Asia's naphtha market experienced significant price drops in late August 2025 because of oversupply, trade disruptions from sanctions, and reduced demand. The petrochemical sector in South Korea hit a critical verge prompting ten major companies to agree to reduce naphtha cracking capacity by almost 25% by the end of the year. While China is boosting its naphtha imports and expanding its petrochemical sector, with the IEA predicting a 6% increase in demand for 2025. EU sanctions affected Nayara Energy resulting in a failed naphtha export tender, and overall fuel demand has decreased. US prices remained low, while the European market was stable, indicating disparities between regions, according to ChemAnalyst.
Naphtha prices in Asia showed mixed situation in late August 2025 due to trade disruptions caused by sanctions, and slower demand from downstream industries. While Naphtha prices in the USA stayed low and Europe’s market was steady, Asia became the most unpredictable region showing different challenges in its main consuming countries for Naphtha.
On August 20, 2025 South Korea’s petrochemical sector reached a breaking point at USD 567/Tonne. In response ten of the country’s largest petrochemical companies signed a government-backed agreement to cut 2.7-3.7 million metric tonnes of naphtha cracking capacity, which is nearly a quarter of the national total. The restructuring, set for completion by year-end, requires strict compliance. Companies that do not meet the terms risk losing state financial support. Analysts caution that with margins under heavy pressure; profitability may not return until at least 2027. This points to a difficult period ahead for South Korea’s once-thriving industry.
Meanwhile, Chinese Naphtha is moving in the opposite direction. As the world’s largest petrochemical consumer. China is set to increase its naphtha use in 2025, driven by new cracker projects and concerns about unstable propane and ethane supplies from the USA. Beijing has nearly doubled its naphtha import quotas to 24 million tons, showing a clear strategic shift. The International Energy Agency forecasts that China’s naphtha demand will grow by 6% in 2025 and rise to 8.6% in 2026.
In India the situation is becoming more uncertain. The effects of European sanctions started to show in mid-August 2025, when Nayara Energy, partly owned by Rosneft, unexpectedly skipped a scheduled spot naphtha export tender. A tanker left without cargo highlighting the changing environment for Indian refiners. At the same time, India’s fuel demand has slowed.
The naphtha market is showing growing regional disparities, as reported by ChemAnalyst. South Korea is undergoing production reductions attributed to industrial adjustments and heightened competition from China and India. Whereas the China is increasing its naphtha imports and expanding its petrochemical sector which is significantly boosting demand. While India is facing difficulties because of EU sanctions on a major refiner, Nayara Energy, which is affecting crude imports and could alter export strategies.
As a result crude imports are declining, raising concerns about India's capacity as a significant oil demand influencer. While the US market remains stable despite a rise in shale liquids production. Europe is experiencing slight demand decline as it shifts towards alternative feed stocks such as bio-naphtha. Instability in Asia is increasingly influencing the overall global market. The Naphtha market is meeting uncertainty characterized by fluctuating crude-naphtha spreads and heightened competition from alternatives like natural gas liquids. The question of whether market equilibrium can be restored before the end of the decade is a crucial consideration for stakeholders in the industry.
