New plants, U.S. trade worries to drive China's 2025 naphtha imports to record
- China's 2025 naphtha imports to hit all-time high, analysts say
- Asian margins to gain steam from Q3 onwards
- China naphtha demand to grow about 6% in 2025, 8.6% in 2026
China's naphtha imports will hit record levels this year as new plants and caution over U.S. propane and ethane purchases will drive demand and support 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 U.S. propane and ethane feedstock, are switching some demand back to naphtha after being ensnared in the U.S.-China trade war that disrupted their U.S. 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 MM tonnes (t)–17 MMt (144 MMbbl to 153 MMbbl) this year, consultancies Rystad Energy and FGE said. JLC pegs 2025 imports at about 15 MMt.
China imported about 12 MMt in 2024, official data showed.
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"With issues in imports of ethane and propane, there is a trust factor that has come into play when it comes to U.S. 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 MMtpy of ethylene capacity is slated to come online in China by end-2025, aiding import demand, and this will increase to about 6 MMtpy by the 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% in 2025 and by 8.6% in 2026, significantly outpacing the combined growth of propane and ethane, which is projected at just 2.3% in 2025 and 1.3% in 2026.
Following the disruption in U.S. supply, China issued a second batch of 2025 naphtha import quotas in June totaling nearly 24 MMt, nearly doubling last year's allocations.
China imported nearly 6 MMtof naphtha between January and May, up 22.81% year-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% year-on-year rise in propane imports to 12.3 MMt in the first five months, while ethane imports were flat at 2.3 MMt 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 U.S. 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% 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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