Diesel sale clocks 6.1% growth; first time since Covid-19 induced lockdown

Diesel sales in India clocked the first year-on-year gain since February as annual festivals boosted demand for the country’s most-consumed fuel.

Sales at India’s top three fuel retailers rose 6.1% from a year earlier last month to 5.76 million tons, according to officials with direct knowledge of the data.

The nation’s two main festivals -- Dusshera and Diwali -- started mid-October and celebrations will extend for more than a month. This is the peak demand season and, as a result, a busy time for diesel-guzzling trucks hitting the roads to deliver everything from clothes to refrigerators. Crop harvesting activities also boosted consumption for the industrial fuel.

The rebound in diesel demand is crucial for ramping up crude processing by Indian refiners after consumption was crushed by a strict lockdown in late March to check the spread of Covid-19. Indian Oil Corp., the country’s biggest refiner, has boosted its run rates to 93% of capacity and is hoping to reach 100% in a couple of months, Chairman Shrikant Madhav Vaidya said on Oct. 30.

“Demand is improving every month and everything is looking up,” said K Ravichandran, senior vice-president at credit assessor ICRA Ltd., the local unit of Moody’s Investors Service. “I see a good demand recovery in the second half of the financial year” unless virus cases start to rise sharply, he said.

The growth in diesel also outpaced petrol sales that rose 4.2% from a year earlier to 2.22 million tons, according to the officials who asked not to be named as they’re not authorized to speak to the media. Liquefied petroleum gas posted a year-on-year gain of 3.7%, but aviation fuel sales volumes were at half of last year’s levels, the official said.

The three fuel retailers -- Indian Oil, Bharat Petroleum Corp. and Hindustan Petroleum Corp. -- which account for more than 90% of the nation’s fuel sales, declined to comment.

--With assistance from Andrew Janes.