india-s-diesel-demand-drops-in-june-amid-heatwave

India's diesel demand witnessed a significant slump in June, attributed to extreme heat conditions that curtailed travel across parts of the country, according to preliminary data from state-owned firms released on Monday.

 

Fuel sales, which typically surge during election periods, have deviated from this pattern in 2024, showing a consistent decline month after month. The downward trend persisted even after the conclusion of the general elections.

 

During the first half of June, petrol sales by three state-owned firms, which dominate 90% of the fuel market, totaled 1.42 million tonnes, marginally higher than the 1.41 million tonnes consumed in the same period last year.

 

This represents a month-on-month drop of 4.6%.

 

Diesel sales fell 3.9% to 3.95 million tonnes between June 1 and 15, compared to the same period last year. This continues a pattern of declining demand, with reductions of 2.3% in April, 2.7% in March, and 1.1% in May.

 

Despite expectations for increased fuel consumption due to election activities, the summer harvest season, and heightened air conditioning use amid scorching summer temperatures, this year has defied trends.

 

Additionally, a reduction in petrol and diesel prices by Rs 2 per litre in mid-March, ending nearly two years of static rates, was anticipated to boost sales but has not had the expected impact.

 

Month-on-month, petrol sales saw a 3.6% decrease, falling from 1.47 million tonnes consumed during May 1-15 to 1.42 million tonnes in the first half of June. Diesel demand remained flat month-on-month, holding steady at 3.54 million tonnes.

 

Diesel remains India's most consumed fuel, making up almost 40% of all petroleum product consumption, with the transport sector accounting for 70% of diesel sales. It is also crucial for the agriculture sector, powering harvesters and tractors.

 

Petrol consumption from June 1-15 was 4.6% lower than the same period in 2022, but 28.1% higher than the Covid-affected period in 2020. Diesel demand dropped 10.5% compared to June 1-15, 2022, but was 14% higher than in the same period of 2020.

 

Jet fuel (ATF) sales increased by 2.3% year-on-year to 331,000 tonnes during June 1-15, 2024. However, this marked a 4.5% decrease month-on-month from 346,500 tonnes consumed during May 1-15.