SULFURIZED EP ADDITIVES FOR LUBRICANTS DAILUBE

Agenda of presentation 1. Corporate profile of DIC and DIC s Sulfur business 2. Design and function of DIC s Sulfur chemicals 3. Feature of Sulfur additives compared with Cl, P additives 4. Product line-up of DIC s Sulfur chemicals, DAILUBE 5. Recent product development of DAILUBE ; IS-30, IS-35 6. The formulation example for non-chlorine fluid.

DIC Corporate Profile Company Name Corporate Headquarters Date of Foundation Paid-in Capital Number of Employees Number of Group Companies Consolidated Net Sales DIC Corporation DIC Building, 7-20, Nihonbashi 3-chome, Chuo-ku, Tokyo, Japan February 15, 1908 96.6 billion Consolidated: 20,481 Nonconsolidated: 3,510 (As of December 31, 2016) 174 (Domestic: 31, Overseas: 143) (As of December 31, 2016) \751.4 billion (Fiscal year 2016) Consolidated Operating Income \54.2 billion (Fiscal year 2016) Printing Inks Fine Chemicals Polymers Compounds Application Materials Printing Inks Product Div. Offset inks, Gravure inks, News inks, etc. Pigment Product Div. Organic pigments, etc. Liquid Crystal Materials Product Div. TFT LC materials, etc. Polymers Product Div. Acrylic resins, Polyurethane resins, UV-curable resins, etc. Liquid Compounds Product Div. Jet inks, etc. Solid Compounds Product Div. PPS compounds, etc. Application Materials Product Div. Industrial adhesive tapes, Hollow-fiber membrane modules, Health foods, etc. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 3

Historical Highlights of DIC Sulfur Chemical Business 1960 s Driers for printing Inks Cobalt Carboxylates Driers, Catalyst Adhesion promoter for tires 1970 s Commencement of sulfur EP additive business Lead Carboxylates Sulfurized Fats(Dark color) Dark color EP additives for Gear oil 1990 s Development of light color EP Additives for MWF Low odor, Light color Sulfur chemicals DAILUBE EP additives for MWF COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 4

Carrier Structure of sulfur EP Polysulfide Sulfur chain (Sx) Carrier Short sulfur chain = Less number of sulfur = More stable polysulfide = Less reaction with metal = Inactive Long sulfur chain = More number of sulfur = Less stable polysulfide = More reaction with metal = Active Chemical structures of carrier is used to control property. -Size of the structure: viscosity, solubility, sulfur content, lubricity -Chemical structure: reactivity, EP performance, stability, solubility COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 6

Function of DAILUBE Sulfur EP additives 1. Formation of metal sulfide tribofilm anti-seizure, anti-weld, anti-wear 2. Adsorption onto metal surface enhance lubricity(reduction of µ) 3D-Structure of Sulfurized Fat 1000 Metal FeS+Fe 2 O 3 Film Sulfur bond Metal Carboxy group No Sulfur additives seizuring, welding occurs Add Sulfur additive FeS tribo-film prevents seizuring and welding. Glycerol group R R R R S ー S S ー S Metal surface Primary function of DAILUBE products is prevention of seizuring and welding by formation of metal sulfide tribo-film. Some DAILUBE products also have significant effect to reduce friction by adsorption onto metal surface. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 7

1000 Metal Metal Fes+Fe 2 O 3 Film Type of additives for lubricants No Sulfur additives Add Sulfur additive Oiliness additives Oleic acid, stearyl alcohol Extreme Pressure additive Cl type P type S type Extreme Pressure additive Zn-DTP Mo-DTC MoS 2 Carbon black *1 星野道男 : 潤滑滑,29,2 (1984) 91. Oiliness molecule Molecule of EP additives Metal atom Solid lubricants Metal surface COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 9

Type of Extreme Pressure additive for Lubricants Type of additives Cl type P type S type Name of additives Chlorinated Paraffin Phosphate ester Sulfurized fat Sulfurized ester Sulfurized olefin Mechanism Minimum Temp MP of film Range of temp. FeCl 2 film 150 ~ 1) 250~650 150~350 1) FePO 4 film 220 ~ 3) 500~1200 220-500 FeS-Fe x O y film 200 ~ 2) 1150~1200 200~800 Feature Effective from lowmiddle load High environmental load Effective on middle load Easily decomposed and dissolved in water Effective on wide range of load Corrosive to yellow metal characteristic odor Application Cutting, Metal foaming restriction of use(eu, Japan) Metal foaming, Slideway, Gear Grease, ATF fluid Mix use with sulfur Cutting, Metal foaming Slideway, Gear Grease, ATF fluid COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 1) Journal of Japan Society of Lubrication Engineers,459(1974) 2) Journal of Japan Society of Lubrication Engineers.514(1974) 3) Journal of Japan Society of Lubrication Engineers,150(1975) 10

DAILUBE PRODUCT LINE RAW MATERIAL LIGHT COLOR DARK COLOR INACTIVE ACTIVE FATS ESTERS Fatty acid OLEFIN GS-110 GS-320 GS-330 GS-210 GS-240 GS-230S GS-520 GS-550 IS-30 GS-225 GS-325 GS-335 GS-215 GS-245 GS-255 *1 GS-235S GS-235LS GS-420 GS-440L IS-35 S-290 S-285 S-220 S-225 S-120 *1:Newly investigated COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 12

Properties of DAILUBE products Sulfurized fat Sulfurized ester, acid Sulfurized olefin Type Active Inactive Active Inactive Active Inactive Carrier size Sulfur content (Typical value) Large (Triglycerides) Medium (Fatty acid ester or Fatty acid) Small (C8- C18hydrocarbon) 15% 10% 17% 10% 20-40% 20-30% Sulfur chain size Long Short Long Short Long Short Solubility to oil good good Excellent Excellent Excellent Excellent Reactivity to metal surface High Low High Low High Low EP(anti-weld) performance Lubricity (friction) Good - Excellent Good Good - Excellent Excellent Excellent Good - Excellent Good Excellent Good - Excellent Good - Excellent Moderate Moderate Water mixable application - - - Acid type Excellent Good Excellent

Product line of DIC s Sulfurized Fat DIC offers an assortment of Sulfur EP Additives, consisted of four types of Fatty Chemical basis. Sulfurized fat Lard base DAILUBE GS-110, GS-225 Sulfurized fat & olefin Sulfurized ester Lard base DAILUBE GS-320, 325 Vegetable base DAILUBE GS-330 Vegetable Base DAILUBE GS-230S, GS-235LS, GS-235S Sulfurized fat & ester Lard base DAILUBE GS-210, 215 Vegetable base DAILUBE GS-240, GS-245, GS-255 COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 14

DAILUBE GS-200 series offsets Inactive (Copper corrosion <1b) Moderately active (Copper corrosion 3a~4a) Active (Copper corrosion 4a<) Triglyceride/ Ester Product-R(9%S) Product-D(10%S) GS-240(10%S) Product-R(15%) GS-255(15%S) *1 Ester GS-230S(10%S) Product-R(17%S) GS-235LS(17%S) Product-R(18%S) Product-D(17%S) Product-L(16%S) GS-245(16%S) GS-235S(17%S) *1:Newly investigated DAILUBE GS-240, 245, 235LS, GS-255 are made from vegetable derived raw materials. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 15

SULFURIZED OLEFIN USING VARIOUS OLEFINS X: 4~6, R: Hydrocarbon PROPERTIES UNIT DAILUBE GS-440L DAILUBE GS-420 *1 CONPETITIVE PRODUCT COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 17 C8 C12 SULFUR CONTENT % 39.5 20.0 39.4 30.0 ACTIVE SULFER % 38.6 11.5 36.0 20.0 VISCOSITY(40 ) mm2/s 48.3 52.3 44.4 110 COPPER CORROSION (5%100 1h) 4c 4b 4c 4c Color(ASTM) - 2.0 3.5 L3.0 L1.5 WELDING LOAD (5%) N 2893 2354 2746 2648 Last Non-seizure Load(5%) N 618 618 618 618 TGA 50%loss 222 317 225 268 *1:GS-420 consist of olefin and small amount of fatty material DIC is providing active types of Sulfurized olefin, DAILUBE GS-440L and GS-420. GS-440L has very high EP performance and GS-420 has high heat stability.

Mixture of GS- 440L with other EP additives EP performance of GS-440L with Ca-Sulfonate, ZnDDP, Phosphate, Chlorinated paraffin GS-440L/other Scar Welding Load additives LNSL Diameter*1 Dosage 5% mm N N GS-440L 0.98 2867 618 GS-440L / CaSulfonate =50/50 0.86 3924< (1617)*2 392 GS-440L / ZnDDP=50/50 0.58 2867 (1470) *2 618 GS-440L/Ca/Zn= 50/25/25 0.71 2893 981 GS-440L / 2452 0.43 618 Phosphate=50/50 (1274) *2 GS-40L/Ca/P 0.55 3090 491 =50/25/25 GS-440L / 2698 Chlorinated 0.64 618 (1470) *2 paraffin=50/50 *1: 1500rpm 40Kg 60min @75 *2: data without GS-440L - Mixture of GS-440L with other EP agent can improve performance. - Ca Sulfonate can improve Welding Load, friction coefficient and Phosphate can improve scar diameter. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 18

PRODUCT DEVELOPMENT INACTIVE SULFURIZED OLEFIN USING VARIOUS OLEFINS Example of ConvenConal Sulfurized olefin tert-carbon-type C8 Sulfurized olefin Sulfur chain 4-5 X: Sulfur Chain length X 4 Active X 3 Inactive C12 Dialkyl polysulfide Sulfur chain 3 or 5 sec-carbon-type Raw materials having unsaturated bond e.g. Olefin, Mercaptane Sulfurized α- olefin Sulfur chain4 COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 20

PRODUCT DEVELOPMENT INACTIVE SULFURIZED OLEFIN USING VARIOUS OLEFINS Reac%vity and stability can be controlled by using different structure as raw material Temperature vs AcCve sulfur content 50% decomposicon temperature Dibenzyldisulfide:274 Active Sulfur:(ASTM D1662) Test fluid:50g Copper powder:20g Conditions:@150 60min. Sulfurized olefin include tertiary carbon COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 21

Structure and performance of DAILUBE IS- 30, IS- 35, GS- 440L IS-30 is inactive but shows high EP performance. IS-35 shows high reactivity at lower temperature but has high heat stability Sulfur chain length Carbon structure Secondary Tertiary S3 - IS-30 S4 IS-35 GS-440L Item Unit GS-440L IS-35 IS-30 Sulfur Content % 39.5 31.2 28.8 Viscosity(40 ) mm 2 /s 47 15 20 Copper 5%100 3hr 4c (1h) 4c(1h) 1b Corrosion 100%20 1hr 3a 4a 1b Welding load Last nonseizure load Scar diameter 5% 400N 75 1hr TGA 50% Decomposition temperature 5% 2.89 2.40 2.65 kn 10% 2.70 2.89 2.99 5% 0.49 0.54 0.49 kn 10% 0.49 0.78 0.78 mm 0.99 0.86 0.75 222 267 233 Example of Sulfurized olefin include secondary carbon (S3) Example of Sulfurized olefin include tertiary carbon (n=1:s3, n=2; S4) COPYRIGHT DIC DIC CORPORATION ALL ALL RIGHTS RESERVED. 22

PROPERTIES UNIT INACTIVE SULFURIZED OLEFIN PROTYPE DAILUBE IS-30 COMPETITIVE PRODUCT C12 SULFUR CONTENT % 29.1 21.3 47.8 SULFUR CHAIN LENGTH C4 3.0 - - ACTIVE SULFER % 27.6 5.1 14.6 VISCOSITY(40 ) mm2/s 20 71 60 COPPER CORROSION (5%100 3h) (5%120 3h) Solubility and stability (Clear:, not clear: ) 10% in GrⅢOil -5 5dys Neat -5 5days PRODUCT DEVELOPMENT INACTIVE SULFURIZED OLEFIN PROPERTIES AND PERFORMANCE 1b 2d 1b 3a 3b 4c - - WELDING LOAD (5%) N 2648 1814 2452 Last Non-seizure Load(5%) N 490 392 618 TGA 50%loss 233 238 233 DAILUBE IS-30 has a short sulfur chain and are inactive. IS-30 has high EP performance but a moderately elevated active sulfur level. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 23 20170916 General-B02E11

PRODUCT DEVELOPMENT Properties and performance of water mixable fluid application Properties of water based fluid using IS-30 EP Welding Base Oil Mixture of Oiliness Water Stability additives Load Emulsifier Paraffinic IS-30 Oleic acid Well water N 50 60hr a - 7.68 2.28 0.05 90 1912 No odor change b 2.58 5.10 2.28 0.05 90 2354 No odor change c 4.28 3.40 2.28 0.05 90 2256 No odor change d 5.98 1.70 2.28 0.05 90 1236 No odor change e 7.68-2.28 0.05 90 784 No odor change b d c a -Similar to Oil base application, IS-30 shows similar EP performance with active type GS-440L COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 24 20170526 General-B02E11

PROPERTIES UNIT INACTIVE SULFURIZED OLEFIN DAILUBE IS-30 CONPETITIVE PRODUCT C12 SULFUR CONTENT % 29.1 21.3 47.8 SULFUR CHAIN LENGTH PRODUCT DEVELOPMENT INACTIVE SULFURIZED OLEFIN PROPERTIES AND PERFORMANCE in Li-Grease C4 3.0 - - ACTIVE SULFER % 27.6 5.1 14.6 VISCOSITY(40 ) mm2/s 20 71 60 COPPER CORROSION (5%100 24h) 2a 1b 3a WELDING LOAD (5%) N 2157 2010 2647 Scar diameter (5%,785N, 1hr, 1200rpm) mm 0.97 1.21 1.13 Friction Coefficient (981N,200rpm) - 0.04 0.04 0.05 Result in Li-grease(No Additive: Welding load 1177N, SD 2.0mm<, µ 0.055) - IS-30 showed similar properties to C12 in Li-grease. - IS-30 can also improve welding load and wear compare with C12. In lower sulfur content, IS-30 achieve higher performance than middle active C4 additive. Properties of Li-grease in different dosage of Sulfurized olefins Performances of Li-grease in different dosage of Sulfurized olefins COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 25

COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 26 DAILUBE IS- 35 Properties properties IS-35 GS-440L TDPS C10 C8 C12 Sulfur content ( mass%) 31.2 39.7 30.1 Sulfur chain length 4.0 4.5 - Active sulfur (150, mass%) 20.0 39.0 19.0 Copper corrosion 20 5%, 1h 1b 1b 1b 100%, 1h 4a 3a 1b 100 5%, 1h 4c 4c 4b Heat stability (TGA, 50% wt loss) 267 222 241 IS-35 is thermally stable, highly active at lower temperature and low friction coefficient.

Tapping torque testing result of IS- 35 PROPERTIES Material DAILUBE IS-35 DAILUBE GS-440L 50% Chlorinated Paraffin IS-35 GS-440L 50%Cl Tapping torque result *1 N cm Carbon Steel 900 930 1107 Aluminum alloy Die Castings 550 620 590 1) Circumferential velocity: 8m/min, Tap: M8 1.25, Base oil: GrⅡ 21mm 2 /s@40, Dosage 5% as sulfur or Chlorine IS-35 Shape of Torque (Carbon Steel) GS-440L Close up of edge of Tap Aluminum alloy Die Castings - IS-35 showed lower tapping torque than GS-440L both in Carbon steel and Aluminum alloy Die Castings. - Adhered material on Tap surface was smaller when IS-35 was used. These results indicated IS-35 can react with tool and material surface effectively. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 27

Steel EP Additive Light cutting Heavy cutting IS-30 or GS-440L 2-5% GS-440L 5-10% GS-230S or GS-235LS 2-5% IS-35 5-10% Phosphate ester 0-0.5% ZnDTP or phosphate ester 0.5-10% Corrosion inhibitor Benzotriazole 0.05-0.1% Benzotriazole 0.05-0.1% Lubricity Additives Fatty oil 2-5% Sulfurized fat or fatty oil 1-10% Anti mist 0-2% 0-2% Anti oxidant 0-2% 0-2% Base oil 80-90% 65-80% * Example of sulfurized Fat: DAILUBE GS-110 or S-220 * Recommended viscosity of formulated oil is about 20cst at 40. * If material is stainless steel, add 1-5% of overbased CaSulfonate to heavy cutting formulation. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 29

Typical formulation of non-chlorine Forming and Pressing oil EP Additive Light Forming Heavy Forming IS-30 or GS-440L 2-5% GS-440L 5-10% Sulfurized fat 2-10% IS-35 5-20% ZnDTP or phosphate 5-10% ZnDTP or phosphate ester 5-10% ester Corrosion inhibitor Benzotriazole 0.05-0.1% Benzotriazole 0.05-0.1% Lubricity Additives Fatty oil 5-10% Sulfurized Fat or fatty oil 5-20% Ca Sulfonate 1-3% Ca Sulfonate 3-5% Anti mist 0-2% 0-2% Anti oxidant 0-2% 0-2% Base oil 70-90% 60-90% * Example of sulfurized Fat: DAILUBE GS-110 or S-220 * Recommended viscosity of formulated oil is about 50cst at 40. * If process is pressing, remove Ca sulfonate phosphate, change EP additives to sulfurized fat. COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 30

Formulation example of Inactive non-chlorine light cutting oil Form ulation 1 Form ulation 2 IS -30 5.0% IS -30 5.0% EP Additive Phosphate ester 0.3% Phosphate ester 0.5% Lubricty Additives Sulfrized fatty ester 5.0% Ca Sulfonate 5.0% 40 viscosity of formulation 1 and 2 are 7.6 and 8.0 respectively. Scar Welding Load LNSL Diameter*1 Dosage mm N N GS-440L 5% 0.98 2867 618 GS-440L/MCCP=50/50 5% 0.64 2698 (1470) *2 618 Formulation 1 0.48 4414 981 Formulation 2 0.48 4905 785 *1: 1500rpm 40Kg 60min @75 *2: Value without GS-440L COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 31

Formulation example of active non-chlorine heavy cutting oil Form ulation 3 Form ulation 4 GS-440L 1.0% GS-440L 2.0% EP Additive IS -35 3.7% IS -35 2.5% Phosphate ester 0.3% Phosphate ester 0.5% Lubricty Additives Sulfrized fat 5.7% Ca Sulfonate 5.0% 40 viscosity of formulation 2 and 3 are 8.8 and 7.5 respectively. Scar Welding Load LNSL Diameter*1 Dosage mm N N GS-440L 5% 0.98 2867 618 GS-440L/MCCP=50/50 5% 0.64 2698 (1470) *2 618 Formulation 3 0.48 9614 785 Formulation 4 0.48 8829 785 *1: 1500rpm 40Kg 60min @75 *2: Value without GS-440L COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 32

DAILUBE PRODUCT LINE RAW MATERIAL LIGHT COLOR DARK COLOR INACTIVE ACTIVE FATS GS-110 GS-320 GS-330 GS-225 GS-325 GS-335 S-290 S-285 S-220 S-225 GS-210 GS-240 GS-215 GS-245 GS-255 *1 ESTERS GS-230S GS-235S GS-235LS Fatty acid GS-520 GS-550 OLEFIN IS-30 GS-420 GS-440L IS-35 S-120 *1:Newly investigated COPYRIGHT DIC CORPORATION ALL RIGHTS RESERVED. 33

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