Naphtha demand in India stood at 20 million tonnes in 2019 and is projected to grow at a CAGR of 6.25% in the forecast period. Government of India’s “Hydrocarbons Vision – 2025” aimed at expanding indigenous production of petroleum products and reducing import bill by 2025 is likely to support the Naphtha market growth in the forecast period.

1. India’s Naphtha Demand to Grow at a CAGR of 6.25% by 2030
According to ChemAnalyst report, “India Naphtha Market: Plant Capacity, Production, Operating
Efficiency, Technology/Process, Demand & Supply, Type, Application, End Use, Distribution
Channel, Region, Competition, Trade, Customer & Price Intelligence Market Analysis, 2015-2030”,
India’s Naphtha demand stood at 20 million tonnes in FY19 and is projected to grow at a CAGR of
6.25% in the forecast period. Increasing demand for Naphtha as a feedstock for obtaining several
petrochemicals, such as olefins and aromatics which are further processed to serve several
downstream sectors such as plastics, textile, rubber etc., backed by increasing demand for motor fuel
and Aviation Turbine Fuel (ATF) would drive the Naphtha demand in the forecast period.
Browse Complete Report : India Naphtha Pricing, Demand & Supply
Naphtha is a highly flammable, light derivative of crude oil obtained through processes like fractional
distillation, coal-tar boiling and others. It is straw colored to colorless liquid having a characteristic
odor, like gasoline. Based on type, Naphtha market has been segmented into Light Paraffinic Naphtha
and Heavy Naphtha. Light Naphtha is rich in olefins and is the most preferred feed for steam crackers
for producing a plethora of olefins/polyolefins such as Ethylene, Propylene, Butadiene etc. However,
it faces strong competition from feedstocks like Ethane, Propane and Butane (EPB). Heavy naphtha
contains high aromatic and Naphthenic content and is mainly used for gasoline reforming and produce
several aromatic products such as Benzene, Toluene, Xylene etc.
Around 65% of the Naphtha produced in India is being used in gasoline blending followed by the
petrochemical industry which seems to grow at the greatest pace in the next decade. India’s Naphtha
demand as fuel is set to soar in the years to come with rising transportation sector further supported
by increasing jet fuel demand due to continuously expanding middle class population. Moreover,
increasing use of aromatics in the production of edible oils, elastomers, and personal care products is
expected to fuel the Naphtha market growth during the forecast period. In addition, rising demand
for olefins and polyolefins for producing plastics used in construction, electrical and electronics and
packaging industry will further propel market growth in the coming years.
The “Hydrocarbons Vision – 2025” proposed by the Indian government, aimed at increasing
indigenous production and expansion of Indian hydrocarbon sector in the country will give a strong
boost to the Naphtha market over the coming years. The vision which has been aimed at increasing
the domestic availability of petroleum products and create major employment opportunities by 2025
will further propel the Naphtha market growth in the forecast period.
However, the recent outbreak of novel Coronavirus led to an unprecedented fall in the India Naphtha
demand. Hit by supply glut and reduced buying sentiments, Indian refineries remained indefinitely
shut or curtailed their operating rates throughout the fourth quarter of FY20, as demand dived to
several years low due to halt in industrial operations and transport restrictions amid nationwide
lockdown. India’s fuel demand fell by 46 per cent in April 2020 on y-o-y basis. Not only this, halted
trade and logistics exacerbated a gradual fall in the Naphtha exports across Mumbai and Kochi ports,
contracting the margins of major exporters. Naphtha prices strongly oscillate with the feedstock
crude. Hammered by a freefall in crude oil values, Naphtha prices plunged to record breaking lows in
Q4 FY20 oscillating between $580-$600 per MT. However, several refiners like RIL which had been

2. running its two refineries in Jamnagar petrochemical complex almost uninterrupted, remained
normally operational despite the lockdown. Players are anticipating a substantial rise in fuel demand
with ease in lockdown restrictions, as vehicular traffic returned to roads and flights resumed to carry
passengers. Moreover, restart of several industrial operations which consume Naphtha as feedstock
will support the growth of the market in the coming months.
According to ChemAnalyst report, “India Naphtha Market: Plant Capacity, Production, Operating
Efficiency, Technology, Process, Demand & Supply, Type, Application, End Use, Distribution
Channel, Region, Competition, Trade, Customer & Price Intelligence Market Analysis, 2015-2030”,
India’s Naphtha production outpaces the domestic demand, hence India is also among the key Asian
Naphtha exporters with annual exports reaching about 7-9 MMTPA. Key players operating in India
Naphtha market are Reliance Industries Limited (RIL), Indian oil Corporation Limited (IOCL), Essar
Vadinar, Bharat Petroleum Corporation Limited (BPCL), Gail (India) Limited, Oil and Natural Gas
Corporation Limited (ONGC), Hindustan Petroleum Corporation Limited (HPCL), Nayara Energy,
Mangalore Refinery Petrochemicals Ltd (MRPL). RIL dominates the India Naphtha market with
around 40% share. Continuous expansion of India’s chemical and petrochemical sector with several
refiners working towards maximizing conversion of oil-to-chemicals using various naphtha cracking
technologies is likely to drive the Naphtha market in the forecast period. One such example is the
mega expansion project devised by the Assam-based Numaligarh Refinery Limited (NRL) for which
the company has awarded an order worth INR 300 Cr to the Thyssenkrupp’s plant engineering
business. Thyssenkrupp will provide support in engineering, procurement, and construction
management (EPCM) services for several units of its refineries located in the Northeastern India. The
project is expected to complete by 2024 and would facilitate NRL to expand its refining capacity
from 3 MMTPA to 9 MMTPA respectively.
“India’s continuously expanding petrochemical sector is likely to open a window of opportunity to all
the refiners in the country. Although the country is already dealing with Naphtha supply overhang,
greater downstream Ethylene capacities tentative to arrive will ensure greater push to the industry.
However, experts believe that although gasoline consumption is expected to wane with time due to
increasing focus on electric vehicles and energy efficient economy, crude-to-chemicals complexes
could dominate the petrochemical industry in the coming future. Emerging refiners have a keen focus
on integrating petrochemical production with more and more hydrocrackers at targeting Naphtha at
a large scale. Prices for light and heavy Naphtha, both being crude derivatives are intertwined.
However, acute volatility in crude is likely to temper the Naphtha prices going forward. Hence, it is
extremely crucial to keep a track on the changes in the industry dynamics both globally and
domestically, besides determining what impacts these will have on the country’s petrochemical
sector. Naphtha is the most important petrochemical feedstock across the chemicals value chain and
is being importantly used for gasoline blending, so its prices are strongly influenced by the supply and
demand balance.” said Mr. Karan Chechi, Research Director with TechSci Research, a research based
global management consulting firm promoting ChemAnalyst.
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