Study shows renewable naphtha market is set for robust growth

Demand for renewable naphtha will also surge owing to growing fuel blending practices to comply with new regulations regarding fuel compositions

A recent study published by market research agency FMI projects growth of the global renewable naphtha market to reach over US$ 422 million in 2021 and balloon to US$ 1.15 billion by end of year 2031.

According to this report, the market is being driven by, among others increasing applications of renewable naphtha in the production of hydrogen.
Over the past half-decade, the market expanded steadily at a CAGR of 3.6%. Now, rising demand for eco-friendly substitutes for synthetic plastic, coupled with increasing usage of naphtha as raw material in bio-plastic production, is fuelling a more rapid growth. FMI’s analysts are predicting a robust 10.5% CAGR during the forecast period (2021-2031).

Demand for renewable naphtha will also surge owing to growing fuel blending practices to comply with new regulations regarding fuel compositions. For instance, the Indonesian Government has increased the blending capacity of biodiesel from 10% to 15%. These and other developments are expected to push sales of renewable naphtha to a year-over-year growth of 8.7% between 2020 and 2021.

According to FMI, light naphtha is projected to remain the most preferred product type, accounting for nearly 92.7% of the sales in the global market. Increased use due to its light weight and easy blending characteristics across the industries such as hydrogen, petroleum, and plastic is propelling the growth in the segment.

“The market will gain traction as stringent regulations are imposed on the use of synthetic plastics and rising carbon emission due to use of petrol and diesel. Surging adoption of advanced technologies such as NExBTL is expected to propel the demand for renewable naphtha over the coming years,” writes FMI.

Takeaways

  • The U.S. is projected to emerge as the fastest-growing market in North America, expanding at a year-on-year growth of 7.9% in 2021.
  • Germany is estimated to hold leading share in the Europe market, accounting for nearly 33% of overall sales through 2031
  • Favored by the increasing demand for automotive and plastics manufacturing, sales of renewable naphtha in India are expected to rise at 8% CAGR through 2031.
  • China is forecast to dominate the market in East Asia, accounting for around 78.5% of the demand in the region in 2021.
  • Based on end use, the feed for plastic production segment is anticipated to witness substantial growth, accounting for nearly 72.8% of the global sales by 2031 end.The U.S. is projected to emerge as the fastest-growing market in North America, expanding at a year-on-year growth of 7.9% in 2021.
  • Germany is estimated to hold leading share in the Europe market, accounting for nearly 33% of overall sales through 2031
  • Favored by the increasing demand for automotive and plastics manufacturing, sales of renewable naphtha in India are expected to rise at 8% CAGR through 2031.
  • China is forecast to dominate the market in East Asia, accounting for around 78.5% of the demand in the region in 2021.
  • Based on end use, the feed for plastic production segment is anticipated to witness substantial growth, accounting for nearly 72.8% of the global sales by 2031 end.

Key drivers

Surging demand for plastic-based products such as bespoke articles, home decor materials, consumer electronics, and others is spurring the sales of renewable naphtha across plastic production segment. Rising demand for automotive vehicles and growing government policies promoting the use of bio-based diesel and petrol across the U.S., India, and China are propelling the demand for renewable naphtha.

Key Restraints

Increasing prices of bio-based fuels and rising consumer inclination towards electric vehicles are hampering the growth in the market.
Stringent regulation towards manufacturing synthetic plastics such as ethylene and propylene is expected to hinder the sales across the plastics production segment.

Competitive Landscape

Leading players operating in the global renewable naphtha market are Neste, ENI, Darling Ingredients Inc., and CNPC. The top five manufacturers are expected to account for nearly 75% of the total sales in 2021.

Key companies are emphasizing on adopting expansion strategies such as new production facility development, mergers, acquisitions, agreements, and collaborations with other players to expand their production capacity and increase the market share. For instance,

In July 2019, PDV LLC, a U.S. based oil and gas company, announced to construct a pipeline to cope up with the shortage witnessed for imported naphtha causing a disruption in production and exports of crude oil.

A number of the key players operating in the market profiled by FMI are:

Neste
ENI
Darling Ingredients Inc.
CNPC
Diamond Green Diesel
Renewable Energy Group, Inc.
Marathon Petroleum Corp.
Preem
Phillips 66
UPM Biofuels

Source

Bioplastics MAGAZINE, 2021-11-25.

Supplier

CNPC Corp.
Diamond Green Diesel
Eni S.p.A.
Future Market Insights
Marathon
Neste Corporation
Phillips 66
Preem Petroleum AB
Renewable Energy Group (REG)
UPM Biofuels

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