India's state-controlled refineries have operated at maximum or higher capacity this month as exports are likely to continue and product cracks are strong, while a pick-up in motor fuel use increased hopes for a robust recovery in demand.
MRPL's 300,000 b/d Mangalore refinery and BPCL's 310,000 b/d Kochi, 240,000 b/d Mumbai and 156,000 b/d Bina refineries are all at more than 100pc of nameplate capacities, market participants close to the refiners told Argus. The country's biggest state-run refiner in terms of capacity, IOC, was running at 99-100pc capacity so far this month. Its 161,000 b/d Haldia refinery, which was undergoing repairs following a fire in December, was also operating at maximum, as were HPCL's 190,000 b/d Mumbai plant and 166,000 b/d Visakhapatnam (Vizag).
IOC plans to defer a maintenance shutdown at its 300,000 b/d Paradip refinery from the April-May period to a later date, and MRPL will defer all maintenance shutdowns at Mangalore planned for the financial year ending March 2023 into the 2023-24 year, market participants said.
This is because robust product cracks are encouraging the refiners to export more and pushing them to operate refineries at maximum or higher capacity this month.
Private-sector Reliance Industries (RIL) has also delayed a planned maintenance shutdown of a crude unit (CDU) at the export-focused part of its Jamnagar refinery in order to capitalise on wide refining margins, market participants said.
Asian gasoil margins — Argus-assessed Singapore 10ppm sulphur gasoil swaps against Dubai crude values — have averaged $17.74/bl this month, compared with $7.29/bl in February 2021 and $15.53/bl last month. Asian gasoline margins — Argus' 92R gasoline spot assessments against Ice Brent — have averaged $13.57/bl in February, compared with $4.27/bl in February 2021 and $11.02/bl last month.
The state-run refiners had offered to sell gasoline and gasoil cargos this month and in January. IOC, BPCL and HPCL together account for around 90pc of India's fuel sales and are committed to fulfil domestic needs before exporting.
Market participants said the refiners are anticipating a robust recovery in fuel consumption in the coming months, after demand took a downturn in January because of restrictions related to the Covid-19 Omicron variant. Gasoline and diesel consumption rose on the month in the first half of February.
Average driving activity across India has been 126pc above a 13 January 2020 baseline so far this month, compared with 77pc above that level in January, according to data from US technology firm Apple.
Daily domestic airport footfall averaged 526,000 so far this month, higher than 413,000 in January, according to Argus estimates based on daily traffic data published by India's civil aviation ministry.
