China’s oil demand declined year-on-year in the second quarter of 2025, but strong naphtha consumption helped limit the drop, according to a new report by Energy Intelligence, which estimates that apparent oil demand fell by 450,000 barrels per day from Q2 2024, primarily due to weak diesel and gasoline margins. In contrast, naphtha demand remained steady as petrochemical producers maintained feedstock purchases amid steady cracker utilization rates.
The International Energy Agency (IEA) forecasts that China’s naphtha demand will grow by around 6 percent in 2025 and by 8.6 percent in 2026, outpacing other light-end hydrocarbons such as propane and ethane. The growth is being driven by increased domestic ethylene capacity and a pivot toward chemical feedstocks in refining strategies.
In June, Beijing raised its 2025 naphtha import quota to 24 million metric tons, nearly doubling the 12.3 million tons issued earlier in the year. The quota expansion reflects sustained domestic consumption and disruptions in U.S. LPG exports, which had been the primary alternative feedstock. According to Reuters, Chinese refiners are increasingly prioritizing naphtha imports from Middle Eastern and Southeast Asian suppliers to hedge against shipping and pricing volatility.
China’s record naphtha intake in the second quarter was also supported by reduced availability of alternative feedstocks like U.S. propane and ethane. Traders noted that lighter naphtha grades were priced at a premium due to strong demand from newly commissioned crackers, as per Reuters.
China’s National Development and Reform Commission has not yet published revised second-quarter demand figures. Analysts expect naphtha to remain a key component of China’s hydrocarbon mix through the second half of the year.
According to a Reuters report from earlier in July, Chinese customs data showed nearly 6?million metric tons of naphtha were imported between January and May 2025, which represents a 22.8% year-on?year increase, with total imports expected to reach 16-17?million tons this year.
By Charles Kennedy for Oilprice.com
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