By Mohi Narayan and Sam Li
NEW DELHI/BEIJING (Reuters) -China’s naphtha imports will hit report ranges this yr as new vegetation and warning over U.S. propane and ethane purchases will drive demand and assist refiners’ margins for the petrochemical feedstock, analysts and merchants mentioned.
Cracker operators on the planet’s largest petrochemical producer, which pivoted lately to cheaper U.S. propane and ethane feedstock, are switching some demand again to naphtha after being ensnared within the U.S.-China commerce struggle that disrupted their U.S. provides, the sources mentioned.
The necessity to diversify provides and to fulfill demand from new vegetation will drive naphtha imports to an all-time excessive of 16 million to 17 million metric tons (144 million to 153 million barrels) this yr, consultancies Rystad Power and FGE mentioned. JLC pegs 2025 imports at about 15 million tons.
China imported about 12 million tons in 2024, official information confirmed.
“With points in imports of ethane and propane, there’s a belief issue that has come into play on the subject of U.S. cargoes,” mentioned Pankaj Srivastava, senior vice chairman, commodity markets at Rystad Power.
“Naphtha, however, is impartial of those issues as a result of suppliers are various.”
A complete of 4 million tons per yr (tpy) of ethylene capability is slated to return on-line in China by end-2025, aiding import demand, and this can improve to about 6 million tpy by first half of 2026, he added.
The Worldwide Power Company (IEA) mentioned in its July report that China’s naphtha demand is anticipated to rise by about 6% in 2025 and by 8.6% in 2026, considerably outpacing the mixed development of propane and ethane, which is projected at simply 2.3% in 2025 and 1.3% in 2026.
Following the disruption in U.S. provide, China issued a second batch of 2025 naphtha import quotas in June totalling practically 24 million tons, practically doubling final yr’s allocations.
China imported practically 6 million tons of naphtha between January and Could, up 22.81% on-year and the best stage since 2015, authorities information confirmed, with Russia, the United Arab Emirates and South Korea the largest suppliers.
This compares with a 6% on-year rise in propane imports to 12.3 million tons within the first 5 months, whereas ethane imports had been flat at 2.3 million tons in the identical interval, authorities information confirmed.
China’s liquefied petroleum fuel (LPG) imports, which embrace propane, are prone to keep decrease within the third quarter amid cautious shopping for of U.S. cargoes, Power Features mentioned in a July 4 notice.
The strong naphtha demand is anticipated to underpin Asian refiners’ margins, analysts mentioned. Naphtha margins have risen about 4% this month to $73.30 over Brent crude on hopes of wholesome feedstock demand from China.
