Naphtha Market Outlook 2031
- The global naphtha market was valued at US$ 249.68 Bn in 2020
- It is estimated to expand at a CAGR of 5.1% from 2021 to 2031
- The global naphtha market is expected to reach the US$ 431.53 Bn by the end of 2031
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Analysts’ Viewpoint on Naphtha Market Scenario
With the start of the new financial year, manufacturers are revising their budgeting for investments and expenditures to overcome long-term implications of the COVID-19 outbreak. However, volatility of raw material prices, high prices of naphtha in North America, and shift in trends toward cheaper alternatives such as LPG are compelling market players in the naphtha market to set up business activities in Asia Pacific. Hence, market players should balance their businesses for mission-critical applications in Western countries and simultaneously capitalize on revenue opportunities in Asia to maximize profits. They should increase sales of naphtha in power plants, steel plants, fertilizer units, and paint applications.
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Investment in Capacity Expansions Help Acquire Market Dominance
Major oil companies in the naphtha market are announcing the launch of clean fuel and aromatics projects as a responsibility toward the environment. They are investing in capacity expansions to incorporate naphtha splitter columns. These columns help to split the hydro-treated naphtha into light and heavy naphtha. Such columns are the main feeder to the continuous catalytic reforming (CCR) and the isomerization units, which have an operating capacity of 90,000 and 65,000 barrels per day, respectively.
It has been found that most of the industry participants have been relying on third-party distributors to reach their target customers. Distribution agreement is the most popular strategy among manufacturers in the naphtha market to increase their product penetration in various end-use cases.
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Balanced Relationship with Ecosystem Partners Necessary During COVID-19 Outbreak
Manufacturers in the naphtha market are maintaining optimum inventory levels to ensure continuity in production and supply chains during COVID-19 outbreak. Cash-rich companies are taking data-driven decisions before making inroads in new regions. Manufacturers are ensuring a balanced relationship with ecosystem partners and suppliers to prevent supply chain hiccups.
Companies are making strategic investments in new production and machinery technologies to stay financially afloat during the ongoing pandemic. Although aggressive capacity ramps are being witnessed in China, a new pandemic wave in Shanghai is grabbing the attention of market stakeholders. Complete relaxations in restrictions in Indian states such as Delhi and Maharashtra are benefitting stakeholders in the value chain.
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Sales of Naphtha Challenged by Less-expensive Alternatives such as LPG
The global naphtha market is predicted to expand at a modest CAGR during the forecast period. However, fluctuating crude oil prices and availability of less-expensive alternatives such as shale gas and LPG (Liquefied Petroleum Gas) are predicted to slowdown growth of the market. Hence, manufacturers are diversifying their sales channels in essential applications of naphtha including solvents used for paints, solvents in rubber industry, and dry-cleaning solvents to ensure high sales of naphtha.
The architecture, engineering and construction (AEC) industry is generating stable revenue streams for companies in the naphtha market. The demand for naphtha from the chemicals industry across the globe constituted to 60% of the overall demand in 2020, and this trend is predicted to continue throughout the assessment tenure.
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Marketing & Distribution Strategies Critical to Boost Naphtha Sales
Due to the highly competitive nature of the naphtha market, manufacturers are engaging in long-term contracts with raw material suppliers to overcome volatile pricing for the same. Companies are strengthening their distribution networks since the market is dictated with a high number of fragmented market players, consisting of a large number of small- and medium-scale manufacturers.
Major companies have their own distribution and marketing networks across the globe to bolster sales of naphtha. Manufacturers are maximizing their business in feedstock for petrochemical cracking or for gasoline reforming and blending.
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