India’s Fuel Consumption Falls At Worst Pace In Six Months
India’s consumption of petroleum products over the year-earlier fell at the worst pace since August as retail fuel prices jumped to a record high.
The aggregate demand for petroleum and related products, including auto and industrial fuels, dropped 4.9% year-on-year in February, according to provisional data released by the Petroleum Planning & Analysis Cell. That’s the fourth straight month of decline on a yearly basis.
- Month-on-month, too, the overall consumption fell 4.6% — the second such dip in a row.
- Consumption in absolute terms stood at 17.21 million metric tonnes in February 2021, compared with an average of 18.17 MMT over the last three months.
“Given the rise of daily Covid-19 cases and fears of the second wave affecting the Indian economy, the overall consumption seems to have been impacted,” Urvisha H Jagasheth, research analyst at CARE Ratings, said in an emailed response to BloombergQuint. “A fall in the consumption of diesel, petrol and petcoke, which account for 61% of the overall consumption, too, has impacted the demand.”
Volumes from April 2020 to February 2021 stood at 88.7% that of the level seen in the prior year.
Last year, India’s fuel demand plunged as much as 70%, led by the world’s biggest coronavirus lockdown. But as industrial activity picks up on easing curbs, PPAC estimates fuel consumption in the world’s third-largest oil importer to recover past pre-pandemic levels. Overall consumption of petroleum products is expected to rise 9.8% year-on-year to 215.24 million metric tonnes in 2021-22, it said.
Petrol & Diesel Consumption
Consumption of petrol declined in February after five months as prices at pumps surged to an all-time high.
Oil marketers took 12 price hikes in February, raising petrol and diesel rates at pumps by Rs 4.63 and Rs 4.84 a litre. Petrol and diesel currently cost Rs 91.17and Rs 81.47 a litre in Delhi. The Indian crude oil basket surged 17.2% in February.
Demand for high-speed diesel — used in medium- and high-speed compression ignition engines — declined for the fourth straight month to 6.5 MMT. Schools and educational institutions remained shut in most parts of the country, restricting movement of buses and other transportation vehicles. Supply-side constraints, too, hurt sales of passenger buses.
“Fall in commercial vehicle sales, decline in port traffic by 1.9%, record-high diesel prices, and reduced mobility has led to the fall in diesel consumption,” Jagasheth said.
- Kerosene consumption continued to fall, with all union territories, barring Jammu & Kashmir and Ladakh, and states of Andhra Pradesh, Delhi, Haryana, and Punjab, being declared kerosene free.
- LPG consumption rose 7.7% year-on-year in February 2021, helped by increased domestic cooking. LPG coverage in India, according to PPAC, has increased from 94.3% in 2019 to 99.6% as on Feb. 1, 2021. Jagasheth said the rise in consumption can be ascribed to an increase in the use of LPG by households and refills under the Pradhan Mantri Ujjwala Yojana.
- With international air traffic curtailed because of global restrictions to prevent the spread of the pandemic, consumption of aviation turbine fuel slumped 37% to 0.43 MMT.
- An uptick in petrochemical industry activity led to a slight increase in consumption of naphtha over the year earlier.