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Naphtha market grow driven by petrochemicals demand

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Hydrocarbon Engineering,

Significant developments in the naphtha market are expected to come from the Asia Pacific (APAC), which is home to some key rising economies such as China and India, and also houses some key naphtha consumers, such as South Korea, Taiwan and Japan, that have based a significant portion of their infrastructure growth on naphtha.

A new report published by Infiniti Research, entitled ‘Global Naphtha Market 2016 - 2020’, forecasts that the global naphtha market will grow at a CAGR of 4.5% during the period 2016 - 2020.

According to the report, a key growth driver for naphtha market is the rise in demand for petrochemicals. Plastics in the 21st century are seen as the building blocks for the national infrastructure of a country. One of the strongest drivers for the naphtha market is the huge demand that the developing economies have for petrochemicals, primarily ethylene and propylene for the production of plastics.

The naphtha market is also primarily driven by the upsurge in the demand for gasoline across the globe. The need for naphtha, which is important in the blending of gasoline, is increasing rapidly due to the increase in demand for transportation. In 2015, the gasoline segment dominated the naphtha market globally by occupying around 51% of the overall market share. Its role as a gasoline blending component is the key factor for the growth of this segment.

The availability of abundant supplies of gas at virtually no cost had put the petrochemical industry at a distinct cost advantage, with most naphtha being exported. The ongoing shift in the Middle East from a gas surplus state to that of shortage in the coming years is expected to reflect positively on the market. This shift is prompting petrochemical producers to move towards a shift in the technology based on naphtha by making changes to the basic operating fundamentals that were employed over the last decade

Furthermore, the naphtha market report states that a major challenge that could hamper market growth is the high volatility of crude oil prices.

Adapted from press release by Rosalie Starling

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