Graver Technologies, LLC

1
Graver Technologies, LLC

• Commodity
• Market Research/Knowledge
• Value and Use in Supply Change Management

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Graver Technologies, LLC

• Commodity Costs
• Market Research/Knowledge
• Value and Use in Supply Change Management
• Understanding our products' component prices
  trends, along with market forces, can help us
  maintain a competitive edge

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Graver Technologies

• Graver Technologies, LLC
• USA Supplier of Ion Exchange Resins
• Gravex Bead Resins
• Powdex Ecodex Powdered Resins
• Dow and Rohm Haas Brand Bead Resins
• Graver Operates A Full Ion Exchange Resin
  Processing Facility
• Largest Condensate Resin Processing Facility In
  The World
• Resin Facility Can Be Characterized As A
  Specialty Chemical Plant
• High Purity Water Is The Largest Volume Chemical
  Used In The Plant
• Variable components of Graver's products include
• IX Resins A Specialty Chemical
• Acid - Commodity
• Caustic - Commodity
• Energy (electricity/gas) Commodity?

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Ion Exchange Manufacturing

• IX resins are specialty chemicals
  (functionalized co-polymers of styrene and
  divinylbenzene)
• Styrene is a commodity tracks benzene but
  impacted by supply/demand
• Prices published regularly both spot/contract
• DVB is a speciality chemical with 90 consumed
  in IX production
• Prices are not published
• In 2006 Atofina (France) ceased production
• Two US Manufacturers prices increased double
  digit/year beginning in 2006!
• Strong acid cation resins (SAC) are
  functionalized with sulfuric acid
• Strong base anion resins (SBA) functionalized
  with amines (specialty)

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IX MARKET DYNAMICS impacting Costs and Pricing

• Worldwide IX Resin Demand Increased Significantly
  2005-08
• High Demand For Biofuels, Pharmaceutical, Food
  And Sugar Processing And Various Specialty
  Processes
• Worldwide IX Supply Decreased By 600M CF by plant
  closings.
• Utility Share Is Only 10 To 12 Of Total IX
  Demand
• Utility Resins Require the Highest Quality
• Processing/Procedural Means Higher cost
• Utility CP IX resins (powder, nuclear grade,
  special ionic forms) can be viewed as Specialy2
  Chemicals!
• Possible Global Market Consolidation also
  Increased Pricing Pressures
• Dow Agrees (or not) To Aquire Rohm Haas

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IX Market Dynamics Cost Increases

• In 2007 IX Resin Prices Began Escalating at 10
  per Quarter !
• Worldwide IX Resin Demand Increased in 2008
• Worldwide IX Resin Supply Decreased in 2008
• Basic Chemical Materials Also Increased
  Dramatically
• Styrene hit a record high (0.87/lb)
• DVB - supply purity in face of demand drove DVB
  costs higher
• Caustic Prices Began Rising In 2007
• Acid Prices Began Rising In 2007
• Other Normal Inflationary Cost Increases Of
  3-5
• Energy (electricity and natural gas) up double
  digit

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2007-08 The Perfect Storm

• Every resin manufacturer raised prices
• Domestic and off shore manufacturers raised
  prices
• Styrene increased by 40
• DVB continued to rise
• Caustic Doubled In Cost
• 500/ton Increased To 1000/ton
• Acid Cost Quintupled
• lt100/ton "forever " to 500/ton!
• Driven by consumption (world food demand, metals
  recovery) and supply (strikes, plant shutdowns)

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Raw Material Cost Trends 2004- 2009
Styrene
Avg Styrene Price 2005-09
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Raw Material Cost Trends 2007- 2009
Sulfuric Acid
10
Raw Material Cost Trends 2007- 2009
Sodium Hydroxide
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Raw Material Cost Trends 2004- 2008
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What does the future hold

• Acid has declined slighlty 33
• Caustic slow to move
• Dow and others have curtailed production
• Electricity and natural gas some relief but not
  back to prior levels (and threats of higher
  electricity due to reduced demand!)
• Styrene has declined considerably But IX
  manufacturers are not yet "rolling back prices"
  in face of demand citing anticipated volatility
  in oil/benzene/styrene.

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Using Commodity Market Knowledge to our advantage

• Know the components of your products
• Understand the market drivers
• Understand underlying supply/demand issues

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Graver / USAs Combined Roles

• Pursue effificiencies
• Large volume purchasing economies
• Willingness to change products (i.e Brand to
  Gravex)
• Leverage IX volumes to obtain lower prices while
  maintaining quality
• Pressure basic manufacturers with our knowledge
  of the cost components and impact we should be
  seeing