Financial Daily from THE HINDU group of publications
Wednesday, Feb 20, 2002
Industry & Economy
Slide in petro consumption slows
MUMBAI, Feb. 19
DIESEL consumption was 2.67 per cent less in the nine-month period from April 2001 to January 2002. The overall consumption of petroleum products was 0.3 per cent down during the period.
"But the rate of decline in overall consumption has been coming down steadily. This is a healthy trend as it indicates a revival of industrial activity," said a senior foreign investment institution analyst.
Diesel growth rate for January 2002 was a negative 1.92 per cent compared to an average fall of 4-5 per cent in the last nine months. Adding to the optimism is the 11.45 per cent jump in growth rates for lubes and greases. Despite smaller volumes, the lubricants segment is considered highest in profitability. "Obviously, sales are looking up and this could mean the beginning of an upswing in the automotive sector," said an analyst with a domestic financial institution.
Petrol registered a positive 5.04 per cent growth rate in January. Liquefied petroleum gas (LPG) jumped 12.25 per cent, while kerosene continued a downslide at -6.05 per cent.
According to an oil company official, the decline in kerosene consumption is in line with that of an increase in LPG, underlining fuel substitution. Another reason for the fall in kerosene growth could be the stringent measures being taken against diesel adulteration, he said.
The consumption of feedstocks such as naphtha, furnace oil and low sulphur heavy stock fell by -12.04 per cent, -2.78 per cent and -1.51 per cent respectively in January.
Reduced consumption by units such as Haldia Petrochemicals and certain fertiliser units, could have led to the fall, say analysts.
But, in spite of the fall, the proposed decontrol in April, combined with the warming up of industrial activity may lead to an upswing in petro-product consumption.
"Freeing the products will kick up a price elasticity in petroleum products. Also, we expect petrochemical business to look up in mid-2002, so sales of fuels such as naphtha will look up. The economy on the whole is expected to improve," said a senior analyst.
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