Even though India’s crude imports and refinery utilisation levels remained robust in April, analysts at S&P Global Platts said that the full impact of demand destruction from the second wave of the coronavirus will get reflected only in May. Indian refiners shipped in cargoes contracted earlier and refrained from backing out of deals in April despite a second wave of the coronavirus triggering demand destruction fears.
“Just like last year, India’s refiners had been slow to respond as crudes were bought in advance,” Lim Jit Yang, advisor for Asia-Pacific oil markets at S&P Global Platts Analytics, said, adding that “but as they started to realize the severity of demand impact from lockdown measures, they are expected to reduce runs and some have already done so as sales of the first half in May turned out to be very weak”. In April, Indian Oil Corporation had a refinery run rate of 96.1%, which had dropped to 84% in the first 7 days in May.
Crude oil imports increased by 10.3% year-on-year (y-o-y) to 18.3 million tonnes (MT) during April 2021. The value of imports however was higher by 183% to $8.5 billion. The Indian basket crude price averaged $63.4/barrel during April against $19.90/barrel in the same month a year ago. Owing to lower international crude oil rates in the earlier half of the fiscal, value of crude imports had fallen 38% y-o-y to $62.7 billion in FY21 even though import volumes had decreased by about 13% annually to 198 MT.
Consumption of Petroleum products fell to 17 MT in April, the lowest recorded since September 2020, signalling that the re-imposition of lockdown curbs with the second wave of the coronavirus in many areas has slowed industrial and commercial consumption. Diesel sales, which contribute to around 40% of the total consumption of petroleum products, was 7.5% lower in April than March.
Petrol sales were the lowest since August 2020, and down 13% from March to 2.4 MT. Overall consumption of petroleum products in the month was, however, 81.5% higher annually, mainly on a lower base of abnormally muted sales in April 2020.