Naphtha Cushions China’s Q2 Oil Demand Decline

China’s oil demand dropped significantly during the second quarter of 2025, but robust naphtha consumption helped soften the blow—especially for petrochemical producers and refiners.

• Oil demand slipped by 450,000 barrels per day (bpd) in Q2 2025 compared to the same period in 2024, largely due to weak gasoline and diesel margins amid softer demand
  
• Naphtha demand remained steady, as China’s petrochemical producers maintained feedstock offtake thanks to high cracker utilization rates
  
• Naphtha imports surged by nearly 22.8% year-on-year in the first five months of 2025 (roughly 6 million tons), marking the highest volume since 2015
  
• Import quotas nearly doubled in 2025 to around 24 million tons, driven by new petrochemical capacity and supply concerns over U.S. propane and ethane.

China’s demand for liquid fuels continues its downward turn, reflecting broader trends such as rising electric vehicle penetration, construction sector weakness, and slower diesel consumption. However, support from the petrochemicals sector—particularly through naphtha feedstock—has limited the severity of volume declines.

Analysts from the International Energy Agency forecast naphtha demand to grow by about 6% in 2025 and increase to 8.6% in 2026, comfortably outpacing the combined growth rate for propane and ethane.

Furthermore, ExxonMobil’s involvement in a major new petrochemical complex in Huizhou, Guangdong, reportedly receiving multiple naphtha shipments, underscores rising domestic demand. Commercial operations at the complex are expected to begin in Q2.