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Press Release

November 27, 2007
Sekisui Chemical Co., Ltd.

Full-scale Launch of New Fiber-reinforced Foamed Urethane Plant in Shanghai, China

The Urban Infrastructure and Environmental Products Company (Company President: Yoshiyuki Takitani) of Sekisui Chemical Co., Ltd. (President and Representative Director: Naotake Okubo) is pleased to announce the full-scale launch of operations at the new plant for the production and processing of fiber-reinforced foamed urethane (FFU), which is a continuous glass fiber reinforced plastics foam and an original Sekisui Chemical product on November 1. It is expected that FFU produced at the plant will mainly be used in FFU synthetic sleepers on railway tracks mainly in the eastern and southern regions of China.

The plant is operated by the Xinjiang Yongchang-Sekisui Composites Co., Ltd., a Sekisui Chemical subsidiary engaged in the manufacture and sale of reinforced plastic pipes in China.

Plant building of the Shanghai branch of Xinjiang Yongchang-Sekisui Composites Co., Ltd.

1. Background and Aims of the Establishment of New FFU Plant

China is currently experiencing high economic growth, and this has given rise to the need for the expansion of domestic transportation capabilities leading to high-paced railway construction. Construction of approximately 10,000 km of railway within China by the year 2010 is currently being planned and in cities like Shanghai and Guangzhou in particular, many large scale projects are underway including subway and high-speed railway construction.

In the past, FFU synthetic sleepers for Subway Line 4 in Guangzhou and for the Super Express (Shinkansen) in Taiwan were imported from Japan and test use on Subway Line 8 in Shanghai has also been completed. A continuing high level of demand in China for FFU synthetic sleepers is expected, and the new FFU plant has been established to meet this demand.

Example of use of FFU synthetic sleepers
(Subway Line 4 in Guangzhou: rail yards)

2. Name and Features of "FFU"

The name "FFU" is the acronym for "Fiber reinforced Foamed Urethane." FFU is a light corrosive-resistant structural material formed of hard urethane resin foam reinforced with continuous glass fiber and features the following characteristics.

(1) Provides both the strength necessary for a structural material and the lightness of wooden material.
(2) Superb workability for cutting, etc.
(3) Superb durability and water resistance

3. Principal Applications of "FFU" and Expanded Applications in China

1) Applications
Utilizing the characteristics outlined in 2 above, FFU has been widely used in areas such as water and sewerage systems, civil engineering, construction, plant facilities, aquaculture and railways since FFU was developed in 1974. The past few years in particular, have seen an increasing global demand for FFU synthetic sleepers.

2) Applications in the Railway Industry
FFU synthetic sleepers are used on bridges and railway junctions where wooden sleepers were previously used, contributing to the conservation of forest resources. The reason for usage on bridges is that FFU is light and easy to work with. Additionally, its long lifespan compared to wooden materials means a reduction in the frequency of work on bridges where construction is difficult.

Their high degree of durability and ease of adjustments at work sites comprise essential elements at junctions in the maintenance of high-precision tracks for high-speed travel and FFU synthetic sleepers are used by almost all the main railway companies in Japan (JR, private railways, subways) including the Super Express, with applications overseas on the increase.

3) Expanded Applications in China
As mentioned above, while FFU is currently used in China principally in railway sleepers, demand for FFU is anticipated in the fields of water processing and civil engineering.

4. Concerning the New Plant

1) Business operations: Manufacture of FFU raw materials and processing of the final product
2) Parent company: Xinjiang Yongchang-Sekisui Composites Co., Ltd.
Xinjiang Yongchang-Sekisui Composites Co., Ltd. was established in April 2005 through investment in Xinjiang Yongchang Composites Co., Ltd. by Sekisui Chemical (current investment: 62.4%). As a top manufacturer of reinforced compound plastic pipes in China, Xinjiang Yongchang-Sekisui Composites Co., Ltd. possesses a total of 4 production bases in China in regions such as Xinjiang Uighur Autonomous Region where the head office is located, Guangzhou and Shanghai.
3) Address: Xinjiang Yongchang-Sekisui Composites Co., Ltd. Shanghai branch, East Zone 5, Public Industrial Zone, Anting Town, Jiading District, Shanghai

5. Completion Ceremony

FA completion ceremony was held on November 18 to mark the full-scale launch of operations at the new FFU plant.


New Office Building

Remarks by President Takitani of the Urban Infrastructure & Environmental Products Company (UIEP)

Remarks by President Zhou of the Xinjiang Yongchang-Sekisui Composites Co., Ltd

Tape Cutting Ceremony (From left to right: UIEP Director Marushita, UIEP President Takitani, Xinjiang Yongchang-Sekisui Composites Co., Ltd President Zhou)

[Message from President Zhou]

Xinjiang Yongchang-Sekisui Composites Co., Ltd., is not only a base for penetration of the eastern China market, but is also vital in the development of overseas markets. In particular, the introduction of FFU equipment this year represents our resolve to meet the challenges presented by new fields, technologies and materials outside the boundaries of the conventional pipe industry.

Chances and challenges, competition and collaboration are constant factors. With the cooperation of government bodies, the support of our customers and the guidance of industry leaders, Xinjiang Yongchang-Sekisui Composites Co., Ltd., will continue in its endeavors to create a bright future in the composite materials industry.

[Message from President Takitani]

I firmly believe that, through the supply of high-quality FFU, this new factory in which Sekisui Chemical has made a technological investment will contribute to the enhancement of quality of Chinese infrastructure.

Moreover, in terms of the existing reinforced plastic pipe business, it is my belief that this new Shanghai factory will serve as a base to expand exchanges between Xinjiang Yongchang-Sekisui Composites and Sekisui Chemical and further promote the application of our existing accumulation of technology, making possible the delivery of total water solutions covering the entire process from design support to construction guidance. In particular, we would like make even greater contributions to the enrichment of the water-environment infrastructure in the rapidly developing eastern China region.

(Reference)
Concerning Xinjiang Yongchang-Sekisui Composites Co., Ltd.
1. Concerning Xinjiang Yongchang-Sekisui Composites Co., Ltd.


Sekisui Chemical invested in Xinjiang Yongchang Composites Co., Ltd. (current investment: 62.4%) in April 2005 and subsequently made inroads into the water environment infrastructure market for products including reinforced compound plastic pipes in China.

Currently, the company has 4 production bases of reinforced compound plastics pipes located in Miquan and Ili in the Xinjiang Uighur Autonomous Region, where the head office is located, as well as Guangzhou and Shanghai. In particular, in regions of eastern China such as Shanghai, the outlook is for an increase in orders and this led to the transfer and expansion of the Shanghai branch as the production and sales base in the region in November last year. Additionally, with the Shanghai branch as base, efforts are underway to acquire competent human resources in the coastal region and to work with design institute and, as mentioned above, production of FFU has been launched from this month.

2. Concerning Xinjiang Yongchang-Sekisui Composites Shanghai Branch

1) Land area: 38,983m2 (Previous Shanghai base: 3,880m2)
2) Building area: 12,575m2
3) Location: East Zone 5, Public Industrial Zone, Anting Town, Jiading District, Shanghai.

3. Concerning Reinforced Compound Plastic Pipes

Reinforced compound plastic pipes are constructed of glass fiber, unsaturated polyester resin and silica sand. The high degree of strength of glass fiber gives the material superb strength and flexibility capable of handling a maximum diameter of 4 m. Additionally, reinforced compound plastic pipes demonstrate excellent resistance to earthquakes, chemicals as well as outstanding hydraulic characteristics and are widely used not only in sewage systems, but also in airport construction, rain water pipe systems in housing developments and public irrigation pipelines.

Sekisui Chemical has been selling reinforced compound plastic pipes under the "Eslon RCP" product name in Japan since 1975.

Press Contact

Sekisui Chemical Co., Ltd.
Corporate Communication Department
Fax: (+81) 3-5521-0510

Disclaimer

This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.

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