CURRENT AND FUTURE PROSPECTS FOR TPOs …

1 CURRENT AND FUTURE PROSPECTS FOR TPOs AND TPEs IN AUTO INTERIORSPRESENTED BY:Roger Young, Vice President Asia PacificRobert Eller Associates LLCE-mail: FOR:SPE TPO Automotive Engineered Polyolefins2016 Shanghai, ChinaMarch 22, 20162 Global (interior) demand factors Forecast what is coming in interior TPOs and TPEs Inter-materials and inter-process competition in interiors Growth/value enablers Targets Paths to innovation and growth in interiors: -foams-soft touch technology-skins-body/glazing sealsTODAY S OBJECTIVESNOTE: See abbreviations and TPE family chart in Appendix3 EMERGING MARKET GROWTH RATES HAVE SLOWEDPHOTO SOURCE: THE ECONOMIST-Slowed auto growth-Renminbidevaluation-NAFTA investments-Rising-Attracting investment-Real devaluation-Economic slowdownDEMAND GROWTH FOR INTEROR PP,PP COMPOUNDS, TPOs NAFTA: -LV production continues at ~ LV/yr -2015 demand for interior PP, PP compounds ,TPO= 1428 MM lbs(649 Kt)@85 lbs/LV (39 kg/LV) CHINA.

2 -Yuan devaluation in China will slow vehicle production and affect PP resin, PP compound and TPO demand-Production in 2014 was 24 MM LVs-Interior demand in 2014 was 1725 MM lbs. (784 kT) at ~ 75 lbs. (34kg)/LV-LV production slowdown will moderately affect global demand growth45 CHINA DEMAND GROWTH FOR INTEROR PP,PP COMPOUNDS, TPOs UNCERTAIN5 CHINA DEMAND GROWTH FOR INTEROR PP,PP COMPOUNDS, TPOs UNCERTAINPP+TPO 2014 = 1725 MM lbs. (784 kT) at ~ 75 lbs. (34kg)/VChina vehicle Production in 2014 was 24 MM PoundsChina vehicle production slowdown and pot l effect on PP + TPO demandSOURCE: ROBERT ELLER ASSOCIATES LLC AND GLOBAL POLYMER SOLUTIONS, 20156 TPE FAMILIES.

3 CHANGING COMPOSITION, POEs AS MODIFIERS BROADENED PROPERTY FOOTPRINTSTPE FAMILIESOLEFINIC(o-TPEs)STYRENIC(SBCs)SU PER-TPVsOTHERe-TPEs(e)s-TPO(c)o-TPVSOURC E: ROBERT ELLER ASSOCIATES LLC, 2015r/mydox/TPE/TPEfamilies 072914 Notes: = Production dominated by resin suppliers(a) Recyclate-based TPV(b) Dow Infuse(c) Specialty grades of TPE produced by independent compounders or in-house via reactive compounding(d) Hipex from Kraiburg(E) COPE, COPA, TPU; PVC-based TPEs not shownPOEPOE/POPOBC(b)- H-SBC- SIS- SBS- SILICONE- ACRYLATES- NEW ENTRANTS (d)r-TPV(a)p-TPV(PARTIALLY CROSSLINKED)f-TPV(FULLYCROSSLINKED) COMMODITYTPONEW LOW MW GRADES OPEN NEW APPLICATIONSPOEs ENTERING olefin block copolymers7 COMPETITION IN INTERIOR SOFT TRIM/SOFT.

4 ROBERT ELLER ASSOCIATES LLC, 2015 SOFT TRIM PROCESS MATERIALS OPTIONSOVERMOLDSEBSTPVTPU2-SHOTSKIN PROCESSESTPUTPU BLENDSPVCTPOSEBS (Starting)SLUSH MOLDBACKINJECTIONOR LOWPRESSUREMOLDINGBACKINJECTIONTHERMO-FO RMCOATED FABRICS-- COATED FABRIC-- FOILS-- UNCOATED FABRICSVAC FORM FOILSTPOPVCTPU ALLOY SHEETHAND WRAP ORVAC FORMBACKINJECTIONRISINGSTARSOFT INSTRUMENT PANEL SKIN- CURRENT SNAPSHOT(NAFTA)SKINTYPEMY 16 DEMANDSHARE (%), (a)MAJORFABRICATION PROCESSNOTE/TRENDPVC25 Slush moldIncumbent. Low tempdeployment resolvedTPO50-Extrusion -Calendering-Thermoform-May use in-house p-TPV in formulation-Compact and foam bi-laminate types-Includes injection molded soft skin-Gaining share/lower costTPU20 Spray; slushHigherend vehicles, Japanese productionSBC-SlushUnder evaluation.

5 Leather/textile5 HandwrapHigh end vehicles only8 SOURCE: ROBERT ELLER ASSOCIATES LLC, 2015 Note: Share of soft IPs on light vehicles produced and importedKey trends:-Grain reproduction continues to improve for all processes-Dual hardness/dual color increasing share-Property improvements: VOC decrease, scratch resistance improvement, soft tactile feel, foam improvement (resilience, heat resistance, softness), weight save, weatherability-In house compounding of TPO formulations for cost save9 PATENTEDSLUSH MOLDED HSBC (TPE-S)TECHNOLOGIES Inteva-Uses PP/SEBS compound (per patent)-Currently commercial in North America (await customers)-Issues.

6 --Scratch/mar resistance (mostly resolved)--Foam bonding (requires surface treatment)--Sustainability special low molecular weight HSBC compounded with PP and polybutene(patented)-Currently under development/commercial applications yet to be announced-New Formosa plant comes on stream in 2016 with capability to supply low molecular weight HSBC resin. 10 SLUSH MOLDED TPE-S INSTRUMENT PANEL SKINSP hoto: TRIM TARGET ZONESE xample multi-material (2-shot) Door Trim Panel: Application: Door trim (dark areas) TPE Type: o-TPV, challenge from SEBSTPE Benefits: Haptics soft (luxury) touch Enhanced craftsmanship/multi-color capability Single step process/labor cost savings Cost save vs.

7 Multi-step approach Multi-material molding cycle time approaching single shotTPE Skin Candidates: TPO, SEBS (TPE-S), p-TPV, TPU modified TPE (for use over PC/ABS)Key TPE Challenge: Adequate flow (large area/thin cross-section (1-2 mm) Capital investment required Ability to incorporate foam Competition with textile inserts Incumbents: Thermoformed/backfoamPVC, TPO bil-aminatesheet)HARD/SKINS ON LUXURY VEHICLESSOFT(SKINS OR TEXTILE)SOURCE: ROBERT ELLER ASSOCIATES LLC, 201512 INSTRUMENT PANEL SKIN : CRITICAL FEATURES PHOTOS: ROBERT ELLER ASSOCIATES LLC,2015 Grain reproduction: key parameterLogosCraftsmanship-Hidden airbag doors(non-laser score)eliminates read-through)-Reduced skin weight/improved haptics/grain13 INDENTATION RESISTANCEPHOTO: O SULLIVAN/HORNSCHUCH PORTA LIGHT Note:-Indentation recovery important property for TPO foam bi-laminates for.

8 --door trim panels--armrests--console covers-Requires balance between recovery and haptics3 INDENTATIONSNO INDENTATIONSP ortaLightTM14 CHEMICAL/STAIN RESISTANCE REQ TS BROADENING FOR TPO SKINS(a)Denim cleanability(a)Abrasion resistanceNote: Hapticscan be tailored via soft touch coatings(a) Also for coated fabrics ( in seating). Especially with trend toward lighter colorsPHOTO: O SULLIVAN FILMS; COMMENTS: ROBERT ELLER ASSOCIATES LLC, 2015 Cutline (beltline) seals (BLS)Key benefits: good sealing performance cost-effective through function integration easy processing and broad process window excellent UV and aging propertiesProduction process: extrusionTPE Candidates:o-TPVM aterial replaced: EPDM15 Glass run channel seals (GRC)Key benefits: part cost reduction vs EPDM good surface appearance smooth/rubbery surface no blooming excellent UV and aging resistanceProduction process.

9 Co-extrusion (dual hardness)TPE Candidates: o-TPVM aterial(s) replaced: EPDM plus flockPHOTOS: ExxonMobilo-TPVs CONTINUE TO CHALLENGE EPDM IN BODY/GLAZING SEALS16 Key benefits durable sealing performance functional integration and weight reduction cost-effective thermoplastic processing vs EPDM matte surface (color match to GRC/BLS) excellent UV and aging resistance reduced breakageFabrication processes stretch-fit glass encapsulation direct glass encapsulation by injection molding o-TPV, TPE-S, TPU, PVC/NBRM ajor incumbent EPDMPHOTO: KraiburgPHOTO.

10 ExxonMobilTPEs ESTABLISHING POSITION IN WINDOW ENCAPSULATION (WINCAP)BODY/GLAZING SEAL CHALLENGES/DEVELOPMENTS Dominant Incumbent: EPDM TPE Challengers: o-TPV, SEBS Dynamic vs. static requirements differ:-Dynamic seals require low compression set-Acoustic/wind noise performance (requirements increasing)-Adhesion (to glass, polycarbonate) -Parts integration opportunities-Surface friction properties (controlling COF)-Meeting regional performance differences-Overcoming institutional resistance-Small cars (lower requirements, profitability challenge) Movement into: -primary door seals-trunk seals1718 APPLICATIONS FOR r-TPVs: ECO-FLEX RTPV SOURCE.