Naphtha Prices Face Pressure from Broader Energy Slump

Feedstock Substitution Risk

Naphtha is currently facing stiff competition from cheaper alternative feedstocks like LPG (propane and butane). Petrochemical crackers with the flexibility to switch inputs are favoring the lower-priced gas feedstock, which is reducing the overall market share and demand for naphtha in the short term.

Correlation with Crude and Gasoline

As a crude oil derivative, Naphtha is tracking the bearish movement in the WTI and Brent benchmarks. Analysts expect prices to remain subdued near the $500 mark until the global oil market stabilizes or until spring gasoline blending demand begins to pull surplus barrels from the market.