PCA Newsletter #22

October 2010 Number 22 Also read in this issue about: Annual Meeting Industry News ° Eastmann ° Florachem ° Hexion Market ° ° ° °

IDA Rhone / Arizona Sun / Spolchimie ICIS Top 120

New Members PCA Upcoming Events

For further information access our website: www.pinechemicals.org

PINE CHEMICALS ASSOCIATION HOSTS INTERNATIONAL CONFERENCE IN ORLANDO The Pine Chemicals Association returned to Orlando to host the 2010 PCA International Conference at the Ritz-Carlton Hotel Orlando, Grande Lakes. The last time the Conference was held in Orlando was in 2005 at the Royal Pacific Resort Hotel, part of Universal Studios.

We were encouraged by the attendance at this year’s Conference as opposed to the 2009 Conference in San Francisco. Combined attendance in 2010 was 210, compared with 176 at the same conference in 2009.

Attendees arrived on Sunday, September 19th, (some earlier) and registered for the Conference. The kickoff event was the Welcome Reception held on Sunday evening from 6:00 – 7:30 pm. As always this provided an excellent opportunity for delegates and spouses to renew old acquaintances and greet new delegates.

The Conference got underway on Monday, September 20th, with the General Session. Alan Phillips of Arizona Chemical had done an outstanding job of assembling a number of very interesting presentations on a variety of different and timely tropics. Mike Roberts, PCA Chairman, gave an overview of the accomplishments during the past year as well as the challenges facing the Association during the coming year(s). Lee Godina of Resinall was introduced as the General Session Moderator.

Rod Young of RISI opened the General Session with a look at the future of soft wood pulping. He was followed by Korijn Defever of Arthur D Little and she posed the question is Crude Tall Oil, Too Valuable to Burn? This was a very interesting discussion about the carbon footprint of CTO processing. Korijn’s presentation was followed by Kamal Dujodwala of Dujodawala Products LTD who presented a very interesting overview of the markets for Rosin and Turpentine Chemicals in India. As we continued around the globe the next speaker, Li Yi of the China Forest Trade Association, gave an overview of the market for China Rosin and Turpentine Chemicals.

The last presentation of the morning’s General Session was by Matt Croson of the Adhesive and Sealants Council. He spoke about the long term growth of the adhesives market.

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INTERNATIONAL CONFERENCE 2010

Following a lively Q & A session with all of the speakers participating, delegates were invited to the group lunch. At the lunch Dr. Kevin Swift, an economist with the American Chemistry Council, gave his long and short term views of the global economy.

On Monday the Gum Rosin Committee met at 3:00 pm and we heard very interesting presentations concerning gum rosin markets around the world. These included an overview of China by Alex Nazari, an overview of South America by Bernardo Mello, and an overview of Mexico by Fredo Arias-King. Last but certainly not least was an overview of the Russian situation by Nikolay Khodov.

Delegates at Welcome Reception.

A second reception was well attended this time held in an outdoor location. At the reception Ann & John Smith (straight from their wedding ceremony on Sunday the 19th) decided to spend their honeymoon at the PCA Conference.

At Tuesday’s General Session, Peter Acton of Arboris served as Moderator. The first speaker was Andrew Matthews of the Flint Group who spoke on the not so rosy future of the printing ink market. He was followed by Eric Moussu of DRT who gave a presentation on Terpene Resins. Michael Bush of Energy Vision gave his annual update on global energy markets and the Tuesday Session was concluded by a presentation by Mike Husain of Arizona Chemical on the subject of Sustainability.

Delegates at Welcome Reception.

To conclude the Conference delegates and their guests went to the Red Coconut Club, a part of Universal’s City Walk, for dinner and entertainment.

PCA ELECTS NEW SLATE OF OFFICERS & DIRECTORS AT ANNUAL MEETING On September 22, 2010, PCA held its Annual Business meeting as an extension of the 2010 International Conference.

Delegates at Welcome Reception.

From 8:30 – 11:30 am, three of the five Committees met. The Environmental Health & Safety Committee met on the afternoon of September 21st and the Gum Rosin Committee met on September 20th. The best attendance by far was at the Sustainability Committee meeting. During the meeting, Korijn Defever of A. D. Little presented a very detailed explanation on the calculation of carbon footprints.

At the Annual Business meeting the four Committee Chairmen presented reports for their respective committees. This included:

Alan Phillips calls Monday’s General Session to order.

Nelson Lawson - Environmental, Health & Safety Corey Schneider – Meetings Committee Alan Phillips – Membership & Information Committee Chris Layton – Sustainability Committee

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INTERNATIONAL CONFERENCE 2010

Mike Roberts of Georgia-Pacific Chemicals LLC was presented with a gift in recognition of his two years of service as PCA Chairman.

In addition to reports by the four Committee Chairmen, the membership elected a new slate of Officers & Directors which included the following: Chairman & CEO Vice Chairman Directors

Mike Roberts brings delegates up to date on PCA activities.

Gary Reed – Arizona Chemical Lee Godina – Resinall Peter Acton – Arboris, LLC Greg Adams – International Flavors & Fragrances Brad Crocker – Hexion Specialty Chemicals Patrick Grozier – Pinova Hank Waters – ArrMaz-Custom Chemical Christopher Layton – Eastman Chemical Co. Mike Roberts – Georgia-Pacific Chemicals, LLC Corey Schneider – DRT America Steve Violette – Plasmine Technology

INDUSTRY NEWS EASTMAN CHEMCICAL TO EXPAND RESIN PRODUCTION Lee Godina serves as Moderator for Monday’s General Session.

Eastman Chemical has announced the expansion of hydrogenated hydrocarbon resins in the Netherlands and the US. Eastman plans to expand production at the Middleburg, NL plant, and Longview, TX plant. Production of Eastman’s Regalite hydrogenated aliphatic hydrocarbon resins at its Middleburg facility will increase by 20% when the expansion is completed in the second half of 2011. In Texas, Eastman will increase capacity of its Eastotac hydrogenated aliphatic hydrocarbon resins by 10% by early 2011.

FLORACHEM EXPANDS PRODUCTION CAPACITY IN MEXICO Rod Young of RISI addresses the global pulp and paper outlook.

Delegates at Monday’s General Session.

Florachem Corp. has announced that it has entered into an agreement with Aromatics Finos SA de CV to form a new company for the production of fragrance and industrial chemicals in Mexico. The new company will operate under the name Arofisa S. de RL de CV. The manufacturing facility in Atlacomulo, Estrado de Mexico is strategically located near the gum turpentine processing state of Michoacan. The main products currently produced are terpineol, pine oil, dipentene and other terpene derivatives. This new venture significantly furthers Flolachem’s expansion into manufacturing. The factory will operate in concert with Florachem’s essential oil processing facility in Mission, Texas.

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INTERNATIONAL CONFERENCE 2010

HEXION COMPLETES CONSTRUCTION OF DISPERSION UNIT Hexion Specialty Chemicals a global supplier of water based tackifier dispersions for pressure sensitive adhesives has completed construction of a new state of the art dispersion unit at its production facility in Baxley, GA. The new unit incorporates Hexion’s proprietary ROBUST manufacturing process technology which produces dispersions with finer particle size and virtually zero grit.

Korijn Defever addresses the subject of using valuable raw material as biofuel.

“This multi-million dollar capital investment further strengthens Hexion’s leading position in the pressure sensitive adhesives industry by enabling the manufacture of both higher solids and higher softening point tackifier dispersions” said Brad Crocker, Vice President of Global Ink and Adhesive Resins. “We now have the ability to operate at production facilities on four continents using the ROBUST process technology, providing our global customer base with the highest level of product technology.

MARKET Kamal Dujodwala speaks on the subject of the market for pine chemicals in India.

INTERNATIONAL DEVELOPMENT ASSOCIATES RELEASES NEW STUDY International Development Associates, Inc. announces the release of a new market study entitled “2010 Study of International Rosin Markets”. The study examines variations in Chinese gum rosin production and other conditions designed to aid the reader in making key management decisions.

In 2009, the distribution of the different types of rosin was broken down as follows;

Li Yi of CGRTA addresses the market for pine chemicals in China.

Gum Rosin – 67% Tall Oil Rosin – 32% Wood rosin – 1% Chinese rosin in the long term will decline because of the increased industrialization and increased shortage of labor. The availability of tall oil rosin will decline because of the shutdown of pulp mills mainly in the US. Presently there are no other visible sources for rosin other than Brazil.

First published in 1976, the biennial study has proved to be a valuable resource and management tool for producers and consumers of rosin. The report also covers the production and distribution of other co-products such as turpentine, tall oil fatty acids and competing hydrocarbon resins.

Matt Croson of ASC takes a look at the future market for adhesives.

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INTERNATIONAL CONFERENCE 2010

RHONE CAPITAL SELLS A CONTROLLING INTEREST IN ARIZONA CHEMICAL TO AMERICAN SECURITIES Rhone Capital has entered into a definitive agreement with American Securities to sell a controlling interest in Arizona Chemical. The transaction is scheduled to close in the fourth quarter of 2010.

Rhone along with other investors and the management team will retain 25% of the company’s ownership, and will continue to participate on Arizona’s Board of Directors.

Speakers address questions from delegates.

According to Kees Verhaar, President & CEO of Arizona, “American Securities has a strong history of providing leadership and resources necessary to ensure that the businesses that are part of their portfolio continue to achieve success. We look forward to continuing to grow our business and strengthen our customer relationships under their leadership.”

American Securities’ portfolio includes General Chemical, MECS, and Fairmont Minerals in the chemical field, along with variety other successful companies in a wide range of industries. They are headquartered in New York with an office in Shanghai.

Dr. Kevin Swift gives outlook from ACC on economic conditions.

SUN CHEMICAL AND SPOLCHEMIE ANNOUNCE JOINT VENTURE Spolchemie has set up a joint venture with Sun Chemical for the manufacture of alkyd and varnish resins. Under the agreement, around 8,000 tons/year of production will move from DIC’s performance resin business in Vienna, Austria to Splochemie’s facility at Usti and Labmen, Czech Republic. Spolchemie will market the products.

FIVE PCA MEMBER COMPANIES LISTED IN THE ICIS TOP 120 COMPANIES John Smith leads discussion at Gum Rosin Committee meeting.

In its mid September edition “ICIS Chemical Business” listed the top 120 Chemicals businesses. Among these were five PCA member companies including Henkel Adhesives (34), DIC (the parent of Sun Chemical) (39), Eastman Chemical (63), Hexion (74), and IFF (112).

ENVIRONMENT PCA SUCCESSFUL WITH ENVIRONMENT CANADA

Attendees at Gum Rosin Committee meeting.

Back in 2006, Environment Canada (EC) published its review for health and environmental effects of every chemical substance made or imported into Canada. Among the 200 or so chemicals that EC’s computer programs estimated as potentially having combined

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environmental persistence, bioaccumulation and toxicity were hydrogenated rosin and three of its esters. If these estimates were left unchanged EC would have to restrict their use leading to higher costs and reduced markets in Canada and a “black eye” for pine chemicals throughout the world.

Aware of this initiative, the Pine Chemicals Association’s Environmental, Health and Safety Committee took a proactive stance providing information and reports to Environment Canada throughout 2009 and 2010. The Committee argued that extensive studies, some of which PCA had itself sponsored during the High Production Volume Initiative, proved that these substances were neither bioaccumulative nor toxic and thus no threat to the environment.

Peter Acton serves as Moderator for Tuesday’s General Session.

EC has just published its screening risk assessment at the end of June and has agreed with the PCA position. We are pleased that common sense has prevailed in the end and that your trade associations has been help in supporting its members in selling safe and effective natural products.

PCA GOES TO BAT FOR ITS MEMBERS! Nelson Lawson - Chairman, EHS Committee PCA has represented the industry to the government many times in the past and continues to do so actively - just one more value from your membership! Here's three recent efforts on your behalf: Andrew Matthews addressing the markets for Printing Inks.

Eric Moussu addresses the market situation for Terpene Resins.

TSCA REFORM The Toxic Substance Control Act that regulates the introduction and production of all chemicals made or imported into the USA is about 30 years old, and nearly everyone agrees it could use some updating.

This summer the House Energy & Commerce Committee introduced a bill to massively rewrite TSCA in a way difficult for industry to meet and EPA to implement, and expanded it to cover almost every part of the US economy. The economic consequences would be so serious, that a group of 77 trade associations have banded together under the umbrella "American Alliance for Innovation" (AAI) to lobby congress to withdraw the bill. The AAI and its individual trade associations shared their concerns through frequent conference calls, met several times with congressional staffers, testified before congress and wrote letters to members of the Committee pointing out the problems and recommending that they start over. We have been successful in that the bill has been withdrawn until after the election, when we hope the congressional makeup will be more to our liking. But like Dracula, TSCA reform will surely rise again, and we will have to be prepared with a positive path to take. Sharing opinions and responses through such ad-hoc groups as AAI is a powerful way to make our voice heard, and our good reputation with EPA from our past interactions and our production of "green" products gives us influence beyond our small size.

IUR

Michael Bush delivers annual global energy update.

Every four years US plants are required by TSCA to submit to EPA their annual production figures for all chemicals they make or import greater than 300 thousand pounds and also provide use and exposure

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information for each chemical. This is called the Inventory Update Reporting rule or IUR. In August EPA proposed to modify the requirements for IUR, lowering the reporting threshold to 25 thousand pounds and greatly expanding the information required not only for the IUR year, but for the previous three years. We think this is overreaching, unwarranted and a great burden on our plants which will have little time to implement the changes. Other trade associations in the AAI including PCA have submitted written comments.

SUSTAINABILITY

Mike Husain comments on Sustainability.

Tuesday’s speakers address questions from delegates.

USEPA is planning to take an active role to promote sustainable products and has asked for comments as to what its role should be, what specific policies it should propose and what actions it can take.

Surely chemicals from trees qualify as the "original green products," so it's easy for us be supportive. We've suggested that the government help to create a level playing field by setting definitions and standards and for sustainability calculations and for green product labels. Preferring government purchases of sustainable products such as those we produce would be helpful. And we've taken the opportunity to recommend that EPA discourage any financial incentives to diverting our raw material sources to biofuels.

NEW MEMBERS Sinochem Guangdong Co. Ltd. Sound Tanker Chartering Inc. Energy Vision LLC

PCA UPCOMING EVENTS Please mark your calendars with the dates of the following meetings: Mr. & Mrs. John Smith honeymooning at PCA Conference.

Delegates and Guests at Monday Night Reception.

2011 PCA INTERNATIONAL CONFERENCE – 18 - 20 September, 2011– Beijing, China.

2011 PCA Annual Business Meeting – To Be Announced.