Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Energy/  India to surpass China as fastest growing oil market in 2018: Moody’s
BackBack

India to surpass China as fastest growing oil market in 2018: Moody’s

With India?s demand for petrol growing at 6% and that of China halving down, India will become Asia?s fastest growing oil market in 2018, according to Moody?s

China and India will continue to be the key growth engines for oil sector in Asia, representing over 80% of the expected growth in 2018, the Moody’s report said. Photo: Indranil Bhoumik/MintPremium
China and India will continue to be the key growth engines for oil sector in Asia, representing over 80% of the expected growth in 2018, the Moody’s report said. Photo: Indranil Bhoumik/Mint

Mumbai: On the back of a 6% demand growth, India will surpass China as the fastest growing Asian market for petroleum products in 2018, says a report.

This is possible as Chinese demand growth is seen halving to 2.5-3% in 2017-18 from a higher 6% in 2016-17. Despite the weakening growth numbers in both these countries, China and India will continue to be the key growth engines for the sector in Asia, representing over 80% of the expected growth in 2018, says a report by Moody’s.

Quoting the American energy information administration projections, the report said the demand for petroleum products in the Asia Pacific will rise a modest 2% or 0.7 million barrels per day in to 34.6 million bpd in 2018.

“Given the oil sector’s reliance on China and increasingly India, we believe demand would face considerable risks if economic growth weakens materially below our expectations. However, India will surpass China as the fastest growing product market in Asia with petroleum consumption growing 6 per cent in 2018," Moody’s said in a report Tuesday.

It also says China and India growth will ensure that Asian refining margins will remain firm, thereby supporting the earnings growth. Since October 2014 Moody’s has been having stable outlook for the sector. On China, the report says, “as Chinese economic activity dials back, we expect its refined product demand growth will moderate to 2.5-3% in 2017-18 which is nearly half of higher CAGR of 5% in 2012-16. Still in absolute terms, China will still account for 48% of Asian R&M demand growth in 2018."

“Specifically, we expect the average Asian refining margins to be largely in line with the average of $6.2 a barrel for the last three years, but better than $5.1 per barrel in 2016," says the report.

“The recent forced closure of about a quarter of US refining capacity has created an under supply situation, causing fuel prices, including gasoline, diesel and jet fuel, to surge. Nonetheless, we expect the recent spike in crack spreads and refining margins to temper and normalise as the supply crunch eases gradually," the report adds.

Noting that supply and demand will vary by country, as a whole Asia’s incremental growth in demand for fuel of around 0.7 million bpd will outpace net refining capacity additions of 0.4-0.5 million bpd over the next 12-18 months.

“At the same time, the bulk of the incremental growth in refining capacity will come from China and Vietnam. Still, with demand growth surpassing capacity additions over the last five years, Asia is likely to remain a net importer of refined petroleum products over at least the next three years," concludes the report.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 03 Oct 2017, 07:52 PM IST
Next Story footLogo
Recommended For You
Energy Stocks
₹1,824.250.53%
₹166.250.9%
₹516.82.34%
₹88.561.21%
₹330.651.6%
Switch to the Mint app for fast and personalized news - Get App