Alkagesta has published a market review of the global naphtha complex in 2026, setting out how the balance between petrochemical feedstock demand and gasoline blending demand is shaping physical values. The piece draws on the perspective of Ayman Youssef, naphtha lead trader at Alkagesta, who has traded the product across European, Mediterranean and Asian markets for two decades.
The starting point is a structural downcycle in petrochemicals. Alkagesta points to sustained margin pressure across Europe and Asia driven by global oversupply, with China's ethylene capacity rising from around 40 million tonnes in 2021 to an estimated 66 million tonnes in 2025 and a further 32 million tonnes forecast by 2028.
That build-out has depressed utilisation rates and compressed margins, but the review argues the damage has not been evenly distributed. Citing a Deloitte analysis of more than 120 publicly announced chemical plant closures since 2022, Alkagesta notes that shutdowns began with intermediate aromatics-chain plants such as styrene, cumene and phenol before moving upstream — a 'hollowing out of the middle' rather than a feedstock-level failure.
In Europe, elevated naphtha and energy costs have left naphtha-based crackers structurally uncompetitive against ethane-based units elsewhere, with regulatory and carbon costs accelerating closures of older assets. In Asia, Japan is set to see operating ethylene crackers fall from twelve units to eight, and some standalone Korean and Japanese crackers have idled or cut runs amid tighter feedstock availability.
Disruption has nonetheless delivered a cyclical lifeline. Alkagesta notes that benchmark Asian naphtha refining margins reached roughly $173 per tonne over Brent at one point in 2026, a sharp repricing that offered relief to European crackers even as the underlying downcycle persisted.
The blending pool has been the stronger of the two demand drivers. Alkagesta's June 2026 European naphtha insight recorded the front-month gasoline-naphtha spread at a 21-month high of $269.2/mt in mid-May, easing to $244/mt by month end — still well above seasonal averages and providing a floor for physical naphtha even as the paper market debated oversupply.
Alkagesta's naphtha desk is most active in the Mediterranean, supplying European buyers alongside arbitrage customers in China, Korea and Japan — positioning it directly at the intersection of the two demand pools. The company also highlights the industry's move toward flex-feed crackers able to switch between naphtha, butane and other gas feedstocks as a longer-term response to this volatility.
