Largely flat industrial activity and subdued mobility pulled down India’s consumption of petrol and diesel during February 2023, the second consecutive month of decline, after the higher demand observed during November-December 2022.

While, petrol consumption fell by 2 per cent m-o-m to 2.78 million tonnes (mt) in February, diesel usage declined 2.5 per cent m-o-m to almost 7 mt. Similarly, LPG demand was also down 4.6 per cent at 2.4 mt. The consumption of aviation turbine fuel (ATF) was also lower by around 7 per cent m-o-m at 0.62 mt.

Petroleum products used in industries such as Furnace Oil (FO) and Low Sulphur Heavy Stock (LSHS) consumption was also down on a monthly basis by 5 per cent at 0.57 mt. Besides, the consumption of lubricants and greases also declined, albeit marginally, in February. That apart, the usage of petroleum coke fell marginally by 1.4 per cent to 1.5 mt in February 2023.

Overall, the consumption of petroleum products fell marginally on a monthly basis to 18.5 mt last month.

Flat industrial activity

Market insiders point to issues such as inflation, rising interest rates, weak external demand and waning domestic pent-up demand exerting some pressure on the momentum in manufacturing activity.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) was at 55.3 in February, with hardly any change from 55.4 in January 2023. Data implied that domestic market was the main source of new business growth, as new orders from abroad increased only fractionally. The rise in international sales was the weakest in the current 11-month period of expansion.

Input costs up

Input costs in manufacturing industry increased further, with firms mentioning higher prices for electronic components, energy, foodstuff, metals and textiles. Despite quickening to a four-month high, the rate of inflation was below its long-run average and among the weakest in over two years, S&P added.

S&P pointed out that suppliers’ capacities seemed adequate to keep up with improving input demand, as signalled by stable vendor performance. The seasonally adjusted Suppliers’ Delivery Times Index posted at the 50.0 no-change mark in February.

A senior oil marketing company (OMC) official said that industrial activity was slightly subdued in the last two months. For instance, mining, road as well as rail freight was slightly down on an annual basis in February 2023. 

“This to some extent was neutralised by higher vehicle registrations and steel demand. There was less fuel requirement for irrigation as rabi sowings are nearing harvest. These factors reflect in lower diesel consumption, the mainstay of irruption and transport. Besides, tourism and marriage seasons are over, which reflects in the decline in demand for petrol,” he explained.