India’s auto fuel consumption during June 2023 fell from the historic highs witnessed since March with monsoons impacting mobility, leading to reduced construction and mining activity, which was partially offset by travel and tourism.
On a provisional basis, India consumed 7.1 million tonnes (MT) of diesel, the mainstay of the country’s transport sector. On an m-o-m basis, the consumption fell 13.4 per cent, while it was down 8 per cent y-o-y.
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Petrol usage stood at 3 MT, a 12 per cent decline m-o-m. The usage of motor spirit (MS) was flat on an annual basis.
Sources said that monsoons impacted industrial and construction activity. Besides, diesel demand from the farm sector is also low. Another reason is the school summer vacation. However, the decline was partially offset by travel and tourism activities.
“Diesel demand will pick up from July as Kharif sowing starts building momentum. Also, schools will reopen. But, the demand from industries, particularly construction and mining will be low due to rains,” said one source.
Petrol consumption will be around 2.8-3 MT in July as schools reopen and office attendance numbers rise, which will offset the decline in travel and tourism, the source added.
Rising auto fuel consumption
Since March 2023, India’s diesel consumption recorded all-time high numbers at 7.8 MT each during March and April. It hit further north in May at 8.2 MT: the highest so far. This was aided by rising industrial and farm activity as well as opening of schools and rising attendance in offices.
Petrol consumption hit a high of 3.1 MT in March 2023 before slipping to 2.9 MT a month later. However, it hit an all-time high of 3.4 MT in May. This was aided by rising personal mobility due to work-from-home norms being gradually lifted by enterprises.
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India’s fuel consumption growth trend is expected to continue. ICICI Securities in a June report said that after three years (FY21, FY22, and FY23) of relative weakness, it expects Indian fuel consumption to steadily grow over the next two years.
This is helped by softer product prices and prices of petrol and diesel being held at the same level in the last 13-14 months, Besides, stronger economic growth predicted for the Indian economy in the next two-three years, and the potential pass-through of the supernormal marketing margins being earned on retail fuels, can spur better pricing power for petrol and diesel.