The Outlook for Recycled Resins

Canadian Plastics Resin Outlook Conference

October 6, 2011
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Agenda
Recycled Resin Overview

Mathelin Bay Introduction Fundamentals Recycled Resin Prime Resin Markets Industry Outlook The recycling industry is playing a significant role in helping companies develop and implement winning strategies to help offset rising raw material costs.
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Mathelin Bay Associates

INTRODUCTION Resin Procurement for Processors. Non-Resin Procurement for Processors. Sales Support for Processors. Mergers & Acquisitions and Private Equity Supply Chain Rationalization.

Mathelin Bay leverages extensive multi-disciplined experience and networking to help clients develop sustainable resin programs that reach the bottom line.
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Fundamentals
RECYCLED RESINS

Demand continues to increase Supply continues to decrease Prime & Secondary market correlation Recycled content / environment Alternatives for recycling industry

Just as in polymer resin industry economics, recycled resins have a unique set of drivers that impact their market .
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Demand
CONTINUES TO INCREASE

Despite economic downturn there is significant demand increase for plastic raw materials to help offset rising feedstock costs. Demand for historical scrap, regrind and repro is at all time high and will continue to rise. Sourcing strategies for recycled resins are key.
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Supply
CONTINUES TO DECREASE Despite increased recycling efforts, supply of post industrial feedstock is decreasing and post consumer feedstock is marginally improving. This will translate into higher costs across the entire value chain over the near term and increase scrap and repro pricing in the marketplace.

Supply streams are valuable commodities.

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Supply
CLASSIFICATIONS

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Supply
CLASSIFICATIONS

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Market Correlation
VIRGIN PRIME and SECONDARY

There is correlation exhibited between recycled resins Vs virgin prime and secondary markets over time. Recycled resins are becoming and establishing a unique market all onto themselves despite this correlation.

Traditionally recycled resin prices lag in relation to virgin commodity pricing both in an up and down market.
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Environment
RECYCLED CONTENT PUSH

3Rs and zero landfill initiatives will stay as the norm. Major OEM brands are capitalizing on marketing. Alternative fuel option. Waste to Energy movement. We will continue to move into more creative and innovative ways to manage our waste and build efficiencies.
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Alternatives
RECYCLING OPTIONS

Recycled content standardized and verifiable content. EOL options to tackle fossil fuel reduced dependency and carbon footprint elimination. Alternative fuel/energy option. There will be further rationalization and competition for recycled resins and waste as these processes gain popularity. www.mathelinbay.com

Prime Resin Market

SNAPSHOT

Commodity resin markets and producers are battling increased feedstock costs and business rationalization due to global competition. Significant social and economic drivers will continue to prevail. Commodity resin markets will continue to react to supply and demand economics and recycling programs will grow.
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Industry Outlook
RECYCLED RESINS Despite slower economic growth recycled resins will grow in demand and have a significant cost advantage over virgin and secondary commodity resins. Environmental initiatives will continue to create demand pull and promote the use of recycled resins

Recycled resins demonstrate a financial cost advantage and promote environmentally friendly solutions.
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Industry Outlook
RECYCLED RESINS Alternative fuels/energy and waste to energy EOL innovative technologies are on the rise which will provide additional outlets and competition for recycled resin feedstock. Reduction of carbon footprint and recycled content standardization will continue to favor the growth of recycled resins.

Recycled resins have and will continue to carve their own special niche within the commodity resin market.
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Contact Information
MATHELIN BAY MANAGEMENT TEAM
Phil Karig, Managing Director Former CPO and VP Procurement, Spartech Corporation. Email: karig@mathelinbay.com Bruce Petersen, Chief Procurement Officer Former VP Materials Management, A. Schulman, Inc., President Diamond Polymers and SPE President. Email: petersenpcs@mathelinbay.com John Denzer, Executive Partner CEO of The Polyven Group and former Director of Sales for PP at Formosa Plastics Corporation, U.S.A. and PP Market Manager at Millennium Chemicals (currently LyondellBasell). Email: denzerpvi@mathelinbay.com & jcedenzer@polyven.net

This Team has Over 90 Years of Polymer Industry Experience.

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Thank You

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Your MBA in the resin business