March 2, 2020 / 11:18 AM / in a month

UPDATE 1-India sees 2020/21 fuel demand growth rebound

    * India's 2020/21 diesel demand seen up 2.8% y/y 
    * Projections made in Jan before coronavirus outbreak 
    * Analysts say may have to be revised down 
    * 2020/21 gasoline demand growth to ease to 8.4% 

 (Adds details)
    By Nidhi Verma
    NEW DELHI, March 2 (Reuters) - India expects its refined
products demand growth to rebound to 3.8% in the financial year
beginning April, tracking improved economic growth, according to
government estimates that were made in January before the
coronavirus broke out.
    India's economy expanded at its slowest pace in more than
six years in the last three months of 2019, and analysts predict
further deceleration as the global coronavirus outbreak stifles
growth in Asia's third-largest economy.
    Consumption of refined fuels, a proxy for oil demand, is
expected to total 222.79 million tonnes in 2020/21, according to
the initial estimates released on Monday by the Petroleum
Planning and Analysis Cell of the federal oil ministry.
    Fuel consumption in the world's third biggest oil importing
nation is expected to slow to 1.3% this fiscal year ending March
2020, the lowest growth rate in six years, government estimates
showed.
    The projections for 2020/21 were finalised in January and do
not factor in the likely impact of the coronavirus outbreak on
the local industry and fuel demand in the country, a government
official said. 
    Analysts, however, say that India may have to revise down
its fuel demand growth projection for 2020/21.
    "(The) Indian economy and oil demand are already facing
headwinds. With corona impacting the regional oil demand, India
will weather a slowdown as well. We expect oil demand to grow by
2.6% over April 2020 to March 2021," said Sri Paravaikkarasu,
director for Asia oil at consultancy FGE.
    India reported two more cases of coronavirus on Monday,
taking the number of people who have tested positive in the
country to five.
    Diesel demand, accounting for about two-fifths of refined
fuel consumption and directly linked to industrial activity, is
estimated to rise 2.8% compared with the expected five-year low
of 0.9% growth in 2019/20, the data showed.
    Gasoline demand is expected to slow to 8.4% in 2020/21 from
the projected 9% for this fiscal year, the data showed. 
    While gasoline is used by passenger cars, diesel is used by
trucks and heavy vehicles for transporting goods and in
industrial activities like mining and powering generators for
industries.
    India's vehicle sales are expected to stay under pressure 
due to rising cost of vehicle ownership and slower economic
growth, the president of automobile lobby group the Society of
Indian Automobile Manufacturers (SIAM) said last month.

    Diesel demand is expected to remain subdued until the second
half of 2020, when analysts expect various policy measures aimed
at stimulating industrial activity to kick in and soak up excess
fuel.
    Estimated Petroleum Products Consumption (in million
tonnes):
    
 Product       2018/19   Revised   %chg    Budget      %chg
               (Actual)  Estimate  yr/yr   Estimate    yr/yr
                         2019/20           2020/21     
                                                            
 LPG               24.9      26.5     6.4        28.0    5.6
 Kerosene           3.5       2.6   -23.7         2.3  -13.5
 Gasoline          28.3      30.8     9.0        33.4    8.4
 Naphtha           14.1      12.6   -10.8        12.7    0.8
 Diesel            83.5      84.3     0.9        86.6    2.8
 Jet Fuel           8.3       8.2    -1.3         8.7    6.3
 Fuel Oil           6.6       6.0    -7.9         5.6   -6.7
 Bitumen            6.7       7.0     4.8         7.5    6.5
 Petcoke           21.3      21.8     1.9        21.4   -1.6
 Others            16.0      16.1     0.9        16.6    3.1
 All Products     213.2     216.0     1.3       222.8    3.1
 LPG: Liquefied Petroleum Gas
    

 (Reporting by Nidhi Verma; Editing by Muralikumar Anantharaman
and Emelia Sithole-Matarise)
  
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