You have been used to hearing how the automobile units in the country have been resorting to production cuts and other measures to meet the crisis brought on by dwindling sales of cars and other vehicles. Now you may be surprised to know the oil refineries in the country have been limiting the production of diesel following a steady decline in offtake in the domestic market. Most refineries have started exporting diesel to offset the loss from domestic sales, as per a Bloomberg report.
Since May 2019, the total consumption of diesel has been declining from a figure of 7.8 million tons to 5.8 million tons in September 2019. The general opinion one would have is that India is a fuel-hungry economy and would never be saturated with it. This phenomenon of decline in demand for diesel may be one more sure signal to the powers that be that the economy has slowed down already.
Luckily for these oil refining units, there is an export market available, predominantly to Europe and they have been steadily sending diesel shipments over the past several months. The month of September 2019 alone saw 3.5 million tons of diesel being exported out of India, a record in itself. The average shipments used to be of the order of 2.2 million tons a month before September. The October shipments too may end up being higher.
Analysts in the field seem to feel this trend will continue through till the end of the calendar year.
Mangalore Refinery and Petrochemicals Ltd and Indian Oil Corporation are busy exporting diesel, also called gasoil in the trade, and have booked for loading shipments in October and November in substantial quantities. Indian Oil used to be an importer of diesel for the domestic market.
Apart from the transportation sector and agriculture, industries in India have been the largest consumers of diesel.