Dr. Gupta Verlag

Spray Foam 2012Intercontinental Hotel, Dallas Parkway TX

Angela Austin, Editor - PU Magazine International

Economic Review of the Global Spray Foam and OCF Markets

NAFTA Headlines for 2011

NAFTA PU production reaches 6.5Bn lbs NAFTA SPF grows by 8.6% in 2011 to reach

485 MMlbs US construction spending forecasts up Growth in renovation and weatherisation US Housing starts up Low pressure kits up 10-12% in US Canadian market up 8-10% Mexican Govnt pushes eco building

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International Headlines for 2011

SPF grows globally due to new legislation and regulations

Global construction spending recovers Chinese SPF construction market stalls US helps to promote SPF in China &

India OCF production exceeds 500 million

cans

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Dr. Gupta Verlag

Estimated Global PU Production by Region ( MMlbs) 2008-2011

Region (MMlbs) 2008 2009 2010 % AAGR 2011 % AAGR

2009/10 2010/11

NAFTA 6,442 5,512 6,254 13.5% 6,459 3.3%South America 1,230 1,332 1,455 9.3% 1,698 16.7%

China 9,336 10,141 12,103 19.4% 13,095 8.2%

EMEA 12,251 10,836 11,684 7.8% 12,225 4.6%

Asia Pacific 4,189 3,968 4,910 23.7% 5,280 7.5%

Total 33,448 31,788 36,407 14.5% 38,757 6.5%

GDP Growth for Major Economies 2010-13 (%)

Source UN

Country 2010 2011 2012 2013

China 10.4 9.3 8.7 8.5India 9 7.6 7.7 7.9USA 3 1.7 1.5 2Canada 2.1 1.6 2.2 2.5Mexico 5.8 3.8 2.5 3.6Brazil 7.5 3.7 2.7 3.8Russia 4 4.4 3.9 4Japan 4 -0.5 2 2EuroZone 2 1.6 0.7 1.7

World 4 2.8 2.6 3.2

Global PU Drivers

MDI is driven by preservation and energy saving

TDI driven by consumption Environmental concerns Population, mobility and comfort Versatility – multiple applications

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Market drivers for spray foam

Private and public construction spending

Renovation & weatherisation Versatility Fuel security Fuel and food prices Legislation

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Growth in Construction Spending 2010/2011 (%)

IHS Global Insight

-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Asia Pacific ( inc China)

Eastern Europe

South America

Middle East & Africa

Western Europe

North America

Global average

Decade of Building for Existing Housing US Stock (‘000 units)

US Census Bureau 2003

0

5,000

10,000

15,000

20,000

25,000

30,000

>1919 1920-29 1930-39 1940-49 1950-59 1960-69 1970-79 1980-89 1990-99 2000-04

US Housing Stock 2010

Harvard University Center for Housing Statistics

Notable LEED Renovation Projects

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More countries implement energy saving legislation in 2011

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International oil and food prices

Source: UN Economic Forecasts

Source: World Economic Situation and Prospects 2012, United Nations, New York

PU Magazine

Global Production Trends in SPF ( MMlbs)

SPF Production (MMlbs) 2009 2010 2011

% change 2010/2011

NAFTA 421 448 485 8.3%South America 12 14 15 7.1%Europe 192 145 164 13.1%Middle East & Africa 25 26 28 7.7%China 172 198 205 3.5%Asia Pacific 115 105 110 4.8%

Total 937 936 1007 7.6%

Global Trends in SPF Production

□ Global:Growth was strong in H1 2011 but slowed in H2 due to economic uncertainty □ Western Europe: Growth for underfloor heating very strong and opportunities for wall insulation too. EU legislation is a driver.□ Eastern Europe: existing housing badly needs insulation, SPF offers a solution□ Middle East & Africa: new energy efficiency regulations introduced □ China interim ban has stalled demand□ Asia Pacific More insulation is needed to meet growing energy demand

Source: BASF

SPF in Under floor Heating

Source Gupta Verlag

Leading SPF Producing Countries 2010 & 2011 ( MMlbs)

Leading producer 2010 2011

% change 2010/2011

Spain 40 29 -27.5%

Russia 25 30 20.0%

Benelux 20 33 65.0%

Japan 45 50 11.1%

China 198 205 3.5%

US 323 350 8.4%

Canada 100 105 5.0%

Iran uses SPF too!

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Interim ban on PU in China’s buildings from March 2011

Source: Chinese Media

New Chinese Regulations

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PU raw material manufacturers and SPF associations have been lobbying the Chinese government to promote regulations that allow SPF to be used in buildings.

Latest draft legislation requires A2 standards, which can only be met by PU in composite systems

Disagreement over regulations for high rise buildings of 50 and 100m ( 160ft and 325ft)

Chinese need to achieve energy savings of 65% in major cities, but cannot use PU, EPS, XPS or other oragnic materials

PIR & PUR panels may be acceptable

The future for China ? Beijing Mall Fire

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North America leads SPF market

Total production reaches an estimated 485MMlbs

New 1-1.2 pcf density foams appear Weatherisation schemes upgrades

607,000 homes Existing building stock offers potential LP kits market reach 450-500,000 “Flash & batt” still growing but suffer

from rising costs

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Source:* IAL, ** CPI End Use Survey

Estimated SPF Production – NAFTA2009-2011 (MMlbs)

Country 2009 2010 2011 % change

2010/2011

US 305 323 350 8.4%

Canada 95 100 105 5.0%

Mexico 21 25 30 20.0%

Total 421 448 485 8.3%

Estimated Production of ccSPF & ocSPF 2010 & 2011 ( MMlbs)

Gupta Verlag

2011 2011 2011 2010 2010 2010Growth

(%)Growth

(%)

Country open closed Total open closed Total open closed

US 95 255 350 87 236 323 9.2% 8.1%

Canada 45 60 105 50 50 100 -10.0% 20.0%

Mexico 12 18 30 10 15 25 20.0% 20.0%

Total 152 333 485 147 301 448 3.4% 10.6%

US Market Drivers for SPF

Commercial wall insulation Promoting “ building science” and the

building envelope Exporting “know-how” Agricultural applications New housing starts increasing “ Bio content” foams slowly penetrating

the market, but not yet mainstream

Flash and Batt

Still a small sector of the SPF market Not suitable for all wall construction Estimated SPF used for this ~30MMlb Rises in price of fiberglass has made it

less economic Effective in Southern and Mid US

SPF Market drivers in Mexico

Government subsidies increases SPF demand in Mexico

“Casa E” educates builders about insulation, especially the need for more efficient cooling systems

Agricultural use dominates the market Open cell foams find applications

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SPF Market drivers in Canada

Residential renovation and weatherisation dominates Canadian market

Increased competition from importers of SPF creates downward prices pressure

Challenges for exports to China and the US

Demand up 8-10% in 2011

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Low pressure kits

Product used mainly in North America Demand has grown10-12% due to

remodelling projects Versatile and useful for small spaces Total US market estimated to be 450-

500,000 kits in 2011

Dr. Gupta Verlag

One component foam (OCF)

Versatile cans are used globally for all types of applications.

Largest market is in China OCF not affected by Chinese PU ban Significant investment by European

companies in China Be alert for low quality imports due to

excessive use of LPG & chlorinated parraffins

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Estimated Global OCF Production ( no of cans) 2011

Industry estimates

China 145,000,000NAFTA 56,000,000

South America 5,000,000

Europe 320,000,000

Middle East 10,000,000

Asia Pacific 14,000,000

Total 550,000,000

US Construction Outlook

House sales remain low and foreclosure pipeline remain full

A slight improvement in housing starts started in 2011

Non-residential construction remains low due to unemployment

Government needs to initiate programes for renovation and weatherisation could create new jobs

Source: NHAB

US Housing Activity 2008-2011 (f) (‘000 units)

US Housing Activity( ,000 units) 2007

2008

2009

2010

2011(f)

2012(f)

Total Housing Starts

1,342 900 554 529 708

1,063

Single Family1,03

6 616 442 415 575 860Multifamily 306 284 112 114 133 203

New Single Family Sales 769 482 374 310 405 605Existing Single-

Family Home Sales

4,959

4,338

4,567

4,208

4,450

5,300

US Housing Activity( ,000 units) 2007

2008

2009

2010

2011(f)

2012(f)

Total Housing Starts

1,342 900 554 529 708

1,063

Single Family1,03

6 616 442 415 575 860Multifamily 306 284 112 114 133 203

New Single Family Sales 769 482 374 310 405 605Existing Single-

Family Home Sales

4,959

4,338

4,567

4,208

4,450

5,300

US Housing Type 2008 2009 2010 2011 (F)

Total housing starts 900 554 585 677

Single family 616 442 435 447

Multiple family 284 112 150 230

New family sales 482 374 310 315

Existing single family sales 4,338 4,567 4,208 4,500

Forecast Growth in Construction Spending 2015-2020 (CAGR %)

Source IHS Global Insight

Source: Statistics Canada

Housing starts in Canada 2006-2011

Year (units)

2006 227,0002007 228,0002008 211,0002009 149,0002010 180,0002011 191,000

Health and safety issues heading your way?

Consumer safety relating to OCF cans due to free isocyanate content. In Europe R 40 legislation introduced

Safer cleaning solvents for handling and disposal to meet VOC limits and reduce costs

Spraygun before cleaning and after

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Source: Bio8

OCF Can recycling

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OCF Can recycling at PDR

WWW.PDR.DE

Conclusion

Despite economic challenges & poor housing market SPF demand continues to grow

US is forecast to become energy self sufficient by 2030 and SPF will help achieve this

Safety and implementation of best practices key for sustainable business

Dr. Gupta Verlag

Dr. Gupta Verlag

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