Diesel demand falls 7.4% in October partly due to economic slowdown
Accounting for a share of 40% of the country's total oil requirement, demand for diesel has reported to plunge 7.4% in October from a year ago which is the biggest monthly fall in three years. Economic slump, extended monsoon, auto sector slowdown...
Demand for diesel, which accounts for about 40% of the country’s oil requirement, appears to be crumbling due to a mix of economic slowdown, extended monsoon, sluggish vehicle sales, preference for petrol vehicles, increased availability of power, electrification of railways, and GST-induced efficiency in transport, according to analysts. The fuel’s demand had contracted 3.3% in September but had grown 1.1% in the six months to September.
Sale of petrol, which makes up about 15% of the total oil demand, rose 8.9% in October compared with 9.1% rise in the April-September period. Industry executives attribute strong petrol sales mainly to car buyers’ preference for petrol-powered vehicles.
During the month, demand for liquefied petroleum gas (LPG), mainly used for cooking in India, jumped 14% while that of polluting petcoke went up 30%.
India’s total oil demand had grown 1.4% in the first half of the current fiscal year, and was up 2.7% in the full year 2018-19.
Besides diesel, demand has dropped for naphtha (-17%), lubricants (-15%), and fuel oil (-15%) too, showing slower industrial activity.
Consumption of bitumen, mainly used for building roads, contracted 23% in October. But that for aviation fuel remained unchanged.
Kerosene consumption contracted 41%. Its demand has been falling sharply for the past few years as the Centre wants consumers to shift from the polluting fuel and has been cutting its allocation to states.
A falling demand for diesel has prompted state-run refiners to increasingly export the fuel.