Naphtha Market

Growing Petrochemical Industry Demand Will Fuel Market Growth

Many industries use both light and heavy naphtha. The primary feedstock utilized in the petrochemical industry is naphtha. The petrochemical industry uses about 50% of the produced naphtha. For the petrochemical industry's manufacturing of aromatics and olefins including benzene, butadiene, ethylene, toluene, and propylene. The industry is aggressive in ensuring the growth of the naphtha market due to its continual expansion. Olefin-rich naphtha is primarily used as a feedstock to create low-cost, high-octane diesel. As a result of accelerating urbanization and an expanding population, its consumption rose in both emerging and developed economies.

Fast-growing economies like those in India, China, and ASEAN see increases in its production and demand. For instance, the Malaysian petrochemical industry is expanding rapidly as a result of the large inflow of FDI. Saudi Aramco and the national oil and gas firm of Malaysia, Petronas, announced the formation of two joint ventures for the $7 billion Refinery and Petrochemicals Integrated Development (RAPID) project in Johor.

A refinery with a daily processing capacity of 300,000 barrels of crude oil and six petrochemical units with a combined yearly output of more than 3.5 million metric tonnes were built as a result of the collaboration above. Thus, this factor is driving the market CAGR.

According to data released by the US Energy Information Administration, the post-pandemic period saw a significant rise in the  use of refined petroleum products. With 25% of the pipelined projects in the European region projected to start up by 2025, the United Kingdom is anticipated to take the lead in the forthcoming oil and gas projects. In the near future, the nation will have 111 oil and gas sector projects, of which 83 will be upstream projects, 23 will be midstream projects, three will be refinery projects, and two will be petrochemical projects.

The development of an oil and gas field in Denmark by the petrochemical giant Ineos will begin in September 2022, marking the nation's first approval of such a project in years. The demand for naphtha for diverse applications in the end-user sectors is therefore projected to expand as a result of the considerations above. As a result, this is anticipated to fuel its demand during the projection period.

The Global Naphtha Market Industry is characterized by robust growth projections, with the market expected to expand significantly over the next decade. Analysts forecast a market value of 311.9 USD Billion in 2024, with an anticipated increase to 450.2 USD Billion by 2035. This growth trajectory suggests a compound annual growth rate (CAGR) of 3.39% from 2025 to 2035. Such projections indicate a strong demand for naphtha across various applications, including fuels and petrochemicals. The market's resilience and adaptability to changing economic conditions further underscore its potential for sustained growth in the coming years.

The Global Naphtha Market Industry is also propelled by the growth of the automotive sector, particularly in emerging economies. As vehicle production ramps up, the demand for high-quality fuels, including naphtha, is expected to rise. Naphtha is utilized in the production of gasoline, which remains a primary fuel source for internal combustion engines. The automotive industry's recovery and expansion in regions such as Asia-Pacific and Latin America could lead to increased naphtha consumption. This trend is crucial as the market is projected to grow from 311.9 USD Billion in 2024 to 450.2 USD Billion by 2035, indicating a robust demand trajectory that supports the Global Naphtha Market.

The Global Naphtha Market Industry is significantly influenced by the expansion of refining capacities across various regions. As refineries enhance their output to meet the increasing demand for fuels and petrochemicals, naphtha production is likely to rise correspondingly. Countries such as the United States and China are investing heavily in upgrading their refining infrastructure, which is expected to bolster naphtha availability. This expansion not only supports the domestic markets but also enhances export capabilities, thereby contributing to the overall growth of the Global Naphtha Market. The anticipated increase in refining capacity aligns with the projected market growth, further solidifying naphtha's position as a key player in the energy sector.

The Global Naphtha Market Industry experiences a surge in demand driven by the petrochemical sector. Naphtha serves as a crucial feedstock for producing various chemicals, including ethylene and propylene, which are fundamental to the manufacturing of plastics and synthetic fibers. As global population growth and urbanization continue, the need for these materials is expected to rise. This trend is reflected in the market's projected value of 311.9 USD Billion in 2024, with expectations to reach 450.2 USD Billion by 2035. Such growth indicates a compound annual growth rate (CAGR) of 3.39% from 2025 to 2035, highlighting the pivotal role of naphtha in the petrochemical landscape.

The Global Naphtha Market Industry is positively impacted by regulatory frameworks that promote cleaner fuels. Governments worldwide are increasingly implementing policies aimed at reducing carbon emissions and enhancing fuel quality. Naphtha, being a cleaner-burning fuel compared to heavier oils, is likely to benefit from such regulations. For instance, initiatives to phase out high-sulfur fuels in favor of lower-emission alternatives could drive naphtha demand. This regulatory support aligns with the broader transition towards sustainable energy solutions, potentially increasing naphtha's market share in the fuel sector and contributing to the anticipated growth of the Global Naphtha Market.

The Global Naphtha Market Industry is influenced by ongoing technological advancements in production processes. Innovations in refining technologies, such as catalytic cracking and hydrocracking, enhance the efficiency of naphtha production. These advancements not only improve yield but also reduce operational costs, making naphtha a more attractive option for producers. As technology continues to evolve, the ability to produce higher-quality naphtha at competitive prices could stimulate market growth. This is particularly relevant as the industry anticipates a market value increase from 311.9 USD Billion in 2024 to 450.2 USD Billion by 2035, driven in part by these technological improvements.

By Region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The Asia Pacific Naphtha market accounted for USD 134.9 billion in 2022 with a share of around 45.80% and is expected to exhibit a significant CAGR growth during the study periodThe demand for naphtha has been continuously increasing in nations like India, China, and Japan due to expansion in a variety of end-user sectors, including petrochemicals, paints & coatings, and fertilizers, among others.

Over the next five years, China is expected to build a large number of chemical companies, which will raise its demand.

Further, the major countries studied in the market report are: The U.S, Canada, Germany, France, UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3:  NAPHTHA MARKET SHARE BY REGION 2022 (%)

Source: Secondary Research, Primary Research, Market Research Future Database and Analyst Review

North America naphtha market accounts for the second-largest market share. The region's petrochemical and oil sectors' rising demand for naphtha. The fast-growing tight oil and shale gas production in North America, notably the US, will be a factor in the capacity expansions and surplus supplies that are anticipated. Further, the US naphtha market held the largest market share, and the Canada naphtha market was the fastest growing market in the region

Europe Naphtha Market is expected to grow at the fastest CAGR from 2022 to 2030. due to the modification of chemical trade laws. Chemical processes comprising propane cracking and gasoline production are expected to steer product demand in the European market. Moreover, UK naphtha market held the largest market share, and the Germany naphtha market was the fastest growing market in the region

Major market players are spending a lot of money on R&D to increase their product lines, which will help the market grow even more. Market participants are also taking a range of strategic initiatives to grow their worldwide footprint, with key market developments such as new product launches, contractual agreements, increased investments, mergers and acquisitions, and collaboration with other organizations. Competitors in the naphtha industry must offer cost-effective items to expand and survive in an increasingly competitive and rising market environment.

One of the primary business strategies adopted by manufacturers in the  naphtha industry to benefit clients and expand the market sector is to manufacture locally to reduce operating costs. In recent years, naphtha industry has provided medicine with some of the most significant benefits. The naphtha market major player such as Chevron Corporation, Reliance Industries Limited, Shell Chemicals, SABIC (Saudi Arabia), BP PLC (UK), Exxon Mobil Corporation. (US), China Petrochemical Corporation, Indian Oil Corporation Ltd (India) and Novatek (Russia).

The Irving, Texas-based ExxonMobil Corporation is a multinational American oil and gas company. It was created on November 30, 1999, through the merger of Exxon and Mobil, both of which are currently used as retail brands alongside Esso for gas stations and downstream products. It is the largest direct descendant of John D. Rockefeller's Standard Oil. In November 2021, Exxon Mobil declared its intention to invest in a multibillion-dollar chemical complex in the southern Chinese province of Guangdong. It will increase the business's 1.6 million tonne annual production.

The largest petrochemical, gas, and oil refining conglomerate in the world, China Petrochemical Corporation or Sinopec Group, is run by SASAC on behalf of the State Council of the People's Republic of China. It has its headquarters in Beijing's Chaoyangmenwai neighbourhood, directly across the street from the CNOOC Group, a rival state-owned oil corporation.

2019 saw the launch of the "Kerosene unicracking" process in India by Honeywell UOP, a US-based technology supplier to the hydrocarbon industry. This process would enable refineries that are now set up for kerosene production to upgrade it into higher-value petrochemical feedstocks. The Honeywell India Technology Center (HITC) in Gurgaon is where the new technology was created.

In order to facilitate a circular supply chain, Clean Planet Energy plans to convert difficult-to-recycle waste plastic into naphtha, a petrochemical feedstock, in 2022. Ultra Low Sulfur Diesel will also be produced by Clean Planet Energy. bp will have the right to offtake from future plants worldwide as well as the output of Clean Planet Energy's first facility, which is currently being built in Teesside.