Industry experts have recently forecasted that naphtha supply in Asia will remain constrained over the next few years, pushing petrochemical producers to turn to liquefied petroleum gas (LPG) as an alternative feedstock for ethylene cracking. With LPG being more cost-effective, manufacturers can significantly reduce input costs and boost their profit margins. Looking ahead, demand for naphtha is expected to outpace supply, making the shift to LPG increasingly attractive. As the petrochemical industry expands rapidly, the use of LPG as a substitute is gaining momentum, especially with growing demand from sectors like plastics and textiles. According to a senior consultant at Nexant, while naphtha will still be the primary feedstock, Asian producers are now exploring opportunities to incorporate LPG into their operations. The expansion of cracking capacity, combined with rising end-user demand, is likely to keep naphtha demand strong over the next five years. A representative from Purvin & Gertz Singapore noted that some companies have already found that using LPG in cracker feedstocks for basic chemicals like propylene is more profitable. Major players such as PetroChina and Formosa Petrochemical in Taiwan have confirmed that their crackers will continue to use LPG as a raw material. This shift is largely driven by the sharp rise in naphtha prices, which hit record highs of around $740 per tonne earlier this year. Similar trends are observed among Korean and Japanese cracker operators, who are also turning to LPG to manage costs. Purvin & Gertz forecasts that global LPG supply will grow by 20% by 2010, reaching 273 million tons. This year, LPG prices—especially butane—are 11% to 13% lower than the average naphtha price, creating a significant cost advantage. This price differential is prompting petrochemical firms heavily reliant on naphtha to reevaluate their feedstock strategies, particularly for new projects that should consider diversifying their raw material sources. In response, Japanese firms like Showa Denko and Mitsui Chemicals are planning to increase the share of non-naphtha feedstocks to between 30% and 50% of their total requirements, signaling a long-term shift toward more flexible and cost-efficient production models.

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