Petrol, diesel consumption likely to burn out on coronavirus heat

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In India, fuel sales are expected to decrease by 5-10% due to the VIDOC-19 restrictions. Reduced purchases of petrol, diesel and aviation kerosene will lead to lower annual consumption in the current fiscal year and until 2020-21.

 

It will be a repetition of what happened in China, where demand for all raw materials, including petroleum products and steel, fell after the outbreak of the Wuhan epidemic, resulting in the accumulation of huge reserves.

 

In India, the epidemic reappeared in the first three weeks. The China National Petroleum Corporation (CNPC) estimates that the country’s demand for gasoline, diesel and aviation fuel could fall by 36% in January-March (Q1) compared to the same period last year.

 

We believe that the situation should be clarified in the next 7 to 10 days regarding the extent of the destruction of demand and the seriousness of the situation of the Kovida-19s in India. Testing our distribution channels with oil and gas companies includes a disruption of 5-10% of initial sales volume due to Covid-19 restrictions in India. However, if the government increases its pressure, the blow to volume may increase further, Emkay Global said in his report.

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Source: PPAC & Emkay Global

 

Lower demand is expected to lead to lower annual consumption of petrol and diesel. Diesel consumption increased by 2.9%, from 81.1 million tonnes in 2017-18 to 83.5 million tonnes in 2018-19. Fuel consumption was also 8.1% in the same period. Growth in diesel consumption is expected to decrease this year due to a 7.4% decline in October.

 

Despite the October figures, we expect diesel consumption to increase by about 0.6 percent and gasoline consumption by 8 percent, said Sanjiv Singh, president of the Indian Oil Company, in an interview with the Business Standard earlier this month.

 

Another executive of an oil marketing company said sales to consumers dropped 4-5% last week. We’ve seen the price of gas drop even more, he said.

 

Traffic experts have warned that economic traffic will slow down in the coming weeks. The boss also explained the fall in demand with the fall in crude oil prices. Our data is based on what the dealers buy from us. There are two factors involved. First, retail demand is weak, and second, retailers reduce their stocks when crude oil prices fall, he said.

 

The Executive also stated that the situation in India is changing rapidly and that there is demand for it in week 23. March could be weaker due to power cuts up to 31 March, announced by several state governments.

 

The IOC estimates that demand dropped by 10 to 11 percent in March, with a 2 percent drop in diesel, aviation fuel and gasoline consumption and a more than 13 percent drop in bunker fuel consumption, Emkai said. According to them, the demand for oil will increase by 2% compared to last year, if the monthly volume falls by 25%, demand will remain at the same level throughout the year.

 

The City Gas Distribution Company (GDS) stated that the initial decrease would be 5 to 7 % in Delhi and 7 to 8 % in Mumbai, as this could affect the supply of gas through pipelines and compressed natural gas. In the case of obsessive-compulsive disorder, if a growth rate of 10% is recorded within a month, the annual growth rate will fall to 8.5%.

 

Gas pump retailers said the total hit could be as high as 25-30%, according to the report. The fuel exhausts tried to shorten the lead time.

 

In the past two weeks, total demand has dropped by 15-20%, said Ravi Shinde, former president of the Mumbai Gas Trade Association. In the current scenario, in which people are asked to stay at home, I would expect a 50% drop in sales, which has not happened so far. The turnout is still considerable, especially for two-wheelers.