This is the second straight month of decline – diesel sales dropped 12.5% in July over June – worrying industry executives that the recovery may take longer than expected. Compared to August of last year, sales of diesel and petrol are down 22% and 8.5% respectively, as per sales data from state-run fuel retailers that control 90% of the domestic market.
Jet fuel sales rose 8% from July but were down 62% compared to August 2019. Sales of liquefied petroleum gas (LPG), mainly used for cooking, grew 0.5% month on month but fell 4% from last year.
Diesel makes up 40% of the country’s oil demand and is considered a good gauge of economic activity due to its wider application in commercial transport and farming.
Petrol is faring better than diesel as more people prefer personal vehicles to crowded public transport for health safety reasons in the middle of a pandemic, another industry executive said. At many places, public transport has been barely available, pushing people to use their personal cars and bikes.
Many industry executives expect diesel demand to return to normal only next year. A weak domestic demand and oversupplied export market would keep capacity utilisation low at refineries.
The run rate at Indian Oil Corp, the nation’s largest refiner, has dropped to 75% from 93% in early July and its chairman, S M Vaidya, expects run rates to stay around 70-75% for the rest of the year.
Rosneft-backed Nayara Energy is unsure when its 20 million tonnes a year refinery in Gujarat would again operate at full capacity as margins on most fuels are very weak, Nayara CEO B Anand said in August.
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1 Comment on this Story
Ravie Gupta58 days ago
there will be surely improvement in September further.