Keyuan Petrochemicals commences construction of first SBS facility in Ningbo

29-Sep-10

Keyuan Petrochemicals, Inc. has 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 tons to Keyuan's production capacity by end-2011, with an estimated cost of US$17.5 mln 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 tpa while domestic demand is projected to reach 750,000 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% pa for the next several years. The supply shortage and value-added nature of SBS provides healthy margins for the few domestic producers.