India’s diesel consumption slipped to a 15-month low due to favourable rains leading to lower requirement of mechanised irrigation and subdued manufacturing activity. According to the Petroleum Planning and Analysis Cell (PPAC), India’s diesel consumption declined by around 3 percent y-o-y and 10 per cent m-o-m to 6.48 million tonnes (mt) last month.
The decline in diesel consumption can be attributed to the monsoon season, which traditionally witnesses reduced mobility during the June-September period. Rains also have a bearing on industrial and mining activities, which subsequently impact the transport sector involved in ferrying minerals and goods.
Subdued activity
An official with an oil marketing company (OMC) said that monsoon rains were 9 per cent surplus in July this year and around 16 per cent last month resulting in lower requirement for diesel for irrigation purposes during the ongoing kharif season sowing. The distribution of rainfall was also well spread leading to a lesser requirement for diesel-fed pumping sets, he added.
Manufacturing and industrial activity also weakened. The headline HSBC Flash India Composite Output Index — a seasonally adjusted index measuring m-o-m change in combined output of India’s manufacturing and service sectors — stood at 60.5 in August, little changed from 60.7 in July 2024.
HSBC Flash India Manufacturing PMI, a single-figure snapshot of factory business conditions calculated from measures of new orders, output, employment, supplier delivery times and stocks of purchases, slipped from 58.1 in July to a three-month low of 57.9 in August.
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s flash composite PMI slipped slightly in August, though it remained significantly higher than the historical average. Although new order growth for the manufacturing sector slowed to its weakest since February, the pace of expansion remained sharp, indicating continued strong demand and favourable market conditions.”
Petrol, jet fuel usage grows
According to PPAC data, the consumption of petrol, the main consuming fuel for personal vehicles, rose by 8 per cent y-o-y and 2 per cent m-o-m to 3.35 mt in August 2024.
The sale of petrol vehicles in August reported a mixed trend with top automakers such as Tata Motors, Maruti Suzuki India and Hyundai Motor India reporting a decline in sales on an annual basis in August 2024. The consumption of aviation turbine fuel (ATF) has also appreciated. Jet fuel usage rose by 6 per cent y-o-y to 7,16,000 tonnes. However, consumption was down, albeit by 1 per cent on a monthly basis.
The growth in consumption of jet fuel is led by a substantial uptick in domestic air travel as well as growth in international travellers. The consumption of LPG registered an uptrend growing at 7 per cent y-o-y and more than 1 per cent m-o-m to 2.77 mt.