India’s refined fuel exports rose 24.2 per cent in December year-on-year to 6.46 million tonnes, the fastest growth since October 2016, data from the petroleum ministry showed, as a broader economic slowdown dented local demand.
India recently revised down its growth forecast for fuel consumption – a proxy for oil demand – to a six-year low of 1.3 per cent in 2019-20, mainly due to a fall in estimated diesel consumption. Diesel consumption is directly linked to industrial activity.
Asia’s third-biggest economy imports and exports refined fuels, as it holds a surplus refining capacity. But slowing local demand is pushing up its exports and they rose for a fourth straight month in December from a year earlier.
Of the 6.46 million tonnes of exports in December, shipments of diesel had the lion’s share, rising 38.2 per cent to 3.14 million tonnes, according to data posted on the website of Petroleum Planning and Analysis Cell (PPAC).
Economists say the decline in fuel consumption and other indicators, such as power demand, reflect an industrial slowdown.
India’s economy grew at its slowest pace in six years in the July-September quarter, while retail inflation in December accelerated to the highest level in more than 5 years.
Adding to concerns, the International Monetary Fund (IMF) trimmed back India’s 2020 global growth forecasts by 1.2 percentage point, the IMF’s biggest markdown for any emerging market.
Electricity demand has fallen for five straight months, its longest losing streak in at least 12 and a half years.