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India's thirst for gasoline supports Asian petrol margins, say industry sources |
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NEW DELHI: Strong Indian imports of gasoline, boosted by a shift towards petrol car sales, are expected to underpin Asian margins for the fuel at least for the rest of the fiscal year to next March, industry sources say.
India has surplus refining capacity, but there has been maintenance at some plants and gasoline demand has risen after a cut in diesel subsidies increased the attractiveness of petrol cars.
Gasoline imports from April to June were the highest in more than four years, official data showed.
As a result, Asia's average gasoline profit margin for refiners, or the crack, in the first seven months of 2015 was$12.60 a barrel, the highest for the period since 2009, based on Reuters data going back to the second half of 2008.
"Gasoline imports are there as we are seeing a robust growth in demand," said B. Ashok, chairman of Indian Oil Corp (IOC) , the country's biggest refiner, which undertook maintenance at its Koyali refinery from March to April.
In the first six months of the year, India's gasoline demand grew 14.17 per cent, official data showed, and trade sources expect growth this year to reach 17 per cent.
Although India still exports more gasoline than it buys, a government source said state refiners would continue importing at least until the end of this fiscal year to March 31 2016.
Higher domestic demand meant that total gasoline exports for January-June 2015 fell about 5.2 per cent to 7.2 million tonnes or 337,400 barrels per day (bpd), while imports have spiked to about 23,400 bpd from about 2,850 bpd.
For all of 2015, consultancy JBC Energy expects India's gasoline surplus to fall to around 310,000 bpd and drop below 300,000 bpd in the next few years, versus 345,000 bpd in 2014.
IOC, the key importer of gasoline, has sought almost 700,000 tonnes for March-September delivery.
State refiners also buy gasoline and diesel from private firms Reliance Industries and Essar Oil but since they charged more for coastal supplies an IOC source said his firm had switched to imports.
Further tightening the market, has been a switch by some north Indian states to less polluting Euro IV gasoline.
IOC's Panipat refinery is only able to meet 75 per cent of demand for Euro IV, the IOC source said.
India's strong gasoline demand comes as major consumers Japan and Australia shut refining capacity and switch instead to imports.
Overall demand is also growing.
ESAI Energy research agency expects global gasoline consumption to grow by 50,000 bpd to 420,000 bpd this year.
Source : economictimes.indiatimes.com
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