Naphtha use in China's ethylene sector may fall

27 Oct '12

2 min read

Even in the midst of rising demand from China’s ethylene sector, naphtha’s contribution to the sector’s overall feedstock mix is expected to fall over the next three years, Shu Zhaoxia, Chief Analyst for Chemicals at state-owned refiner Sinopec, has said.

Speaking at a conference in Singapore, she said naphtha mainly finds utility in ethylene production and accounts for around 70 percent of the total feedstock used in ethylene plants in China.

The country is all set to add an additional 1.93 million tons per year ethylene production capacity to its existing capacity of 15.2 million tons per year, upon conclusion of its ongoing five-year economic plan in 2015, she said.

Most of these new ethylene production units would use naphtha as key feedstock, however, manufacturers are also considering other economical options like synthetic coal gas and coal-to-liquids. This incidentally would reduce naphtha’s dominance in overall feedstock mix to 65 percent over the next three years, Ms. Shu said.

Thus, naphtha would grow at a slower pace as compared to past few years, she said. Also, the country’s sluggish economic growth has led to reduced demand for chemicals, which has also impacted demand for naphtha, she added.

According to the National Bureau of Statistics’ data, during the first nine months of the current year domestic naphtha production fell by 2.3 percent to 20.9 million tons, as compared to same period last year.

Meanwhile, the General Administration of Customs data shows that overall naphtha exports plummeted to 190,000 tons during January-August 2012, showing a year-on-year fall of 53.7 percent.

Ms. Shu said China’s ethylene consumption for the current year is expected to grow by 3.8 percent year-on-year to 32.5 million tons, compared to growth of five percent year-on-year achieved last year.

For 2013, China’s ethylene production is likely to touch 17 million tons, mainly on the back of capacity addition.

While Sinopec and CNPC are each looking at launching two new ethylene plants, several other players have allocated sums for upgrading their existing plants, the Sinopec official informed.

She said naphtha would be used as the key feedstock at Sinopec’s greenfield projects at Chengdu in Sichuan province and Wuhan in Hubei province.

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