New plants, US trade worries to drive China's 2025 naphtha imports to record
refiners' margins
for the
petrochemical feedstock
, analysts and traders said.
Cracker operators in the world's largest petrochemical producer, which pivoted in recent years to cheaper US propane and ethane feedstock, are switching some demand back to naphtha after being ensnared in the
US-China trade war
that disrupted their US supplies, the sources said.
The need to diversify supplies and to meet demand from new plants will drive naphtha imports to an all-time high of 16 million to 17 million metric tons (144 million to 153 million barrels) this year, consultancies Rystad Energy and FGE said. JLC pegs 2025 imports at about 15 million tons.
China imported about 12 million tons in 2024, official data showed.
"With issues in
imports of ethane and propane
, there is a trust factor that has come into play when it comes to US cargoes," said Pankaj Srivastava, senior vice president, commodity markets at Rystad Energy.
"Naphtha, on the other hand, is independent of these concerns because suppliers are varied."
A total of 4 million tons per year (tpy) of
ethylene capacity
is slated to come online in China by end-2025, aiding import demand, and this will increase to about 6 million tpy by first half of 2026, he added.
The International Energy Agency (IEA) said in its July report that China's
naphtha demand
is expected to rise by about 6 per cent in 2025 and by 8.6 per cent in 2026, significantly outpacing the combined growth of propane and ethane, which is projected at just 2.3 per cent in 2025 and 1.3 per cent in 2026.
Following the disruption in U.S. supply, China issued a second batch of 2025
naphtha import quotas
in June totalling nearly 24 million tons, nearly doubling last year's allocations.
China imported nearly 6 million tons of naphtha between January and May, up 22.81 per cent on-year and the highest level since 2015, government data showed, with Russia, the United Arab Emirates and South Korea the biggest suppliers.
This compares with a 6 per cent on-year rise in propane imports to 12.3 million tons in the first five months, while ethane imports were flat at 2.3 million tons in the same period, government data showed.
China's liquefied petroleum gas (LPG) imports, which include propane, are likely to stay lower in the third quarter amid cautious buying of US cargoes, Energy Aspects said in a July 4 note.
The robust naphtha demand is expected to underpin Asian refiners' margins, analysts said.
Naphtha margins
have risen about 4 per cent this month to $73.30 over Brent crude on hopes of healthy feedstock demand from China.
"Increased pull from China will provide support to (naphtha) cracks towards the middle of third quarter to fourth quarter," Rystad's Srivastava said.
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