India: Petroleum products consumption rises by 6% y-o-y in July

India’s petroleum products consumption rose by 6% in July 2022 to 17.6 million tonnes (mnt) compared to 16.6 mnt in the same month last year.

The total consumption of all petroleum products includes domestic sales by all oil companies, direct imports and sales by SEZ units in DTA.

Demand for petroleum products in India has gained momentum after easing of Covid 19 restrictions and trade-related obstacles, hence promoting mobility in the industrial sector.

Notably, the top five products by consumption for the period April-July 2022, in descending orders are high speed diesel (HSD), motor spirit (MS), liquified petroleum gas (LPG), pet coke and naphtha. These products have contributed approximately 80% of total petroleum products consumption.

Among the major products, aviation fuel experienced the highest growth rate in July at a staggering 84%. Air turbine fuel (ATF) is used by most of the aircrafts. Its consumption has steadily increased as a result of the easing of airline restrictions for both domestic and international destinations. It is anticipated that consumption would increase significantly further in the following months.

The consumption of furnace oil (FO) and low Sulphur heavy stock (LSHS) increased by 20% m-o-m. Furnace oil is used for electricity generation.

The consumption of pet coke products in India increased due to higher thermal coal rates after European countries-imposed sanctions on Russia. Meanwhile, demand for thermal coal in Europe increased after sanctions.

The supply of raw petroleum coke to India from Russia rose as the latter was looking for a new export destination, post western sanctions on Moscow.

Petroleum products consumption in FY23 (April-July’22)

On cumulative basis, petroleum products consumption during April-July 2022 increased to 72.7 mnt against 63.8 mnt in the same period last year, registering a 14% growth y-o-y.

During the first four months of FY23, the highest rise is seen in motor spirit consumption followed by high-speed diesel. The consumption of naphtha recorded a drop of 15% y-o-y during the said period due to decreased usage in power and fertiliser plant.

Outlook

The Indian economy is still recovering backed by increased industrial output and pent-up demand for services. It may maintain its upward momentum but will remain affected by several risk factors, including high inflation, less accommodative monetary conditions, and a deteriorating external environment.