Heavy Aromatic Naphtha Solvent Prices Expected to Stay Volatile on Crude Oil Uncertainty

Heavy Aromatic Naphtha demand remained subdued throughout June as the southwest monsoon disrupted construction activity across India. Architectural paint manufacturers reduced procurement as rains slowed infrastructure and residential projects, limiting solvent consumption in coatings applications. Construction-related demand weakened further as project execution slowed during the monsoon season, while agrochemical formulators also reduced purchases after completing pre-season stocking in May. Automotive coatings remained relatively stable, supported by steady vehicle production, but this was insufficient to offset weakness across the broader coatings and construction sectors.

Heavy Aromatic Naphtha supply-side conditions further reinforced the bearish market. Upstream crude oil prices declined by approximately 5.7% during June following the easing of Middle East tensions, significantly weakening feedstock cost support. Softer Singapore heavy naphtha assessments reduced replacement costs and enabled suppliers to offer more competitive prices. Additional cargoes from South Korea increased arrivals at Kandla, while steady refinery operations maintained comfortable domestic availability. Although Reliance Industries' Jamnagar Units I and II underwent planned maintenance during June, overall supply remained adequate as production from other domestic refineries and imports offset temporary capacity losses. Rising inventories and persistent selling pressure kept market participants focused on inventory liquidation rather than price increases.

Heavy Aromatic Naphtha Solvent prices are expected to remain under pressure through  August as the monsoon season continues to limit construction activity and coatings demand. Comfortable inventories in Heavy Aromatic Naphtha, lower crude oil prices, and ample regional supply are likely to keep replacement costs weak, restricting any meaningful price recovery in Heavy Aromatic Naphtha.

However, renewed geopolitical tensions following the U.S. strikes on Iran in early July have reintroduced uncertainty into the market. Any disruption to crude oil shipments through the Strait of Hormuz could increase feedstock and freight costs, potentially reversing the current bearish trend in the Heavy Aromatic Naphtha market. A seasonal recovery in construction activity after the monsoon, combined with tighter regional supply, could also support prices during September and October.