India's fuel demand has dropped by a steep 10-11 per cent in the first two weeks of March as the outbreak of coronavirus (Covid-19) led to the cancellation of flights and a reduction in industrial activity.
The country had consumed 19.5 million tonnes of petroleum products in March 2019, official data showed. Assuming consumption in two halves of the month was almost the same, as much as 10 million tonnes of fuel was consumed during the first fortnight of March 2019.
"The petroleum industry is witnessing the impact of coronavirus on sales of all petroleum products. The overall demand for liquid fuels has gone down by 10-11 per cent in the first fortnight of March 2020," said Indian Oil Corp (IOC), the country's largest fuel retailer, in a statement.
Restrictions and travel advisories, as well as a slowdown in industrial activity, has led to the fall in demand.
While diesel sales as dropped by over 13 per cent, jet fuel sales has slumped by over 10 per cent. Petrol sales have seen a decline of over 2 per cent.
"Due to restriction in movement and travel advisories, the aviation turbine fuel (ATF) sales have dropped by over 10 per cent. The bunker fuel sales are also down by approximately 10 per cent," IOC said.
Crisil said the Covid-19 pandemic has made the already subdued demand outlook ever grimmer.
"The airlines industry accounts for 6-8 per cent of total crude consumption. As more countries are implementing bans over Covid-19 in both international and domestic travel, the impact is likely to worsen. And if the pandemic is not contained over the next two-three months, the consequences will be severe," it said in a note.
Covid-19, it said, is further drying up demand from the road transport and airlines segments in India as well.
"Hence, consumption growth of petroleum products is expected to be low at 2-3 per cent in fiscal 2021," it said.
Separately, Morgan Stanley cuts India's fuel demand estimate for the next financial year by five per cent.
Prior to the outbreak of coronavirus, Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) had projected fuel demand to grow to 222.79 million tonnes in the fiscal year starting April (2020-21) from an estimated 216 million tonnes in 2019-20.
ATF consumption was projected to rise to 8.7 from an estimated 8.19 million tonnes in 2019-20 while diesel demand was to grow to 86.5 million tonnes from 84.26 million tonnes. Petrol consumption was projected to rise to 33.4 million tonnes from almost 31 million tonnes in the current fiscal.
In the first 11 months of 2019-20, fuel demand was 197.6 million tonnes. ATF consumption came at 7.5 million tonnes in April 2019 to February 2020 while diesel demand was 77 million tonnes. Petrol consumption came at 27.8 million tones in April-February.