Keyuan Petrochemicals Secures New Raw Material Supplier for SBS Production

NINGBO, China, February 22, 2012 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or the "Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced that it has signed a long-term supplier agreement with Shell Petrochemicals Company Limited ("CSPC"), a joint venture between CNOOC and Royal Dutch Shell Group, to purchase butadiene, an essential raw material used in the production of Styrene-Butadiene-Styrene (SBS).

This year (2012) will be the first full year of commercial SBS production. In the past twelve months, the price for butadiene has ranged between approximate $2,144/t and $5,083/t, with current prices at approximate $4,765/t. The one-year agreement with CSPC ensures Keyuan has adequate supply of butadiene to meet its 70,000-ton SBS production target in 2012.

"This agreement provides important stability for one of our new business units," explained Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "We have secured an adequate supply from a trusted partner and at a reasonable cost. Having recently secured strong orders for SBS, we can now focus on optimizing our production for the remainder of 2012."

CSPC is a joint venture between CNOOC and Shell Nahai BV, a subsidiary of the Royal Dutch Shell Group. With its butadiene production facilities located in Huizhou, Guangdong Province and annual production capacity of 165,000 metric tons of butadiene, CSPC can conveniently ship materials directly to Keyuan's production plants in Ningbo.

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 2010, Keyuan's operations include an annual petrochemical manufacturing design capacity of 720,000 MT for 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 which was completed in September 2011 and one production line has entered into commercial production, additional storage capacity, a raw material pre-treatment facility, an asphalt production facility, and an ABS 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.