Keyuan Petrochemicals, Inc. Commences Construction on Energy-saving, Gas-fired Steam Boiler

NINGBO, China, July 21 /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 today that it has commenced construction on a new gas-fired boiler that will make the Company self-sufficient for steam gas and save $1.76 million per year, approximately 30%, in steam supply costs. Total investment in the project, expected to be completed by the end of November, is estimated at approximately USD $1.47 million.

"Controlling critical supply components, such as steam supply that we use in our manufacturing processes, has both strategic and economic benefits," stated Mr. Chunfeng Tao, founder, chairman and chief executive officer of the Company. "By adding the boiler, we will be able to manage our own steam supply and achieve above-industry-average margins by reducing energy related costs and improving utilization rates. In addition to this and other process improvements, as previously announced, we are also expanding our overall production and facility capacity in order to capitalize on China's growing demand for refined petrochemical products."

Growing demand driven by China's robust economic growth, coupled with under-developed domestic production capacity, has led to an imbalance in supply and demand for refined petrochemical products that is likely to persist for many years. Due to the supply-demand imbalance that exists in China, Keyuan's customer order requests for 2010 have exceeded its current annual production capacity. At March 31, 2010, Keyuan had annual petrochemical manufacturing capacity of 550,000 MT of a variety of petrochemical products, including BTX aromatics. In order to grow its business to meet its backlog and increasing customer demand, Keyuan plans to expand its petrochemical manufacturing capacity to 600,000 MT in 2011. The Company also plans to double its storage capacity to 200,000 MT by the end of 2011, and to add a new raw material pre-treatment facility and an asphalt production facility in 2012.

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 raw material pre-treatment facility, additional storage capacity and an asphalt production facility.

Cautionary Statement Regarding Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward looking statements.

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SOURCE Keyuan Petrochemicals, Inc.