India Naphthalene Market Key Insights & Perspectives

Karan Chechi
Research Director, TechSci Research
According to a recently published report by TechSci Research, "India Naphthalene Market Research Forecast & Opportunities, 2019", naphthalene market in India is expected to register double digit increase at an estimated CAGR of 18.24 per cent in value terms during 2014- 19F. In 2013, the overall demand for naphthalene in the country pegged at 82.33 thousand metric tons, and is expected to grow to over 113 thousand metric tons. CEW brings forward the key insights and perspectives for its readers.

Naphthalene, represented by molecular formula C10H8, is a white crystalline organic compound that can be derived either from crude oil or coal tar. Chemically, naphthalene is an aromatic hydrocarbon formed by the fusion of two benzene rings. Naphthalene is characterised by a peculiar odour, which is easily detectable even in concentrations as low as 0.08 ppm by mass. Naphthalene derived from crude oil is purer than that derived from coal tar. However, since 1990, industries have forbade using crude oil for extracting naphthalene and generally prefer coal tar for extraction. Coal tar is a byproduct of steel industry. It is produced during carbonization process while making coke. High temperature coal tar derived from steel industry contains various organic chemicals such as naphthalene, xylene, toluene, etc .

Distillation of coal tar results in several organic compounds. Firstly, coal tar is distilled to remove low boiling components like benzene, xylene and toluene within light solvent column. Subsequent to distillation, the leftover crude is called coal tar naphtha, which contains naphthalene in high concentration with boiling range of 1300-2000C. Coal tar naphtha can be distilled to get pure naphthalene at up to 2200C under normal atmospheric pressure. Major impurity present in coal tar is thionaphthalene (1-3%).

In order to distill naphthalene, high temperature coal tar is a primary requirement. In India, coal tar of such high grade is mainly produced by a few players such as Steel Authority of India Limited (SAIL), Neelachal Ispat Nigam Limited (NINL) and Rashtriya Ispat Nigam Limited (RINL). While some of the steel companies in India distill naphthalene on their own that is more than 90 percent pure by composition, others directly sell coal tar to chemical industries for naphthalene production. Naphthalene produced by other allied industries is 60-80 per cent pure by composition. Based on the composition purity, naphthalene can be classified into two categories:

Crude Naphthalene- > 60 per cent pure
Hot Pressed Naphthalene- 90 per cent pure

In India, Naphthalene market is highly consolidated since majority of the share is occupied by SAIL. Being a byproduct of steel industries, naphthalene production in the country is dependent on the quality and quantity of steel produced in steel industry. As a result, the market for naphthalene in India remains volatile and is dependent on imports to fulfill the recurring demand. In 2013, the overall demand for naphthalene in the country was pegged at 82.33 thousand metric tons, and is expected to grow to over 113 thousand metric tons through 2019. Major factors that are likely to drive such a tremendous increase include growing textile exports, rising adoption of naphthalene in construction industry and growing production of sulfonated naphthalene formaldehyde (SNF) for use in construction chemicals .

Consumption of Naphthalene in Different Applications
Textile Products: In textile industry, an array of processes is involved to come up with a final product like bleaching, dyeing , printing and finishing. Bleaching is done to remove the original colour and odour of the raw material from which the textile is made. Before bleaching, scouring of material is done to make the textile hydrophilic in nature. Alkyl naphthalene sulfonates, in general, are used as wetting agents during the scouring operation. The process of dyeing imparts colour to the textile product and is done in the presence of certain chemicals like naphthalene sullfonates.

Indian textile industry has been witnessing robust growth, which in turn is surging the demand for naphthalene in the domestic market. As a result, the country is emerging as one of the global leaders in the production of yarns and fabric.

In addition, rising FDI investments are also driving the growth of Indian textile industry, which in turn is boosting the demand for naphthalene in India. For instance, in 2005, textile industry witnessed FDI investments worth USD 40 million, which increased to USD 101 million in 2013.

Moth Balls: Naphthalene is characterised by a highly pungent smell, which can be easily detected even at very low concentrations. Being a sublime substance, naphthalene readily converts from solid state to gaseous state, which is toxic to moths and other insects. Naphthalene balls are not only used in textile industry to kill moths but also as a snake repellent and in toilets to kill germs and other insects. Diverse use of moth balls is driving the market for naphthalene in the country.

Construction Chemicals: Naphthalene is a key raw material for the production of sulfonated naphthalene formaldehyde. Around 1/4th of the total naphthalene is being consumed in the production of SNF. Naphthalene is first sulfonated with the help of sulfuric acid, which then reacts with formaldehyde to give SNF polymer. SNF is useful in increasing the fluidity of concrete mixtures. Increasing production of SNF in the domestic market is driving the naphthalene market in the country. SNF can be produced from naphthalene as follows:

Wall Tiles: Since naphthalene is hygroscopic in nature, it can be used in the production of wall tiles for water proofing systems. Tiles play a major role in improving the interiors of residential and commercial spaces. Indian wall tile industry is continuously increasing at 15 percent annually. The overall market for tile industry in India was valued at USD 2974.47 million in 2012. Increasing market for tile industry is also driving naphthalene market in the country.

Availability of Alternate Material
Globally, naphthalene is used to produce phthalic anhydride, naphthols and mothballs. However, due to availability of alternate materials, demand of naphthalene in these products is decreasing in India. Bon Acid (Beta oxy naphthoic acid), 1,4 dichloro benzene and xylene are alternate ingredient for naphthols, mothballs and phthalic anhydride, respectively.

India Naphthalene market remains largely import-driven with SAIL as the only large producer of naphthalene operating in the country. The company produces hot pressed naphthalene, while other players such as AVH Chemicals and Bhilai Cement are engaged in producing crude naphthalene by procuring coal tar (raw material) from various steel companies. "Since raw material for naphthalene is a by-product of steel industry during the process of making coke, naphthalene market in India completely depends on the scenario prevailing in India's steel industry. This is the main reason behind the uneven scenario in trade dynamics of the naphthalene in India," said Karan Chechi, Research Director with TechSci Research, a research based global management consulting firm.