China Independent Refineries’ Naphtha Output Refreshed New Low

According to SCI, the average operating rate of CDU at Shandong independent refineries was only 56.11% in July 2018. With the independent refineries maintenance increasing, and coking units’ shutdown, there was a significant decline in naphtha output in July.

In August, with the gradual restart of the refineries, the average operating rate of CDUs is expected to rebound sharply. The output of naphtha will also increase at Shandong independent refineries.

From the perspective of demand, Sinopec raised its gasoline procurement price by RMB 300/mt. This supported the gasoline market at independent refineries. It is predicted that gasoline prices at independent refineries will increase by around RMB 100/mt. At the same time, the prices of gasoline components are generally low, which makes the profit of gasoline gradually increase. Therefore, the gasoline market has a certain pulling effect on the demand for naphtha.

SCI believes that the market demand for naphtha will increase due to multiple factors such as the rebound in gasoline demand. However, the amount of tradable resources in the naphtha market is still shrinking. Therefore, the probability of a favorable supply-demand balance in the naphtha market is relatively high at Shandong independent refineries in August.