2019 Shandong Independent Refinery Naphtha Output Dropped

According to SCI’s statistics, from the beginning of 2019, the average operating rate of CDUs at Shandong independent Refineries was 61.68%, down 3.86% from last year. The accumulated output of gasoline at Shandong independent refineries from January to May 2019 decreased by 3.19% from last year, while that of diesel decreased by 5.01% from last year.

In terms of naphtha, According to SCI, in May, the naphtha output at Shandong independent refineries was 957.4kt, up 0.84% from last month. From January to May 2019, the total naphtha output at Shandong independent refineries was 5,170.1kt, down 21.25% Y-O-Y. The reason led to the output slump of naphtha are listed below.

First, in 2019, due to the CDU operating rate decrease at Shandong independent refineries, the operating rates of most naphtha producing units declined. For instance, in 2019, the average operating rate of delayed cokers at Shandong independent refineries was 53.5%, down 7.23% from last year. The drop of the delayed cokers’ operating rates resulted in the decrease of naphtha supply to some extent.

Second, from Q3, 2018, China’s gasoline apparent consumption volume increased dramatically. In 2019, China’s gasoline apparent consumption volume continued rising, making China’s gasoline market suffer from graver oversupply. Currently, the naphtha in Shandong is mainly used at catalytic reformers whose major profitable product is reformed aromatics, and the reformed aromatics market closely associates with the gasoline market. Therefore, in 2019, China’s sluggish gasoline market brought in the weak reformed aromatics market, and the profits of catalytic reformers at Shandong independent refineries became negative for the first time since 2015. Due to the weak downstream demand for reformed aromatics, the naphtha output at Shandong independent refineries slumped.

SCI reckons that due to the sluggish gasoline market in 2019, the profitability at independent refineries was reduced, and the operating rates at independent refineries fluctuated downwards. In order to solve this issue, China’s gasoline supply and demand must be adjusted to balance, and the course will not be simple. Therefore, in the rest of 2019, the naphtha outcome at Shandong independent refineries may stay at lows, waiting for the revival of China’s gasoline market.

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