Naphtha demand from ethylene sector to rise in China, but naphtha’s dominance to reduce

Demand for naphtha from China's ethylene sector will continue to grow over the next three years but its dominance in the overall feedstock mix will slip, as per a Sinopec official reported by Platts. Naphtha's dominance in the overall feedstock mix is expected to drop to around 65% by 2015. Naphtha is primarily used for ethylene production in China, currently accounting for 70% of the total feedstock used in ethylene plants. China currently has ethylene production capacity of 15.2 mln tpa and an additional 1.93 mln tpa capacity is slated to be ready by the end of the current five-year economic plan in 2015. Some of these new plants will use mostly naphtha, but producers are also finding cheaper alternatives for feedstock like synthetic coal gas and coal-to-liquids. Hence, while naphtha demand will continue to grow, the pace of growth will be slower than in the last few years. Ethylene consumption in 2012 is likely to rise 3.8% to 32.5 mln mt, slowing from the almost 5% growth seen last year. Next year production is likely to rise to 17 mln mt due to new capacity coming online. Sinopec and CNPC are each planning two new ethylene plants, while a number of existing plants have been earmarked for upgrades. Sinopec's greenfield projects in Wuhan, Hubei province and Chengdu in Sichuan province will use naphtha as feedstock. They have total capacity of 800,000 tpa. Naphtha output by domestic refineries over January-September fell 2.3% year on year to 20.9 mln mt (686,500 b/d), according to data from the National Bureau of Statistics.
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