Chinese Tyre Makers to Benefit from Keyuan SBS Facility

Chinese petrochemical product manufacturer Keyuan Petrochemicals reports it entered into land use right transfer agreements with local government agencies on August 18. Following their approval, the company will instigate plans for expansion on an 111,500 square metre site adjacent to its existing plant in Ningbo, Zhejiang province. In addition to building a storage and several manufacturing facilities as originally planned, the company has now announced it also intends to establish a Styrene-Butadiene-Styrene (SBS) production plant on the site. Work will begin in the third quarter of 2010.

In making this latest plan public, Keyuan Petrochemicals comments that China’s current production capacity of SBS is approximately 600,000 tonnes per year while domestic demand is projected to reach 750,000 tonnes in 2010. The tyre industry is a major user of SBS.

“We see a tremendous opportunity to gain market share in the SBS market, given the value-added nature of the product and the supply-demand imbalance that exists today,” said Chungfeng Tao, chairman and CEO of Keyuan. “Our expansion plan includes four new state-of-the-art facilities and they will not only allow us to increase our capacity and expand into new markets but also make us more efficient.”

Once completed, the new SBS plant will add an additional 70,000 tonnes of production capacity. The company expects the facility to be completed in the second half of 2011 and cost approximately US$17.5 million. It is thought the SBS facility will generate approximately $110 million in sales and between $10 million to $11 million in net profit annually once it reaches full capacity.