Keyuan Petrochemicals Starts Construction on New 70,000 Ton SBS Production Facility; Expect to Generate $110 million of Sales in 2012

NINGBO, China, Sept. 8 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (OTC Bulletin Board: KYNP) ("Keyuan or the "Company"), a leading independent manufacturer and supplier of various petrochemical products in China, announced that on September 1st, Keyuan commenced construction of its first Styrene-Butadiene-Styrene ("SBS") production facility in Ningbo, Zhejiang Province, which will be adjacent to its current production facility.

SBS is commonly used in soles of shoes, tire treads and other products that require a hard rubber to remain sturdy for a long time due to its durability. The new SBS facility is expected to add 70,000 metric tons to Keyuan's production capacity by the end of 2011 with an estimated cost of $17.5 million in capital expenditures. The current estimated schedule of the SBS facility is as follows:

    Phase I:   Civil engineering from September 2010 to March 2011
    Phase II:  Equipment installation from April 2011 to September 2011
    Phase III: Trial runs from October 2011 to November 2011
               Production is expected to commence after the trial runs are
               complete

"Due to rising demand for SBS from products consumers as well as basic materials and industrial customers, there is a shortage of SBS in China" stated Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan. "Once we complete construction of our new SBS facility, Keyuan will be one of the leading producers of SBS in China."

China's current production capacity of SBS is approximately 600,000 metric tons per year while domestic demand is projected to reach 750,000 metric tons in 2010, resulting in China importing a substantial percentage of its needs from Japan, Korea, Taiwan and the U.S. Demand for SBS in China is expected to grow 6%-7% per year for the next several years. Average selling price is expected to be approximately $2,000 in 2012. The supply shortage and value- added nature of SBS provides healthy margins for the few domestic producers.

Keyuan expects to generate net profit margins of 10% for the SBS it produces once it reaches normal production levels. The new facility is anticipated to achieve 80% utilization rate in 2012, the first full year of production, and generate approximately $110 million of sales and $10 million to $11 million of net income.

About Keyuan Petrochemicals, Inc.

Keyuan Petrochemicals, Inc., established in 2007 and operating through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd., is located in Ningbo, China and is a leading independent manufacturer and supplier of various petrochemical products. Having commenced production in October 2009, Keyuan's operations include an annual petrochemical manufacturing capacity of 550,000 MT of a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. In order to meet increasing market demand, Keyuan plans to expand its manufacturing capacity to include a SBS production facility, additional storage capacity, a raw material pre-treatment facility, and an asphalt production facility.

Safe Harbor Statement

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future use of the proceeds are forward looking and subject to risks. Keyuan Petrochemicals, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward- looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form S-1, as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For more information, please contact:

    Investor Relations:
     HC International, Inc.
     Ted Haberfield
     Executive VP
     Tel:   +1-760-755-2716
     Email: [email protected]

     Mr. Andrew Haag, Managing Partner, USA
     Hampton Growth, LLC
     Tel:   +1-877-368-3566
     Email: [email protected]
     Web:   http://www.hamptongrowth.com

SOURCE Keyuan Petrochemicals, Inc.