Renewable Naphtha Market By Product Type (Light Naphtha, Heavy Naphtha), Application (Fuel Blending, Feed for H2 Production, Feed for Plastics Production) & Region - Forecast 2021 - 2031

Renewable Naphtha Market Snapshot

[250+ Pages Report] The global renewable naphtha market is projected to top US$ 422.0 Mn in 2021, finds Future Market Insights (FMI) in a recent market survey. Driven by increasing demand for eco-friendly alternative for synthetic plastic, sales of renewable naphtha are poised to grow at an impressive 10.5% CAGR through 2031.

Shifting consumer focus on bio-based products, along with favorable government policies promoting the use of biodegradable packaging material will continue boosting demand for renewable naphtha over the forecast period.

Considering this, FMI has projected the market valuation to reach US$ 1.15 Bn in 2031.

2016-2020 Renewable Naphtha Market Outlook Compared to 2021-2031 Forecast

Demand for renewable naphtha grew at a moderate 3.6% CAGR between 2016 and 2020. Sales prospects were dampened due to the onset of the COVID-19 pandemic. However, steady recovery is on cards, as the market is forecast to experience year-over-year growth by 8.7% in 2020-2021.

In recent years, high demand for plastics has been observed due to increasing adoption of plastics in packaging materials, home decor, bespoke articles, and automotive. Besides this, rising fuel blending practices to comply with changing fuel composition related mandates are boosting the consumption of renewable naphtha.

Renewable naphtha market is anticipated to witness a considerable growth rate in the coming years. The global population is been estimated to be pegged at about 7.8 billion which is expected to reach about 9.7 billion by 2050 end. This substantial growth in the population will require more automobiles, plastic products, packaging films, which is expected to boost the demand for renewable naphtha.

Consumption of renewable naphtha in the production of bio plastics & hydrogen is expected to propel market growth. Rising concerns regarding harmful greenhouse emissions is encouraging companies to manufacture bio-based plastics. Countries such as Argentina, Brazil and Indonesia where feedstock is available in abundance, are aiming to increase the renewable naphtha blending to utilize stockpiles of feedstock.

Bio-based plastics are expected to gain higher acceptance in various industries as they are an effective and sustainable alternatives for fossil fuels. Increasing demand for plastic-based products such as home decor materials and bespoke articles will continue propelling sales of renewable naphtha over the forecast period.  

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How is Growing Demand for Fuel-Efficient Vehicles Impacting Sales of Renewable Naphtha?

Demand for renewable naphtha is driven by increasing production & fleet of vehicles globally. Global production of automobiles is growing at a steady pace after the economic slowdown encountered due to COVID-19.

Conventional fuels such as petrol & diesel used in vehicles are derived from crude oil. Consumption of these fuels results in emission of harmful gases such as NOx, SOx, CO2, and other greenhouse gases which are hazardous for the environment & ecosystem. Renewable naphtha blended fuel is a great substitute for fossil fuels and it emits less harmful gases as compared to conventional fossil fuel.

Market entrants in emerging countries have a strong opportunity to benefit from increasing demand for renewable naphtha from the automotive industry. Rising crude oil prices have led to higher fuel price. To deal with these prices, several countries have increased blending of biofuels in gasoline and diesels.

For instance, the Government of Indonesia has aimed to increase blending of biodiesel from 10% to 15%. This is indicative of lucrative growth prospects for players operating in the renewable naphtha market.

What Is the Impact of COVID-19 Crisis on Renewable Naphtha Market?

The global economy witnessed a significant downfall during the COVID-19 crisis owing to worldwide lockdown restrictions. Disrupted supply chains and halted production activities resulted in reduced trade activities. The Industrial sector, automotive sector and construction sector have suffered the most, with automotive sales including passenger cars and commercial vehicles plunging to an extent in 2020.  

Renewable naphtha market also witnessed stagnated demand from the automotive and plastic production sector. However, with expedited vaccine drives across the globe, and resumptions in production activities, the global renewable naphtha market is anticipated to recover at a steady pace over the forecast period.

Country-wise Insights

How Will Renewable Naphtha Market Expand Across the U.S.?

Sales of renewable naphtha in the U.S. are slated to grow by 7.9% year-over-year in 2021. Increasing demand for plastic-based products is anticipated to create more opportunities for the renewable naphtha market in the U.S.

Apart from plastics sales, shifting consumer preference towards bio-based plastics is spurring demand for renewable naphtha in various end-use industries. This is anticipated to bode well for the renewable naphtha market in the U.S. over the forecast period.

Why is Demand for Renewable Naphtha Increasing in India?

Demand for renewable naphtha is projected to soar at a robust 8.0% CAGR in India in 2021, driven by high consumption of renewable naphtha in plastics, automotive, and bio plastics manufacturing industries. Manufacturers are aiming to expand their production facilities in India to cater to growing demand for renewable naphtha in the country.

Increasing applications of plastics in the construction sector for décor in commercial and residential building is projected to propel sales of renewable naphtha in the forthcoming years. Besides this, favorable government-backed investments in the development of infrastructure and automotive sector will continue enabling sales of renewable naphtha through 2031.  

What will be the Demand Outlook for Renewable Naphtha in China?

China is expected to remain one of key manufacturers and consumers of renewable naphtha, accounting for about 78.5% of the East Asia market share in 2021. China is increasingly ramping up renewable naphtha production capacity in response to growing demand from the automotive and plastic sector. This trend is anticipated to continue over the forecast period.

Why is Germany Considered an Attractive Renewable Naphtha Market?

Germany is expected to account for about 33.0% of the Europe renewable naphtha market share. To cater to growing demand for renewable naphtha, players in Germany are increasing their production capacity.  

In addition to this, stringent REACH regulations regarding fuel blending, waste disposal, and bio-plastics are compelling manufacturers to produce renewable naphtha and bioplastics in collaboration. These factors are anticipated to augment growth of the renewable naphtha market in Germany through 2031.

Category-wise Insights

Demand for Light Renewable Naphtha to Continue Increasing

Based on product type, the light naphtha segment is projected to hold a dominant share of approximately 92.7% of the total renewable naphtha market share. Growing need for eco-friendly alternative for plastic and high demand for bio-based materials will continue providing tailwinds to light renewable naphtha sales. 

Given the product's nature and scope of application, manufactures operating in the renewable naphtha market are investing in research and development to launch new products for a wide range of applications.

Applications of Renewable Naphtha in Plastic Production to Remain High

In terms of end-use, the feed for plastic production segment is projected to account for about 72.8% of the total renewable naphtha market share.  The plastics sector is expected to grow at a rapid pace due to increasing demand for consumer goods, and increasing investment in bio-based plastic material production.

This demand for renewable naphtha is expected to increase because it is used in applications where it acts as an intermediary product, for example, the production of hydrogen gas, where its acts as an intermediate product.

The segment is further expected to grow continuously in the near future owing to high demand from the plastics, bioplastics manufacturing units, and the fuel blending sector. In addition, the trend for bio-based plastics will help propel the growth of the renewable naphtha incoming period.

Competitive Landscape

Key players operating in the global renewable naphtha market are focusing on expanding their production capacities by setting new production units in emerging economies. In addition to this, players are collaborating with plastic producers to strengthen their market presence. Apart from this, mergers, acquisitions and research and development will remain prominent growth strategies adopted by leading market players. For instance:

• In January 2015, industrial production of UPM BioVerno diesel and naphtha started out in Lappeenranta, Finland. The yearly capability of superior and renewable biofuels is 120 million litres.

Scope of Report

Renewable Naphtha Market by Category

By Product Type:

• Light Naphtha
• Heavy Naphtha

By Application:

• Fuel Blending
• Feed for H2 Production
• Feed for Plastics Production
  • Ethylene
  • Propylene
  • Butadiene
  • Others

By Region:

• North America
• Latin America
• East Asia
• Europe
• South Asia Pacific
• Middle East & Africa