Industrial and Commercial Consumption of LPG in India Increased by 18.4% in the First 9 months of FY2023 on Year-on-Year Basis

Commercial customers increased their LPG consumption by over 5% in the first nine months of this fiscal year as a result of switching from pricey natural gas.

According to the oil ministry, India consumed 21,256 thousand metric tonnes of LPG overall between April and December 2022, an increase of 1.8% from the previous year. Only 0.3% of total consumption, or 89% of it, was consumed by homes, but sales to businesses increased significantly. While bulk LPG had a 12% year-over-year growth, packaged LPG sales to commercial customers climbed by 18.4%.

After gas prices surged to record highs in 2022, businesses like factories, restaurants, and shops that frequently use natural gas started looking for alternatives. Many enterprises and stores found LPG to be useful. LPG is simple to get and use, and prices have been falling.

Since May 2022, the cost of packed LPG cylinders for commercial usage has decreased, with prices in India falling by 25% in the seven months leading up to December. The price of liquefied natural gas (LNG) on the Asian spot market is also significantly lower than it was in August, although it is still fairly expensive, trading at about USD 18 per MMBtu.

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At roughly USD 12 per MMBtu, LNG obtained through long-term contracts with prices correlated to petroleum is significantly more expensive than the average price over the last few years.

LPG imports have increased dramatically in recent months. According to energy cargo tracker Vortexa, average imports were 15% higher in the three months leading up to January than in the previous three months. According to an industry executive, the increase in imports was primarily caused by seasonality because winter requires more energy for the same task. Another factor was the widespread move by customers from natural gas to LPG.

According to the executive, LPG imports have predominantly surged at Western ports because of their proximity to numerous gas-consuming companies.

After reaching a nine-month high in December 2022, India's fuel demand fell in January as a result of lower mobility brought on by the country's widespread cold weather and a slowdown in industrial activity.

Fuel consumption, a proxy for oil demand, was 18.7 million tonnes in January, down 4.6% from the previous month, according to statistics from the Petroleum Planning and Analysis Cell of the Indian Oil Ministry (PPAC).

According to PPAC data, sales of gasoline, often known as diesel, declined 5.3% to 2.82 million tonnes in January from the previous month while sales of diesel fell 7.6% to 7.18 million tonnes

In January, the manufacturing sector in India expanded at its sluggishest rate in three months as both output and sales growth slowed. But on an annual basis, fuel use increased by 3.3%. Sales of diesel increased by 12.6%, and those of gasoline increased by 14.2%.

Overall, auto sales are still strong, and the continued growth in Indian oil consumption will encourage refiners to maintain high refinery runs. Sales of passenger vehicles (PV) increased 22% over the previous year to 3,40,220 units in January. The Federation of Automobile Dealers Associations' data showed that it increased by 8% from pre-COVID 2020 levels due to strong bookings and better supplies.

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India is on track to have the fastest-growing economy in the world by 2023 because of a boom in investment, which is anticipated to lead to a dramatic uptick in industrial production as the central bank implements measures to combat inflation. 

Sales of cooking gas or LPG fell 2.1% year over year to 2.51 million, while sales of naphtha fell 14.4% to 1.23 million tonnes. While fuel oil use increased 9.1% last month, sales of bitumen, which is used to build roads, plummeted by almost 20%.

As per Procurement Resource, Due to the switch from expensive natural gas, commercial customers boosted their LPG use by more than 5% in the first nine months of this fiscal year. India consumed 21,256 thousand metric tonnes of LPG overall between April and December 2022, up 1.89 from the previous year, according to the oil ministry. Homes only accounted for 89% of total consumption, or 0.3%, but sales to businesses greatly rose. While sales of packaged LPG to commercial clients increased by 18.4% over the previous year, sales of bulk LPG increased by 12%.