India’s April Diesel Import breaks five-year record

The Dollar Business Bureau

The extremely hot weather has boosted the demand for diesel at the power generators in South Asia.

In April, India has imported 510,000 tonnes of diesel, which is the biggest volume of import in the last five years. The imports ramped up after the refiners found the supplies from private companies very expensive in the absence of discount on shipping and taxes.

Due to summer demand and the disruption in the supply caused due to the recent strike at Kuwait Petroleum Corp, Pakistan imported 215,000 tonnes for the month of May.

Petrolimex, Vietnamese trading company doubled the purchase of gas oil in April to 140,000 tonnes and has maintained the same value in May.

These purchases have cut down Asia’s surplus diesel, which was forecasted by the FGE to drop about 50,000 bpd in the second quarter from the same period a year ago.

Asia has been going through a tough time to absorb the excess diesel supply. The main reason behind the excess supply is the economic slowdown across the region that has curbed the consumption for the fuel.

Last month, the International Energy Agency has warned that the demand for gas oil is collapsing. 

However, after Pakistan, India and other Asian countries have boosted their imports, the profit a refiner gets for a barrel of diesel from Dubai crude has doubled. On April 6, the price came up to $11.74 a barrel from the low point of $6.22.

An analyst at the FGE said, “The strength in imports into these affected countries will continue in the coming weeks. The El Nino phenomenon is expected to last till June, after which conditions should normalize.”

After the refiners across the region has optimized the gasoline output, the proportion of the middle distillates against the overall oil and stocks held in Singapore has fallen to a multi-year low.

However, this turmoil may be only for short period of time. The traders have said that India and Vietnam are showing signs of slowing down the purchase of industrial fuel. A trader based in Singapore said that India oil corporation will reduce imports due to monsoon.

Also, another point to be noted is that Petrolimex’s June purchase have slowed down.

In the same way, the rainy season in Vietnam is fast approaching thus slowing down the demand for the fuel.

FGE said that the demand in the second half of the year is expected to widen again with an average of 93,000 bpd which is up by 77,000 bpd from a year ago period.