The Increasing Demand of Naphtha and its Market Dynamics

Increasing Demand of Naphtha

Naphtha: Definition

Naphtha is a class of volatile, flammable mixtures of liquid hydrocarbons that are mostly employed as diluents, solvents, or raw materials for the production of gasoline. In the fractional distillation procedure, it is a light petrochemical feedstock that is separated from crude oil together with kerosene and jet fuel.

There are numerous different kinds of naphtha, each with a distinctive blend of different kinds and amounts of hydrocarbons. Each type of naphtha produced by refineries has specific handling and storage instructions. Refineries can produce a variety of naphtha.

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This blog contains comprehensive information on the production process of naphtha and its pricing trends, key players, market drivers, recent development, and regional outlook.

Production Process of Naphtha

Naphtha is produced from the process of fractional distillation of the crude oil. The process involves the collection of petroleum and crude oil distillates through fractional distillation and depending upon the temperature range, the distillates are collected. The temperature range of naphtha (forming the top distillate) is up to 170 °C.

Naphtha Price Trend

North America

The naphtha prices declined in the US as domestic naphtha production cost rose, expanding the market's supply of the product. As demand from importing economies like China and Turkey grew, naphtha prices increased, pushing up costs in the American market. Due to low downstream petrochemical industry demand during the holiday season and low upstream crude oil prices in the US, naphtha prices declined.

Asia Pacific

China's economy is struggling as a result of increasing limitations associated to COVID 19; as a result, naphtha prices have decreased. As the limits loosened, the price of naphtha climbed due to fierce competition in the Asian markets.

Due to poor purchasing decisions made by the downstream petrochemical industry during the Christmas season, naphtha prices decreased as export prices from the USA eased. The last month saw a fall in the price of naphtha as a result of destocking efforts, contributing to the steady performance of the downstream monomer market.


A large supply of upstream crude oil and weak downstream petrochemical industry demand both contributed to the falling trend in naphtha prices in Europe. Naphtha prices were further lowered by the consistent supply from North African nations.

Despite the mediocre performance of the downstream petrochemical sector, the demand for North African naphtha cargoes increased in Asian nations, which caused naphtha prices to rise in Europe.

The sluggish buying sentiment in the European region brought on by the holiday season led to a further drop in naphtha prices.

Key Players

  • China Petrochemical Corporation
  • Reliance Industries Limited, Shell Chemicals
  • Exxon Mobil Corporation
  • Indian Oil Corporation Limited
  • Novatek

Market Drivers

There are many industries that use both light and heavy naphtha. The primary feedstock utilised in the petrochemical industry is naphtha. The petrochemical industry uses about 20% of the manufactured naphtha.

Naphtha finds a notable application for the production of aromatics and olefins, such as benzene, butadiene, ethylene, toluene, and propylene in the petrochemical sector. The industry's ongoing expansion makes it proactive in preserving the growth of the naphtha market.

The principal application for olefin-rich naphtha is as a feedstock in the production of low-cost, high-octane diesel. As a result of accelerating urbanisation and an expanding global population, naphtha consumption rose in both emerging and developed economies.

News and Events

October 2022: The naphtha crackers were shut in South Korea by LG Chem for its maintenance for seven weeks. During the maintenance, the supply of the petrochemical was affected in the region.

Regional Outlook

Naphtha Market share worldwide is dominated by the Asia Pacific region. In nations like China, India, and Japan, demand for naphtha is constantly increasing as a result of the expansion of numerous end-user sectors, including petrochemical, fertilisers, paints, and coatings.

The commercial and military aerospace industries in Japan produce aircraft parts. The rising demand for cargo has led to an increase in commercial aircraft production during the last few years.

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With an investment of USD 2.1 billion and a projected operational date of 2033, the South Korean Defense Acquisition Program Administration (DAPA) intends to develop on light aircraft. With an annual maintenance budget of USD 210 million, Hyundai Heavy Industries participates in this manufacturing process.

Approximately 2% of Australia's GDP and 10% of the world's aerospace are managed by one of the country's most important businesses, the aerospace sector. Furthermore, the aerospace and defence sector in Australia employs about 1,000 companies and brings in about USD 4 billion annually.

Exports to China, the United States, Europe, and ASEAN nations account for 42% of this total earnings. In the upcoming years, the market's growth trend is probably going to be the same, which will fuel its expansion in the area.

About Author:

Prakhar Panchbhaiya

Senior Content Writer at Procurement Resource

Prakhar Panchbhaiya is an accomplished content writer and market research analyst. With over 4 years of experience in content creation and market analysis encompassing many industries, including pharmaceuticals, nutraceuticals, biochemistry, healthcare, ed-tech, and Food & Agriculture, he has been creating quality content for multiple sectors. He is a Biochemistry major with sturdy backing in a PG diploma in digital marketing, helping in the exhaustive content creation based on extensive research and competitive marketing.




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