Naphtha Market Expected To Observe Major Growth with CAGR of 5.1% Forcast Period 2021-2031

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Naphtha Market: Introduction

The global naphtha market is likely to be hampered due to the volatile crude oil prices and abundant availability of cheaper alternatives such as LPG and shale gas. In terms of application, the chemicals industry segment dominated the global naphtha market in 2020. The demand for naphtha from the global chemicals industry accounted for 60% of the overall demand witnessed by the naphtha market in 2020. The petrochemical industry, which uses naphtha for the production of various petrochemicals, is also a key end-user of naphtha.

Generally, there are two main classes of naphtha: heavy naphtha and paraffinic naphtha. Paraffinic naphtha is rich in olefins and is suitable for polyolefin and olefin production. Heavy naphtha is mainly used for production of aromatics. In the petrochemical industry, naphtha is utilized for manufacturing aromatics and olefins such as benzene, butadiene, ethylene, toluene, and propylene. Consistent expansion of the petrochemical industry is driving the naphtha market. Market entrants in emerging countries have a strong opportunity to benefit from increasing demand for renewable naphtha from the automotive industry. Rising crude oil prices has led to higher fuel prices. Several countries have increased blending of biofuels in gasoline and diesels in order to deal with these prices.

The energy/fuel segment of the naphtha market is expected to expand at a CAGR of 5.1% during the forecast period. Naphtha is used for blending gasoline in numerous industries.

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Naphtha Market: Prominent Regions

In terms of region, the global market for naphtha was led by Asia Pacific, which accounted for a notable 40% share in 2020. The high demand for naphtha in the region is the result of considerable construction and manufacturing activities as well as a rise in demand for plastic in industries such as construction, automotive, and electronics. The market for naphtha in North America is projected to expand at a moderate CAGR of 2.6%, while the market in Europe is estimated to expand at a CAGR of 2.1% during the forecast period. Rising demand for naphtha from oil & petrochemical industries in these regions is estimated to fuel the market in these regions.

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High demand for mineral oil and rise in disposable income in emerging countries, which encourages people to buy new cars as well as purchase fuel-efficient vehicles, are key factors that are projected to propel the global naphtha market. However, there may be challenges with cost competitiveness for some regions such as Latin America due to volatility in crude prices and production rates. Furthermore, environmental concerns associated with fossil fuels have also led several buyers toward cleaner renewable energy sources, such as solar power and wind turbines over conventional forms of electricity generation.

The increasing usage of plastic products is fuelling the demand for polypropylene and polyethylene, which, in turn, is driving the demand for naphtha that is utilized as a feedstock for the production olefins and aromatics that are employed in production of paints and coatings. Advancements in technology have led to the emergence of advanced furnace materials and enhanced distillation processes. This, coupled with the expansion of the chemical industry, particularly in Asia Pacific, is further boosting the consumption of naphtha in the region.

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Naphtha Market: Key Players

Key market participants operating in the global naphtha market include BP, Chevron, Shell Chemicals, Mangalore Refinery and Petrochemicals Limited, Lotte Chemical Corporation, Reliance Industries Limited, SABIC, Vitol, Sinopec, ExxonMobil, Indian Oil Corporation, OAO Novatek, Total S.A., and Mitsubishi Chemical.

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