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MUMBAI, July 16

SALES of petroleum products suffered a setback in June 2002 with consumption sliding to -1.7 per cent. Most fuels saw negative sales, with diesel falling to -4.4 per cent.

Bulk sales of both diesel and petrol, which account for one fourth of the products' volumes, slid sharply to -11.4 per cent and -16.5 per cent, respectively. According to analysts, the fall in consumption could be because of higher diesel and petrol prices last month.

"Bulk consumers are especially price-sensitive. They could have stocked up in May anticipating a price hike in early June,'' said a senior analyst. Diesel and petrol had shown a positive growth rate of 1.1 per cent and 14 per cent, respectively in May 2002.

Another reason for the reduced bulk sales could be product substitution. Bulk users may be switching to natural gas thanks to fresh findings in the Krishna-Godavari basin. "GAIL is scheduled to supply around 2-3 million standard cubic metres per day of additional gas to bulk consumers in the South,'' said the oil company officials.

Oil companies also saw a dip in naphtha and furnace oil sales. Sales of naphtha fell to -6 per cent while furnace oil went down to -4.8 per cent.

According to industry observers, naphtha sales might have taken a hit due to import substitution. Improvement in low sulphur heavy stock sales to 7.8 per cent might explain the fall in furnace oil sales as the two products could be substituted, analysts said.

"Bharat Petroleum suspending naphtha sales to Nocil may have contributed to the steep fall in naphtha consumption,'' an analyst said.

In June, kerosene consumption was -4.6 per cent with LPG sales simultaneously improving to 6.6 per cent because of continued substitution and aggressive selling of the second LPG cylinder by oil companies. Lubes continued positive sales growth at 18 per cent.

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