Outlook for Formaldehyde and Impact on …

1 Outlook for Formaldehyde and Impact on methanol demand 33 rd Annual IHS Chemical World methanol ConferenceIHS -World methanol Conference 11 th 12 thNovember 2015, Sheraton Munich Arabellapark Hotel Lars Axelsen, Dynea General Manager, Technology Sales & Licensing, Norwegian Corporate Sales 950 mill NOK (2014) 210 employees 3 own production sites 4 tolling sitesCompany overview2 Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Innovation and expansion Dynoperiod (1947 2000)Milestones: 1947: Norske Kunstharpikser ( Formaldehyde and resins) established in Lillestr m 1971-1999: Driving force behind growth and internationalization of the chemical activity of of the Dynea Group (2000 2013)Milestones: 2001: Dynea company name and identity launched worldwide 2002-2007: Streamlining of business and operations.

2 2007-2014: IK implementing divestment strategy through a split of the Dynea Group, with assets and activities sold in to the roots Independent Dynea period (2013 -)Some milestones: 2013: Acquisition by EltekHolding, 2014: Full ownership of and rights to the Dynea name3 Dynea HistoryDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 20154 EWSE ngineered Wood SolutionsIWSI nterior Wood solutionsWBPRWood Based Panel ResinsDynoaddIndustrial Coating AdditivesPowder ResinsFormaldehydeSpeciality Adhesives and PolymersTechnology Sales & LicensingFormaldehyde plantsAnalytical ServicesRegulatory ServicesTank Cleaning ServicesDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Technology Sales & Licensing Silver Catalyst Formaldehyde technology (FASIL) for new plants and revamps.

3 License and Engineering Proprietary equipment & Catalyst Commissioning and Start-up services. Metal Oxide Formaldehyde technology (METOX) for revamp and upgrade. Resin Batch Reactorsfor the production of UF, MF, MUF and PF Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Formaldehyde and Resin Process Technology Dynea have more than 60 years of experience in process development, design and operation of both Synthetic resin production, Formaldehyde Silver and Metal-oxide plants Batch reactor deign for of UF,MF and PF icluding sophisticated tailor-made simulation tools Phenolsim and UF Visualizer For Formaldehyde production, Dynea have technologies for: Silver Contact plants, FASIL Metal Oxide plant, METOX Dynea have designed, constructed and started up more than 40 Formaldehyde plants world-wide.

4 Dynea are a producer of Formaldehyde for its own internal use, all improvements are tested in our own plants before offering them to our external 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 ConverterAbsorptionExport SteamBoiler feed waterWaterGas recycling (option )Off-gas to treatmentWaterVaporizerSteam DrumWaste heat boilerAir scrubberMethanolAirFORMALIN TOSTORAGE TANKD ynea Formaldehyde Silver ProcessLarge Range In Plant CapacityFrom 15 000 150 000 TPA FA 100 wt %. Selective AbsorberNo Distillation. Selective Formaldehyde absorption, recycling of methanol and water. Result; Improved yield and product qualityProduct QualityHigh Formaldehyde concentration, up to 56 w% .Low formic acid concentration in final methanol concentration in final Costs/consumption FiguresInexpensive catalystThe low electricity consumption and cooling demand more than compensates the higher methanol consumptioncompared to the metal oxide technology.

5 Key Benefits -Dynea Formaldehyde Silver ProcessDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015A Safe ProcessThe Greenspot shows the typical operation point:30 % methanol45 % air25% recycle gas or waterSafe during:-During Start-up phase-In Operation-During ShutdownSafe in Design: No hot oil Only water/steam cooling which mitigates risks of fire. No oxygen in absorber Catalyst can be removed without dust and waste in a few hours. Re-catalysation takes less than 24 hours : Small holding tanks are needed to serve customers during re-catalysationShutting down the plant will move the processfrom Safe to Safer DYNEA Formaldehyde SilverFocus on HSED ynea Plant TourDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Dynea World of FormaldehydeProduction based on Dynea AS Formaldehyde and Resin technology Silver Formaldehyde plantDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Typical contract and project phases for Dynea Licensing projects3.

6 CustomerDetail engineering5. Customer Purchasing Non Proprietary equipmentDynea condtion:Check & Accept euipment6. Customer ConstructionCustomer Commissioning & Start-up1. Extended Basic engineering-Fixed price2. Purchasing-Proprietary equipment-Catalyst4. Detail engineering Non Prop Eq -Review-Manhours-Hourely ratesDynea Supervision for Commissioning & Start-up-Manhours-Hourely & Daily ratesDynea Technology PackageDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Formaldehyde OutlookA view in to the future13 Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 What visions of the future came out of the situations of the pastPast is history Future is mystery but predictable14 Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Historical development Formaldehyde volumes in the USA(Assume same development took place in Europe)

7 Predominantly as a primary derivativeAlso as an independent feedstock to other primary methanol derivatives of which MMAis only one exampleActual Formaldehyde demand may thus exceed forecasts that do not take these inter-derivative relationships into account15 Formaldehydeto continue as a significant methanol consumer02000040000600008000010000012000 0200920102011201220132014E2015E2016E2017 E2018E2019 EThousands of Metric TonsGlobal methanol demand by Derivative OthersMethanol-to-OlefinsFuel CellsDMEB iodieselGasoline Blending &CombustionAlternative FuelsMethyl Chloride(Chloromethane)MethylaminesMetha nethiol (MethylMercaptan)Dimethyl terephthalate(DMT)Methyl MethacrylateMethyl tert-Butyl Ether(MTBE)Acetic AcidFormaldehydeDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 2015 Expected Global FormaldehydeDemand by Derivative20152019 Urea Formaldehyde (UF) Resins & Concentrates66108041 Phenol Formaldehyde (PF) Resins28743393 Others19512291 Polyoxymethylene/ Polyacetal (POM)13881624 Pentaerythritol10061212 Methylene Diphenyl Diisocyanate (MDI)88510471,4 Butanediol(1,4 BDO)805921 Paraformaldehyde665824 Hexamine457555 Other Polyols(TMP, TME, NPG)444518 Melamine Formaldehyde (MF) Resin386463 Total 100% Formaldehyde (kMT)174722088916 Urea Formaldehyde (UF) Resins & Formaldehyde (PF) Polyacetal (POM) Diphenyl Diisocyanate (MDI) ,4 Butanediol (1,4 BDO) Polyols (TMP, TME, NPG) Formaldehyde (MF)

8 ,6%Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 201517 Formaldehyde Derivatives and End Use ApplicationsUrea Formaldehyde (UF) Resins & Concentrates37,83 %Phenol Formaldehyde (PF) Resins16,45 %Others11,17 %Polyoxymethylene/ Polyacetal (POM)7,95 %Pentaerythritol5,76 %Methylene Diphenyl Diisocyanate (MDI)5,06 %1,4 Butanediol(1,4 BDO)4,61 %Paraformaldehyde3,81 %Hexamine2,62 %Other Polyols(TMP, TME, NPG)2,54 %Melamine Formaldehyde (MF) Resin2,21 %Synthetic LubricantsPlasticizers(Thermoplastics, PVC)Paint ResinsExplosivesTextile Treatment(Poly-) Urethane FoamsHousehold/ Electronic AppliancesElastic FibersResins (Adhesives & Coatings) for Wood ProductsVulcanization Accelerators (Rubber)Pesticides( biocides for oil production)Dynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 201518 Expected Growth in Formaldehyde DemandNORTH AMERICAN orth American demand has recovered since global financial crisis (2013 construction activity) demand primarily from UF & PF resinsThere currently are no alternative resins that provide overall better technical performance, versatility and cost effectiveness than Formaldehyde -based resins.

9 -American Chemistry CouncilDemand include 1,4-BDO, POM & MDIM arkets generally more mature than in Asia, thus slower growth expectedSOUTH AMERICAL ocal Formaldehyde production necessitated by impracticalities of shippingMostly used in UF, PF and MF resinsRelatively small but accelerating demand growth Expansion in infrastructure for urethanes and polyesters may render investments in MDI and BDO feasibleDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 201519 Expected Growth in Formaldehyde DemandEUROPER ecovery expected to continueNew world scale facilities not expectedCapacity expansions & revamps (less developed countries) Formaldehyde buyers tendency to install own facilitiesDemand will grow along with wood industryThankstoformaldehyde-basedresins ,anincreasingamountofwoodwasteisbeingrec ycledbothforthegoodoftheplanetandfortheg oodofconsumers.

10 Phil Hope,Formacare Secretary General, August 2013 RUSSIA* *Also includes states that became independent from USSRR ecovery expected to continue along with that of wood industrySignificant demand from UF & PF resins, also isoprene manufacturingDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 201520 Expected Growth in Formaldehyde DemandMIDDLE EASTR elatively small Formaldehyde vs. methanol demand Traditional wood-related uses for Formaldehyde uncommon (no forrestry) Swift growth in other Formaldehyde -derivative facilities, paraformaldehyde and slow release fertilizers, amongst othersAFRICAC onsumption limited to basic and traditional uses in resinsImports of Formaldehyde derivatives such as UF and other resins are heavily relied on by wood product manufacturersDynea 33 rd Annual IHS Chemical World methanol Conference Formaldehyde Outlook 11-12 th November 201521 Expected Growth in Formaldehyde DemandASIAG rowth primarily from UF & PF resins BDO & MDI sectors also contributes increasinglyMMA may contribute to a more significant extent than expected, depending on the production technology China remains center of global Formaldehyde demandChinese demand to grow at slightly lower pace than previous 5 yrsAt present.