Preliminary data from state-owned firms reveals that diesel sales in India have declined for the second consecutive month in September. The drop in demand is attributed to rains that have dampened industrial activity and reduced the need for diesel in certain regions of the country.
While diesel sales by three state-owned fuel retailers saw a year-on-year (YoY) decline in the first half of September, petrol sales showed a slight increase. Diesel, which constitutes about two-fifths of India’s fuel demand, saw a 5.8 per cent decrease in consumption to 2.72 million tonnes between 1 September to 15 September compared to the same period the previous year. This decline in consumption was similar to the first half of August. However, month-on-month sales increased by 0.9 per cent compared to the first half of August when 2.7 million tonnes of diesel were consumed.
Diesel sales typically decrease during monsoon months due to reduced demand in the agriculture sector, where diesel is used for irrigation, harvesting, and transportation. Additionally, rains slow down vehicular movements.
In contrast, petrol sales saw a 1.2 per cent increase to 1.3 million tonnes in the first half of September compared to the same period last year. Consumption had dropped by 10.5 per cent in the first half of July but recovered in the latter half. In the first half of August, it had fallen by 8 per cent. Sales in the first half of September showed an 8.8 per cent month-on-month increase.
India’s economy has displayed resilience and is expected to outperform most major economies in the first half of 2023, contributing to the growth in fuel demand.
Petrol consumption during 1 September to 15 September was 29.2 per cent higher than in the same period in 2021 and 20.8 per cent higher than in September 2019, before the pandemic.
Diesel consumption also increased, with a 26 per cent rise compared to 1 September 2021 to 15 September 2021, and a 36.4 per cent increase compared to the same period in 2019.
Jet fuel (ATF) demand increased by 6.8 per cent to 2,92,500 tonnes during the first half of September compared to the same period last year, driven by rising passenger traffic at airports. This marked a 53.9 per cent increase over September 2021 but was 5 per cent lower than pre-COVID September 2019. Month-on-month jet fuel sales declined by 1.8 per cent compared to 1 August 2023 to 15 August 2023.
LPG (cooking gas) sales increased by 10.2 per cent year-on-year to 1.36 million tonnes on September 1-15. LPG consumption was 15.5 per cent higher than in 1 September 2021 to 15 September 2021, and 35 per cent more than pre-COVID 1 September 2019 to 15 September 2019. Month-on-month, LPG demand surged by 12 per cent compared to 1.21 million tonnes consumed in the previous period.