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Trend in Indian petroleum products - Views on News from Equitymaster
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Trend in Indian petroleum products
Mar 18, 2008

We have analysed the volumes of petroleum products sold in India over the past decade. In this article, we shall take a look at some of the trends observed across the various categories. The climbers
The auto fuels- Petrol, Diesel and Aviation fuel have grown over the past decade on the back of a sustained increase in traffic on the road and in the sky. We expect the trend to continue as the increasing mobile Indian will continue to travel. Affordable automobiles and airfares will continue to drive the off take in this set of fuels.

The laggards
LPG, Kerosene and Naphtha have registered a downward volume trend over the past decade. It may be noted that this is the set of fuels, which accounts for the maximum under-recoveries for oil marketing companies. The decline can be attributed to the increasing role of natural gas for domestic and commercial use (affecting LPG volumes) and for fertilisers (affecting naphtha).

The cyclicals
The third category of petroleum products- furnace oil, lubes and bitumen- grew in a cyclical manner due to the nature of applications they are put to use. Furnace oil is used as secondary fuel for thermal power plants and feedstock for fertiliser plants; lubes are used for automotive and industrial lubrication; and bitumen in used for the surfacing of roads. This set of fuels is not consumed by the retail consumers (except auto lubes). Consumption is in fact directly driven by infrastructure that explains the cyclical pattern.

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