Keyuan Petrochemicals, Inc. (KYNP.OB) Announces Addition of New Desulfurization Process at Its BTX Aromatics Refining Facility

In the company’s news yesterday,

Keyuan Petrochemicals announced that it has completed and placed into service effective July 1, 2010, a new desulfurization process at its current refining facility for BTX aromatics. By reducing the sulfur content, the company will be able to realize higher selling prices and improved margins on certain of its BTX aromatics products.

More specifically, the new process is being applied to Keyuan’s BTX light aromatics, which account for 200,000 metric tons of the company’s total BTX aromatic production capacity of 345,000 metric tons a year. The total investment made in adding the desulfurization process totaled about $4.4 million and is expected to be recovered within 1-2 years.

At the company’s current utilization rate of 100%, the higher pricing on BTX aromatics could generate nearly $3 million in additional net profit per year. This will allow the company to recover their costs in about 1.5 years. BTX aromatic products include benzene, toluene, xylene and other chemical components for further processing into oil resin and solvent materials used in paint, ink, coatings and pesticides.

Keyuan Petrochemicals is also expanding its overall production and facility capacity in order to capitalize on China’s growing demand for refined petrochemical products. Currently, there is a large imbalance in supply and demand for refined petrochemical products that is likely to persist for many years in China.

Due to this imbalance, the company’s customer order requests for 2010 have exceeded its current annual production capacity. Therefore, Keyuan plans to expand its petrochemical manufacturing capacity to 600,000 metric tons in 2011. The company also plans to double its storage capacity to 200,000 metric tons by the end of 2011. In addition, it intends to add a new raw material pre-treatment facility and an asphalt production facility in 2012.

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