Consumption of petroleum products in India rose to a 7-month high of 17.9 million tonnes in October 2021. After the drastic fall in petroleum products’ demand in May 2021, the subsequent months recorded a gradual improvement. The decline as compared to the corresponding 2019 level narrowed down consistently up to September 2021. With the start of the festive season in October 2021, demand for petroleum products in India surpassed the corresponding pre-Covid level by 3.1 per cent during this month.
Eight of the 12 petroleum products had witnessed an increase in demand in September 2021 as compared to the same month in 2019. In October, this increased to nine products. Aviation turbine fuel (ATF), petroleum coke and superior kerosene were the only products that continued to face a decline as compared to the level seen in October 2019.
Industrial fuels such as naphtha, furnace oil and bitumen & asphalt registered the highest growth in October 2021. Consumption of naphtha, which is principally used by the petrochemical industry, rose to a 7-month high of 1.3 million tonnes. This was a 13.1 per cent increase as compared to October 2019. In September 2021, the increase had been of only 1.2 per cent as compared to September 2019. According to a report by Reuters, demand for naphtha in Asia is expected to continue growing in the next year as well.1 Furnace oil recorded a similar increase in consumption, of 10.5 per cent as compared to October 2019. Its increase in September 2021 had been much lower, of 3.1 per cent in a similar comparison. Bitumen & asphalt, which is used in road construction, saw a double-digit increase in consumption over the corresponding 2019 level for the third consecutive month, at 49 per cent.
In contrast to the above, consumption of petroleum coke remained lower than the pre-Covid level in October 2021, by 19.2 per cent. But, the gap narrowed down as compared to the decline seen in September 2021 over the corresponding 2019 level. Consumption of petroleum coke stood at 1.3 million tonnes in October 2021. Steel and cement plants, which are major consumers of the fuel were adversely impacted by the coal shortage in the beginning of October 2021 as per news reports.2
Consumption of liquefied petroleum gas (LPG) was 5.9 per cent higher than its October 2019 level. Demand for LPG, being a domestic fuel, has remained well above 2.1 million tonnes during the past year in spite of the second wave of Covid-19. In October 2021, India’s LPG consumption reached its highest level in nine months, of 2.5 million tonnes.
Consumption of transportation fuels including petrol and high speed diesel also rose substantially in October 2021. Petrol consumption rose for the fourth consecutive month in comparison to the corresponding 2019 period, by 8.3 per cent. It reached an all-time high level of more than 2.7 million tonnes in October 2021. Demand for petrol has been higher than the pre-Covid level since July 2021, most likely due to an increased preference for private transportation during the pandemic. This increase has been in spite of a surge in petrol prices. In October 2021, petrol prices in urban India rose by 34-44 per cent as compared to October 2019.
Diesel consumption also grew in October 2021, by 1.6 per cent over October 2019. This was the first month that saw a higher level of diesel consumption as compared to its pre-Covid level. After plunging in May 2021 by 16.9 per cent, the fall in demand for diesel had reduced sequentially up to September 2021. The increase in October 2021 as compared to the same month in 2019 reflected the increase in transportation of goods due to factors like harvesting and transportation of the kharif crop and the start of the festive season. Similar to petrol, this increase was in spite of a surge in diesel prices in urban India, of 40-46 per cent as compared to October 2019. However, diesel consumption is likely to decline again in November. As per news reports, its consumption in the first half of November 2021 has been 19.3 per cent lower than its corresponding 2019 level.3
ATF was one of the few petroleum products, along with petroleum coke, whose consumption continued to be lower than its pre-Covid level in October 2021. ATF consumption stood at less than 0.5 million tonnes, which was a 31.4 per cent decline as compared to October 2019. But, like petroleum coke, the gap in ATF demand has also sequentially narrowed down in the previous four months. Although domestic flights have resumed operating at full capacity from mid-October, the ban on scheduled international passenger flights has been extended up to the end of November 2021. This is likely to reflect in a continued decline in ATF consumption in November as well.
|Month||May 21||Jun 21||Jul 21||Aug 21||Sep 21||Oct 21|
|Motor Spirit (Petrol)||-27.3||-8.7||4.3||4.6||9.5||8.3|
|High Speed Diesel||-29.0||-16.9||-10.3||-8.4||-5.6||1.6|
|Aviation Turbine Fuel||-60.6||-60.4||-52.1||-43.1||-37.5||-31.4|
|Bitumen and Asphalt||-8.8||5.0||6.8||73.7||38.7||49.0|
|Light Diesel Oil||55.5||76.4||49.7||30.7||42.4||86.1|
|Other petroleum products||-7.9||-12.9||14.9||18.7||30.9||14.0|