in 2009? Which types of polyamide and which end use markets are set to enjoy the strongest recovery and growth? ( e.g. in the Electrical and Electronics market , PA6 demand is continuing to be swelled by a growing use of energy saving lamps ) What are the key individual application developments which will underpin the anticipated recovery? What inter- polymer competition exists in the key applications? Will renewable PA polymers (e.g. BASF and Rhodias PA 6.10 and DSMs PA 4.10 products) develop a significant volume position in the market? Has European PA demand suffered significantly from manufacturing migration to Asia? What scope remains for additional substitution of metal by polyamide? (e.g. structural inserts in automotive bodywork) Where does the power lie to influence change i.e. OEM, first/second tier systems supplier (moulder), etc? Who are the largest 100 moulders /extruders of polyamide? How and where are the independent compounders effectively competing against the polyamide producers, gaining specification and becoming active suppliers? What level of commitment do the leading polyamide compounders have to the different applications? The report will be an invaluable resource to companies who are attempting to ensure that their business in Europe maximises its profit and growth potential. The research will result in a detailed report and full study service from AWJ Consulting, which will include responding to queries and interaction with clients and their management.

The Polyamide Market in Europe

OBJECTIVES The objective of the report is to provide a comprehensive analysis of: 1. Market size and structure 2. Drivers of end use demand and future industry prospects 3. Competitive strategies of PA suppliers in the marketplace, with an assessment of the positions of integrated and independent compounders 4. The larger moulders and extruders of PA To achieve these objectives the following information will be detailed: Market size and structure The volume of polyamide polymer and compound demand past, present and future, segmented by 3 main end-use injection moulding markets, and 3 polyamide product families For each of the 3 end-use markets, Automotive, Electrical/Electronic and Other Industrial /Consumer, AWJ Consulting will provide an analysis of the market according to most of the major individual segments. Approximately 24 individual applications (i.e. 8 for each of the 3 end-use markets) will be specifically covered, a list of these applications is shown on page 12 of this proposal) The volume of current and future demand for polyamide in other processes i.e. Extrusion and Blow Moulding Drivers of end use demand and future industry prospects The changing structure of the 3 downstream end-use injection moulding markets, their concentration and the main 4-5 customers/end users in the major individual application segments The implications of structural change at the OEM, Tier 1 and Tier 2 supplier level for the polyamide suppliers
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The ways in which customers are adopting new polyamide compound product formulations such as flame retardancy or recycled feedstock materials to meet new price/performance needs Competitive strategies The supply of polyamide is relatively complex as the chart on page 10 indicates. AWJ Consulting will review and analyse the position of approximately 20 PA polymer producers and 25 Independent PA compounders in the market including an appraisal of: Business assessment Market and application focus Estimated polyamide production volume in 2009 (for integrated producers) Split of polyamide sales between captive use (compounding, textile, film) and third parties i.e. independent compounders, textile producers, moulders, film and other extruders. (for integrated producers) Compound production assets and the use of toll compounders The approximate volumes of PA compounds produced in 2009 by product family PA polymer producers to be profiled will include: Aquafil Ascend Performance Polymers BASF Beaulieu Nylon Domo DSM DuPont EMS Grivory Honeywell Invista Kuibyshevazot Lanxess Nilit Nurel
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Polyamide High Performance P Group Radici Rhodia Tarnow Ube

Independent PA compounders to be profiled will include: Addiplast Albis Akro-Plastic Bada Plast CP Polymer Tecnik Lati Pentac Polykemi Polyone Ravago Repol Sabic Innovative Schulman SO.F.TER SpA Taro Plast Teknor Apex Triesa Vamp Tech

The Polyamide Market in Europe

TABLE 1 EUROPEAN POLYAMIDE MARKET ORGANISATION AND PRODUCT FLOW

POLYAMIDE RESIN (includes local production and imports)

RESIN SALE

TEXTILE/ FILM/ OTHERS

EXPORTS

INDEPENDENT COMPOUND RESIN COMPOUND

INTEGRATED COMPOUND RESIN COMPOUND

RECLAIM/ RECYCLE

DIRECT SALE

DISTRIBUTOR

EXPORT

IMPORTED COMPOUND

MOULDING / PROCESSING INDUSTRY

The Polyamide Market in Europe

CONTENTS OF THE REPORT The contents of the report are expected to be as follows: Introduction Explanatory Notes Executive summary and management overview Section One Product overview by polyamide type Section Two Market analysis INJECTION MOULDING APPLICATIONS Automotive end use market review o Car production o Industry structure o Demand by application o Structure of component demand o Supplier leadership Electrical/Electronic end use market review o Electrical component production o Industry structure o Demand by application o Structure of component demand o Supplier leadership Other injection moulded applications market review o Consumer goods/industrial engineering/building & construction and materials handling/components production o Industry structure o Demand by application o Structure of component demand o Supplier leadership OTHER PROCESSING APPLICATIONS Film extrusion

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The Polyamide Market in Europe

Other extrusion processes and markets (tubing, profile, semi finished stock shapes, cable jacketing and monofilament) Blow Moulding Section Three Competitive strategies of suppliers to the market Company profiles - approximately 40 (comprising 20 PA polymer producers and 20 independent compounders)

SCOPE Product Scope The polyamide families to be principally covered at an application level are: PA 6 PA66 PA4.6 and partially aromatic polyamides ( inc PPA ) Other PA product types such as PA11, PA12, PA612, PA4.10 , PA6.10, etc will only be covered to the extent that their combined volume demand in 2009 will be estimated, thus enabling an accurate 2009 demand estimate for all PA products. Polyamide compound types to be appraised will include: Glass fibre reinforced Flame retardant (UL V0) Others (includes unfilled, heat stabilised, mineral reinforced, impact modified and blends) Data Points Data will be provided for 2008 and 2009 (actual) with forecasts for 2010 and 2014. Units of Measurement Data will be reported in tonnes, or thousand metric tonnes, with values in m as appropriate.

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The Polyamide Market in Europe

Applications Research focus will concentrate on approximately 24 of the individual applications (or associated application groups) currently consuming the largest volumes of polyamide in the 3 end-use injection moulding markets. Smaller, but faster growing, applications will also be covered. Automotive: Segment and application analysis may include Market Segment Under bonnet Application Examples HVAC, Inlet Manifolds, Header tanks, fuel systems, filter and pump housings, oil pans, rocker boxes, engine covers, front end carriers Wheel trims, mirror housings, door handles, body panels, structural inserts, fuel tank flaps, windscreen wiper parts Dashboards/Instrument panels/air bags, underseat trays, instrument controls (inc gear knobs), handles, fasteners, locking systems and seats Switches, instrumentation, sensors, connectors and cables

Exterior

Interior

Electrics

Electrical and electronics: Segment and application analysis may include Market Segment Components Application Examples Switchgear, connectors, bobbins, plugs, sockets, switches, knobs, handles, wiring accessories, motors, cables , ballasts for CFLs Large appliances, small appliances, IT equipment, Power tools, lighting

Housings

Other end use markets: Segment and application analysis may include Market Segment Consumer goods Application Examples Sports and leisure, apparel/textile bobbins, marine, hand tools, knife handles, trolleys, push chairs, buggies, furniture, umbrellas, kitchen products,
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toys, aerosol valves, gardening products, bathroom plumbing and shower products Industrial \engineering Pumps, machinery housings/guards, tools, gears and castors, cable ties, clamps, conveyor chain links, ball bearing cages, chemical engineering Spacers, ties, screw protectors, utility enclosures, conservatory roof brackets

Building/ Construction Medical /Healthcare

Medical devices and housings

Materials handling /packaging Crate handles Other Polyamide Processes and their markets: Process and application analysis may include Process Type Film Extrusion Non film extrusion Blow Moulding Application Examples Mono, multi layer and BOPA film for food, medical , and industrial packaging Profile, tube, stock shapes, semi-finished products for machined parts, cable jacketing and monofilament Automotive under bonnet APPROACH AND METHODOLOGY AWJ Consulting will use a field-oriented approach to build the study, making multiple calls to develop its understanding of the market combined with analysis of publicly available data and information related to polyamide suppliers and processors in Europe. AWJ Consulting will undertake approximately 130 interviews of which about 30% will be personal. Tony Jones will attend the majority of personal meetings.

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The Polyamide Market in Europe

Type of company OEMs Tier One/Two Systems Suppliers, Moulders and extruders PA compounders PA polymer producers Others (inc compound machinery, additive and filler producers, polymer distributors, recyclers and traders) TOTAL

Number of interviews 20 50

25 20 15

130

AWJ Consulting will use a well developed approach to maximise the information gathered during each interview. Due to its extensive background and knowledge of the Engineering Thermoplastics industry, AWJ Consulting is able to successfully engage knowledgeable industry participants in meaningful discussions.

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The Polyamide Market in Europe

SCHEDULE AWJ Consulting will conduct the fieldwork from April to July 2010, with publication of the final report planned for September.

COSTS AND PAYMENT TERMS The total cost of the report will be advised on application. AWJ Consulting will invoice half the fees on receipt of order and half on delivery of the final report. Out-of-pocket expenses are included within the project cost. Payment is due 20 days from date of invoice. The fee includes two hard copies of the study report and a review meeting to discuss the reports contents. A further copy of the report will be supplied in a PDF format. Review meetings and discussions will normally be held in the UK. Arrangements for other locations will incur travelling costs to be invoiced separately.

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The Polyamide Market in Europe

ABOUT AWJ CONSULTING AWJ Consulting is a small, specialized consulting service dedicated to the Global Engineering Thermoplastics Industry. Founded by Tony Jones in October, 2007, AWJ Consulting offers a broad portfolio of services to clients, both large and small, who can benefit from his commercial hands on and consulting experience built up since entering the Industry in 1983. In June 2008, AWJ Consulting published a well received multi-client report on the 500,000 tonne Chinese Polyamide market. Clients included 7 major polyamide polymer manufacturers supplying polymer or compounds into this fast growing market. In August 2009, AWJ Consulting published a multi-client report on the 42,000 tonne Indian Polyamide market, another fast growing market that was only marginally dampened by the global downturn. To date, 6 Polyamide producers have subscribed to the report. AWJ Consulting has also successfully completed 9 single client reports for ETP manufacturers and compounders. Tony Jones commenced his career in technical sales of ETPs to the UK Injection Moulding sector with Whitfield Plastic Compounders. At the time, they were a leading ETP compounder in the UK, and a distributor of PC, PA, PBT and ABS for Bayer, as well as a toll compounder of POM for Celanese (now Ticona). His European Plastics Industry understanding and knowledge was then developed during a 4 year consultancy spell with CDC (Corporate Development Consultants), including successful project management and completion of the first pan European multi-client studies on both the PP and ETP compound markets. Following a business development role with leading UK Telectronics moulder , Plastic Engineers , in the early 1990s , Tony returned to Sales
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Management with the specialist PA compounder , Plastex , before joining Applied Market Information ( AMI ) in 1993. In an 11 year career at AMI, as Head of Client research, he pioneered the consulting companys early studies and research of the Central European Plastics Industry, as well as managing major market research projects in the late 1990s for polymer manufacturers seeking to enter the emerging, but fast growing markets in Asia (particularly China). More recently, Tony also spent 3 years as Commercial Manager at Chem Polymer, the UKs leading independent PA compounder who are now owned by the US diversified material science company, Teknor Apex. In 2007, when back at AMI, he researched and published a successful and well received multi-client study of the European PA market, in addition to managing a strategic review of the largest 50 technical compounders in Europe. Where required to fully meet client needs, Tony will be networking with associates around the world who have complementary skills and experience within the Global Engineering Thermoplastics Industry. AWJ Consulting offers assistance in the following areas:
Market research and analysis Competitor analysis and benchmarking Strategic analysis and planning Defining new product opportunities Market and product diversification Merger and acquisition screening , selection and due diligence Global expansion

AWJ Consulting has extensive market experience and knowledge in:

Injection Moulding Thermoplastics Compounding Engineering plastics in Electrical/Electronic applications Extrusion Plastics Recycling Automotive plastic applications and component supply

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The Polyamide Market in Europe