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3M

Price Increases from DSM, AOC and Reichhold

30 May 2006

DSM will be increasing the prices of all its unsaturated polyester resin and gelcoat products, whilst AOC and Reichhold will increase the prices of their isophthalic-based products.

DSM Composite Resins will increase prices on all its unsaturated polyester resin and gelcoat products for shipments on or after the 1st of May 2006. All unsaturated polyester resin and gelcoat products will be increased by 70 Euro/ton and vinyl ester products will be increased by 100 Euro/ton. Gertjan de Koning, Business Director Structural Resins Europe, stated that the resin price increase is the inevitable consequence of the continuous rise in raw materials prices during the first quarter of this year.

Reichhold will impose a price increase of $ 0.03 per pound on all isophthalic acid-based resins sold to the composites industry in North America, effective for all orders shipped on or after May 1, 2006. “This increase has been necessitated by sharp spikes in cost and limited supply of isophthalic acid,” explained

Reichhold’s Director of Business Management Bill Schramm. “The sharply reduced availability of isophthalic acid was set into motion following Hurricane Rita which forced the closure of a major refinery, BP Amoco Chemical Company Texas City, which supplies a basic component of isophthalic acid, metaxylene, to U.S. producers of isophthalic acid. Flint Hills, which produces a significant portion of the isophthalic acid sold in North America, had been importing both metaxylene and finished isophthalic acid from Europe since Hurricane Rita, but those safety stocks are no longer viable, pushing isophthalic supply into a short position. As a result, Flint Hills has declared Force Majeure and has notified customers that sales of this product are being put on allocation. This has also resulted in price increases for finished isophthalic acid.”

AOC will also increase prices by US $0.03 per pound on all isophthalic-based products sold in the United States and Canada shipped on or after May 1, 2006. The reason that they also give is that every petrochemical plant on the Gulf Coast was shut down and evacuated due to Hurricane Rita and that the BP Texas City refinery was one of the affected facilities and remains closed.