Since we've become Excel Polymers LLC three months ago, we've completed hundreds of tactical items to make the transition seamless. I'd like to take this opportunity to let you know how grateful I am for your support and understanding during this time. The teamwork displayed by your employees and ours has been appreciated, with the end result being a smooth switch over. I'm happy to report that all product shipments and orders during the transition were completed on time.

I'd like to update you on some of the more recent developments and news at Excel Polymers.

Foremost, in September, we opened our new facility in Shanghai, China, located in the Nanhui industrial sector. We've hired a talented team of technical, operations and sourcing professionals to run this site and provide the excellent quality of services to which you have become accustomed. We are now shipping compounds from Shanghai and would enjoy hosting you or your associates at the plant. Please contact steve.nieto@excel-polymers.com or clay.beauchamp@excel-polymers.com if you are interested.

Our new website, www.excel-polymers.com, has gone live and will continue to feature technical and business development news. If you have specific ideas for content, please let us know. We would be happy to include them on the website.

We’ve also strengthened our leadership by adding Dale Dodrill as Executive Vice President of Business Development. Dale is charged with exploring avenues for profitable growth. The former CEO of American Synthetic Rubber Corporation, Dale was the International President of the International Institute of Synthetic Rubber Producers. Florian Kete, who will serve as the Vice President of Human Resources, also recently joined our team. Florian most recently worked at FedEx, and we hope to gain from his vast experience at the company which created the “absolutely, positively” culture.

The part of our transition we certainly did not expect is the inflation rate we have experienced based on the one-two punch of energy costs and supply tightness. With oil prices at more than $50 a barrel and natural gas at more than $6 per million BTUs, the feedstocks for polymers, process oils and carbon blacks have doubled during the past 12 months. This inflation compressed margins across the entire supply chain, with the exception of the large petrochemical producers. The polymers producers have not been able to add capacity due to their lack of profitability over the past several years. Once they reach reinvestment economics, it takes another two to three years to add new capacity. This also raises another concern: Where the capacity would be added, most likely not in the U.S.

Needless to say, the supply dynamics have swiftly changed. However, we are working to get the issue under control. To protect your business and ours, we’ve been qualifying suppliers from all over the world. We will work with your technical teams of specialists to co-specify the ingredients to allow us the flexibility to source from secure suppliers. Of course, we continue to focus on LEAN practices in our effort to control costs and maintain competitiveness for both us and you.

We also see signs of a less robust economy in 2005. The higher energy prices and interest rates likely will dampen the growth rate we’ve enjoyed during the past 18 months, and we probably won’t see any relief in oil prices until after the winter months. Industrial, automotive and home construction markets also are predicted to soften compared with 2004, but forecasts show that, at this point, it won’t be substantial.

We are appreciative of your business. Working together, we can target key markets with new products that deliver extra value and find solutions to help keep you productive and competitive. We are willing to listen and act on any idea which helps you to win, and we will do all we can to support your business.

Best wishes for continued success.

John E. Quinn
President-CEO

© 2004 EXCEL Polymers LLC.