India's fuel demand falls 10% in March H1 as coronavirus curbs travel

NEW DELHI, March 18 (Reuters) - Indian state retailers have sold 10-11% less refined fuel in the first two weeks of March than in the same period of 2019 as coronavirus cut transportation and industrial activity, the country’s top refiner and fuel retailer Indian Oil Corp said.

State companies - IOC, Hindustan Petroleum Corp and Bharat Petroleum - own about 90% of India’s retail fuel outlets.

“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% in the first fortnight of March 2020,” IOC said in a statement.

Due to restrictions on movement and travel advisories, aviation turbine sales have dropped by over 10% and bunker fuel sales are down by a similar amount, it said.

India’s gasoil sales by state retailers in the first 15 days of March plunged by 13.6% from a year earlier while gasoline and jet fuel sales declined by 2.1% and 17.2%, industry data show.

“Covid-19 is further drying up demand from the road transport and airlines segments in India,” CRISIL, the local arm of rating agency Standard and Poor’s, said on Wednesday.

“Hence, consumption growth of petroleum products is expected to be low at 2-3% in fiscal 2021.”

India has announced steps including the closure of schools, universities, shopping malls and other public gatherings and restricted air travel to control the spread of virus.

“This will restrict mobility and in turn impact transport fuel demand,” Singapore-based consultancy FGE said in note released this week.

“Several airlines have suspended flights to and from high-risk overseas destinations, which will hit jet fuel consumption considerably.”

FGE has revised down expectations for India’s total fuel demand growth in 2020 to 45,000 bpd from its previous estimates of 100,000 bpd, it said.

“The escalating coronavirus situation could impact industrial activities, which will have a ripple effect on road-freight movements,” it said.

“Considering the expected progression of events, the COVID-19 impact will likely be more prominent in (the second quarter of) 2020.”

FGE said India’s gasoil demand growth is expected to be broadly flat this year in contrast to a previous estimate of 48,000 bpd or about 2.8%.

It expects India’s gasoline demand to grow by 28,000 bpd, about 4.1% year-on-year, compared with a forecast of 42,000 bpd before the outbreak. (Reporting by Nidhi Verma; Editing by Jan Harvey)