China Naphtha Cracker for Olefin Production is Operating at 70 to 75 percent in August 2022 Amid Poor Margin and Lackluster Demand

China naphtha cracker utilisation for olefin production amid lackluster demand and poor margin is operating at 70 to 75 percent in August 2022. As per market experts, China tends to grow its yields in upcoming years because of the fall in prices of the petrochemical sector which has reduced the demand for the end products like naphtha.

The region’s gasoil, kerosene, and fuel oils yields contain about 39.7 percent of the oil products in the month of July which was approximately about 34.9 percent in the previous year and about 38.5 percent in the month of June, according to the National Bureau of Statistics Data.

Especially the feedstocks for petrochemicals such as naphtha, the yields will further increase because of the better demand. But the demand for petrochemical in china is low. The production of naphtha fell by about 4.2 percent to 4.17 million mt in the month of July 2022 which was despite being higher by around 6.3 percent from the previous year.

Moreover, the imports fell by 23.9 percent which was 544.029 mt in July 2022. Naphtha imports are mainly used for steam crackers for feedstock. To reduce the losses, China has cut operating rates for steam crackers which were running at a capacity of 75-80 percent in August.

In July, the fuel production of China reached a record of 4.7 million mt which was about 1 percent higher than the previous month. It has an output surge of 21.5 percent.

With a reduction of 31 percent in crude, the production of gasoline fell about 3.6 percent in July and kept the entire product yield balanced at 26.1 percent. When the yield was at 22.4 percent, the volume was up at 6.3 percent. China produced a total of 291.61 million mt including gasoline, fuel oil, LPG, and naphtha, despite the decline of 6.3 percent of the crude during the same timeframe.

The market for Linear Alpha Olefins has been very firm during quarter one because of the upstream energy feedstock and strong cost pressure. Since mid-January, crude oil has gained more than 10 percent.

The olefins and the derivates of crude oil faced cost pressures and inflammation and in return propelled by the increased cost valuations. In the Asia Pacific, the cost of linear alpha olefin was USD 661.79 (INR 52700) Per MT for C20-24 grade, whereas C24-28 LAO cost valuation was estimated at USD 880.43 (INR 70100) per MT based on CFR in March 2022.

As per procurement Resources, China’s naphtha cracker for olefin production amid lackluster demand and poor margin is operating at 70 to 75 percent in August 2022. The region’s gasoil, kerosene, and fuel oils yields contain about 39.7 percent of the oil products in the month of July 2022. Naphtha imports are mainly used for steam crackers for feedstock.

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To reduce the losses, China has cut operating rates for steam crackers which were running at a capacity of 75-80 percent in August. The market for Linear Alpha Olefins has been very firm during quarter one because of the upstream energy feedstock and strong cost pressure.