In acidic condition, the extractive form waste water in hardboard production reacts with extra amount of formaldehyde at 1-5∶1 (formaldehyde : solid extractive, based on weight) to prepare extractive-formaldehydecomplex, then urea or phenol is added into the solution of this complex and reacts with unreacted formaldehyde to form a new adhesive system.* This adhesive system can be used in making wood-based panels and more than 20% production cost savings can be made without any harmful to the properties of panels.