1

Cabinet Meeting Document on Monthly Economic Reports, etc. (21 July & 10 Aug 2010, Cabinet Office )

Industrial Production decreased in June

2007 2008 2009 2010

Stock

inventory rate

Production

Shipment

Production growth becoming moderate

Transition of major industries

electric parts/devices

ITmachinery

General machinery

% vs previous year

Steel

Planned business investment in increase trend for the first time in 3 years

Transport machinery

Production industry

1st half 2nd half 1st half 2nd half

Rates of production, shipment and inventory (2005 =100)

Trends of Domestic Production

2

Compared to 2007, production volume in 2009 was -19%, and shipment volume was –18%; which were –8% respectively compared with 2008.

2) Paint Shipment

FY2006

FY2007

FY 2008

FY2009

1. Japan (domestic market)

Production Volume Shipment VolumeThousand ton Thousand ton

FY2006

FY2007

FY 2008

FY2009

3

Shipment Value of FY2009 was –15% against FY2007.

=> It was –9% against FY2008. Quantity of inventory was unable to be adjusted at steep fall in 2008, but now, it is within normal range.

FY2006

FY2007

FY2008

FY2009

Shipment Value Quantity of inventory

FY2006

FY2007

FY 2008

FY2009

4

(1) JPMA Paint Shipment Vol. forecast and actual figure

JPMA Forecast

Actual Figure/ Chemical Industry Statistics

JPM

A F

orecast

2007 shipment volume = 100.

With the cooperation of JPMA member companies, JPMA forecasted shipment volume.FY2008 forecast of –8% against 2007 resulted –11%, and FY2009 forecast of –15% against FY2007 resulted in –18%.

4) Future Paint Demand Forecast

JPM

A F

orecast

JPM

A F

orecast

Actual F

igure

Actual F

igure

5

(2) FY2010 Paint Demand Forecast (JPMA, March 2010)

JPMA Paint Demand Forecast (issued on March 2010, by the effort of JPMA members) stated 101.1% of FY2009 expected actual figure.

JPMA forecast of paint production volume for FY2010 is 1.434 million tons (101.1% vs FY2009, and 83.1% vs FY2007,) based on various economic forecast issued by government and private bodies, trends of major user industries, and JPMA members' industrial condition perspectives.

DemandCategory

Volume Forecast(1000tons)

vs Priviousyear (%) Basis of calculation

Buildings 364 99.2Slow recovery trend. Private demand is still sluggish, butactivation of re-painting market is expected.

ConstructionMaterials

72 100Slow recovery trend. No-tax cases increasing, housingfinancial benefits, housing eco-points.

Structuress 76 98.7Continous declining trend due to reduced publicconstructions. Private plant refinish is expected.

Marine Use 111 92.5Sluggish due to decrease of new ship construction andcontinuous shrinking trend of the domestic demand.

Motor Vehicles New

226 109.7Compared to worst period of last FY, demand increasedowing to gradual recovery of Auto sales environment.

Refinish 51 100 Slow recovery base, but starting to level.ElectricalAppliances

67 106.3It will be better than last FY, but no great increase.

IndustrialMchinery

58 118.4Demand of construction machinery has increasedmainly in China.

MetallicProducts

97 105.4Slight increase of demand owign to recovery of corporateprofit.

Woodenproducts

26 92.9Further decline of demand due to pull back trend ofconsumers.

DIY Use 25 92.6Further decline of demand due to pull back trend ofconsumers.

Exports 84 101.2 Oversea demand is increasing, especially in AsiaRoad Marking 73 93.6 Less demand due to smaller budget for road works.Others 104 98.1 Gradual recovery in each area.Total 1434 101.1 As a whole, gradual recovery trend.

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(3) Forecast of this year and the next year (Monthly Cabinet Report)

Growth rate of developed areas are expected to be 1-3%, Emerging / Developing areas: 4-10 %

Economic perspective of Developed Areas

USA Japan Euro area UK

AprilApril

JulyJuly

Economic perspective of Emerging/ Developing Areas

China India Brazil Russia

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B) Near Future Paint Production Forecast (Private Opinion)

0

0.5

1.0

1.5

2.0

2.5

3.0

1960

1970

1980

1990

2000

2002

2004

2006

2008

2030

Production Volume(Million ton)

Recovery/Development 2% per year

Recovery/Development 1% per year

Decline

2.43 Mil. ton

1.47 Mil ton

2 Mil. ton

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Global situationGlobal situation

Situation in JapanSituation in Japan

Paint IndustryPaint Industry

Secure Global Environment and

Economic Development

-Global Financial Crisis-Dealing with post crisis economy

Prevent Global Warming

New Law on public-service

corporation JPMA projects

Statistics

Technical

Safety

Environment

Int'l

colors

Standardization

Public Relation

Globalization

Product Liability

(fire fighting law)

Chemical Management-Formaldehyde-VOC-AF-GHS*Laws on Chemical Management

REACHHazardous Waste Treatment / Basel

Convention

Consolidation of JIS

Waste Management

Labor Safety

International Standard ISO - JIS

-Global Financial Crisis, Post economic crisis-Adoption to globalization-Global Environmental issues -Chemical Management

(9) Issues facing paint industry and its surroundings