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Even adjusting for the leap year effect in last year’s base, petroleum product consumption growth was weak in February, continuing the trend that started in December. Overall product demand grew at only 3% y-o-y – excluding petcoke, which has been distorting the data to some extent, demand was largely flat y-o-y. For FY17YTD, demand growth has been 6.5% y-o-y vs. 11% in FY16 – excluding petcoke growth has been 4% vs. 9.5% last year.
Diesel demand has declined 2.3% over the last three months; even for the year it is up only 2% vs. historic average and last year’s growth of 7-7.5%. Fuel oil and bitumen have also been weak this month and over the last three months.
On the other hand growth in gasoline and ATF, which are more consumption led, have been relatively robust. The trend of LPG vs. kerosene has continued with LPG growth in FY17YTD at 12 year highs and kerosene declining at 30%+ in recent months.
We believe this reflects conscious government strategy to shift households away from kerosene towards LPG.
Petcoke consumption in India is now higher than gasoline in tonnage terms. It has consistently been the fastest growing petroleum product since FY12 — in FY17YTD it has grown at 31% y-o-y. However, we note that there has been recent news flow on the possibility of government imposing restrictions on use of petcoke due to its adverse impact on pollution.
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