New Delhi : India’s petroleum consumption will grow at 6 per cent in 2017-18, double the rate at which fuel demand in China is projected to grow, Moody’s Investors Service said on Monday.
The US Energy Information Administration (EIA) projects total liquid fuels consumption in the Asia Pacific to rise by 0.9 million barrels per day (bpd) in 2017 to 33.3 million bpd. China and India remain the fastest-growing product markets in Asia, collectively accounting for 80 per cent of total demand growth in the region. “China’s slowing economic growth will temper underlying product demand over the next 12-18 months. We estimate China’s demand for refined-oil products will grow around 3 per cent annually in the next two years, compared with 4-5 per cent on average over the past five years. “While petroleum consumption in India will likely grow 6 per cent annually in 2017-18, we believe this will not fully offset slowing growth in China,” Moody’s said in a report.
Moody’s said Asian refiners have started to dial back their capacity additions and this trend is expected to continue in 2017-18, although the immediate impact on an oversupplied market will be somewhat limited. Refiners have canceled, delayed or scaled back large- scale, greenfield refineries as well as capacity expansion projects that were originally planned to come on-stream over the next 18 months.
“We believe such project delays and cancellations are partly in response to the ongoing supply glut in Asia, following over 400,000 bpd of new capacity from India over the past few months,” it said. The economic slowdown in China, industry cyclicality and capacity overhang continue to pressure Asian refiners, despite stable outlook.
“We could change our outlook to negative if net refining capacity additions and increasing refinery output in Asia materially outpace growth in demand, such that our projected EBITDA for the industry declines by more than 10 per cent; or if demand from China and India contracts,” it said.
