Naphtha deficit reduces olefin feedstock availability

22 May 2007 12:21  [Source: ICIS news]

ANTWERP, Belgium (ICIS news)--A growing deficit in naphtha will reduce feedstock availability for olefins production, an industry consultant said on Tuesday.

“There could be a fundamental shortage of naphtha due to refining capacity not being available,” Paul Hodges, chairman of International eChem, told the fourth World Olefins Conference.

Naphtha prices will be volatile due to crude oil, refining imbalances and the seasonality in the US gasoline market, he added.

There is a perceived shortage in oil refining capacity along with soaring refining margins, he said. The strongest demand growth has been seen for light and middle distillate products in Asia, especially naphtha.

Global refining capacity was forecast to grow, with Asia Pacific leading the additions. However, Asian refining balances could stay tight up to 2010 when new refineries come on stream in China, India and South Korea.

But Hodges questioned whether there had been sufficient focus on naphtha production, pointing out that there was a growing surplus of gasoline.

An increasing deficit of naphtha in Asia Pacific is driving global balances, leading to a potential naphtha deficit of 24m tonnes by 2010, he said.

To deal with this problem, refiners may reduce reformer operations to maximise naphtha production. Petrochemical producers may switch feedstocks to liquefied petroleum gas (LPG).

By: Peter Taffe
+44 20 8652 3214

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