Demand for petrol and diesel rose to a four-month high in October, while jet fuel sales surged to their highest in the current financial year as rising industrial and construction activity coupled with the festival season boosted sales.
According to the Petroleum Planning and Analysis Cell (PPAC), petrol consumption last month rose by 5 per cent year-on-year and 3 per cent month-on-month to 3.14 million tonnes (MT), while diesel usage was up 18 per cent M-o-M and 9 per cent Y-o-Y to 7.64 MT.
The consumption of the two key auto fuels was the highest since June 2023.
Consumption of jet fuel was at its highest during FY24, so far, as well as the calendar year 2023. Aviation turbine fuel (ATF) sales rose by 5 per cent M-o-M and 12 per cent Y-o-Y to 691,000 tonnes last month.
The consumption of liquefied petroleum gas (LPG) fell 2 per cent M-o-M, but rose 4 per cent Y-o-Y to 2.50 MT in October 2023.
Sales of bitumen, used in road construction, surged 30 per cent M-o-M and 21 per cent Y-o-Y to 711,000 tonnes, reflecting the rise in activity in the construction and infrastructure sector.
Consumption of naphtha, a key feedstock for the petrochemicals sector, rose by 12 per cent M-o-M and 30 per cent Y-o-Y to 1.11 MT in October 2023.
Analysts attributed the uptick ito the historically higher sales due to rising industrial, construction and mining activity in the October-March period.
Another reason is the robust activity witnessed in the FMCG and FMCD sectors during the October-December quarter, as firms stock up on products for the upcoming festival and marriage season.
An official from an oil marketing company (OMC) said that December consumption will grow further as farm activity picks up for the Rabi sowing season.
Analysts expect a rise in India’s demand for petroleum products demand during the October-December quarter, aided by rising industrial activity and preparations for the festival season.
ICICI Securities said in a June 2023 report that after the relative weakness during the past three years (FY21, FY22 and FY23), Indian fuel consumption is expected to grow steadily over the next two years.
This has been aided by softer product prices, and the unchanged prices of petrol and diesel in the last 13-14 months. Besides, economic growth is projected to be stronger in the next 2-3 years, and the potential pass-through of the supernormal marketing margins earned on retail fuels is expected to fetch better pricing power for petrol and diesel.