August 26, 2010 (FinancialWire) (Go to http://www.financialwire.net/?s=ftrdnwswnd for all of today’s featured news.) — Keyuan Petrochemicals, Inc. (OTCBB: KYNP) said it has acquired four parcels of land adjacent to the company's current facilities totaling approximately 1.2 million square feet under a land use right transfer agreements with the local government of Ningbo entered into on August 18. According to Keyuan, the total cost of the land was around $5.8 million, lower than the company's original $20 million projection. By acquiring the land, the company will be able to begin the construction of a storage facility, a raw material pre-treatment facility and an asphalt production facility as the company originally planned.

In addition, in the third quarter of 2010, Keyuan said it will also begin building a new Styrene-Butadiene-Styrene production facility on the land, which will be included in the expansion plan together with the three facilities mentioned above.

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. China's current production capacity of SBS is around 600,000 metric tons per year while domestic demand is projected to reach 750,000 metric tons in 2010, according to Keyuan.

Once completed, the new facilities will add an additional 100,000 MT of petrochemical storage capacity, a raw materials pre-treatment plant, 300,000 MT asphalt production capacity, and 70,000 MT of SBS production capacity.

Keyuan said that the total build-out of the storage, pre-treatment and asphalt facilities will be around $70 million, including $20 million for facility construction, $40 million for new equipment, and $10 million for working capital. Management said it expects that these three projects together will increase sales by as much as $298 million and net income by around $30 million per year.

The total cost of the SBS facility will be around $17.5 million. Management expects the SBS facility will generate around $110 million in sales and between $10 million to $11 million in net profit annually once it reaches full capacity.

China-based Keyuan Petrochemicals operates through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd., as an independent manufacturer and supplier of various petrochemical products. The company began production in October 2009.

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