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Industrial fuel consumption falls to 5-year low in October

FE Bureau
Industrial fuel, Industrial fuel consumption, market news, commodity news

Monthly requirement of furnace oil (FO) and low sulphur heavy stock (LSHS) fuel - which are predominantly used in industrial applications - touched a five-year-low in October. According to provisional data by the government's petroleum planning and analysis cell (PPAC), 4.7 lakh tonne of FO-LSHS was consumed in the country, the lowest since October, 2015.

The October consumption was 15.3% lower than the same month last year. Apart from being the fuel and feedstock for fertiliser plants and industrial units, FO/LSHS are petroleum products which are extensively used as secondary fuel for thermal power plants.

The lower fuel consumption coincides with the utilisation level of coal power plants touching an all-time low in October, with their average plant load factor (PLF) recording 48.9% amid falling electricity usage.

On a cumulative basis, FO/LSHS consumption recorded a drop of 5.9% for the April-September 2019 period on an annual basis. The government has attributed the drop in consumption to the ban of FO in Delhi, Uttar Pradesh, Rajasthan and Haryana.

"Consumption of LSHS has also reduced due to shift to natural gas by major customers like the fertiliser industry," PPAC said. Fall in fuel oil usage also closely follows industrial production in September contracting 4.3%, the sharpest decline since October 2011 spanning both the 2004-05 and 2011-12 series.

The fall came even when companies usually step up output to cater for festive demand. All the three major sectors of the index of industrial production (IIP) - manufacturing, mining and electricity - shrank for the first time since November 2012.

Including FO-LSHS usage, overall consumption of petroleum products fell 1.5% year-on-year to 17.4 million tonnes in October, with naptha usage dropping 17.2% to 1.1 million tonne and diesel demand falling 7.4% to 6.5 million tonnes.