India’s sputtering economy is turning the energy-hungry nation into an unlikely source of diesel exports, reports Bloomberg.
The industrial fuel is the lifeblood of Indian manufacturing, transport and agriculture, making it the country’s most-consumed petroleum product. But five straight quarters of slowing growth is taking an increasing toll on demand, resulting in diesel consumption slumping to the lowest since the start of 2017.
The sharp slowdown – economic growth has almost halved since the middle of 2016 — was compounded by a heavier-than-normal monsoon is some areas, taking refiners by surprise. That forced them to cut operating rates and spurred a 47 per cent jump in exports of diesel, also known as gasoil, to a record 3.5 million tonnes last month.
Indian diesel consumption has fallen for four straight months to 5.8 million tonnes in September from 7.8 million tonnes in May, according to government data. The 3.5 million tonnes of overseas shipments last month compares with an average of 2.2 million tonnes in the first eight months of the year.
While Indian diesel exports typically go to Europe, strong near-term buying interest from Asia may draw some shipments east too, according toanalysts. Exports are likely to taper toward the end of the year, although they will remain higher than the same period in 2018, he said.
Mangalore Refinery & Petrochemicals Ltd. has offered 650,000 tonnes of diesel for loading in October and November, according to data compiled by Bloomberg, two-thirds more than for the previous two months. The refiner is offering more diesel via tenders because it boosted run rates to make up for forced shutdowns earlier this year due to a landslide and water shortage.
Indian Oil Corp., the country’s biggest refiner, has offered as much as 130,000 tonnes of October-loading diesel loading in October. The state-owned company, which is usually an importer of gasoil, had to shut units in at least two refineries in September due to the lower demand, the oil ministry said in a statement this week.