Keyuan Initiates Commercial Production of SBS After Completing Tests of 2nd Production Line

NINGBO, China -- Keyuan Petrochemicals Inc. (OTCQB: KEYP) ("Keyuan" or "the Company") an independent manufacturer and supplier of various petrochemical products in China, announced that it has completed the trial production and comprehensive tests of its second production line for Styrene-Butadiene-Styrene ("SBS") and has now commenced commercial production.

Keyuan completed construction of the new 70,000 tons SBS production facility in September 2011. After several months of trial production that included various technique tests, the Company started commercial production with the first production line in January 2012. As of June 30, 2012, this production line had produced 13,049 metric tons of SBS. As a result of the trial production, testing and the operational experience gained from the first line, management believes that second production line will be better adjusted and optimized for commercial production. SBS is currently selling at $3,175 per ton in China.

The Company has received positive feedback from the domestic customers about its SBS products. Meanwhile, the Company has started preparation to enter into global markets, reaching out to several potential foreign customers and sending out samples for testing. Some of the potential foreign customers have already expressed their interest in SBS products and intention to purchase as Keyuans samples have passed their tests.

"In order to provide high quality products, we always make various adjustments and tests according to different industrial and internal standard before the approval of commercial production. The performance of our SBS production facility has surpassed our expectation, both in technique and market acceptance," said Mr. Chunfeng Tao Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "We are confident that the full launch of SBS commercial production will bring better profit and returns to the Company and its shareholders."

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 one of the leading independent manufacturer and supplier of various petrochemical products. Having commenced production in October 2010, Keyuans 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.